Sirius in Music Deal With Sprint Phones

Sirius Satellite Radio (SIRI) Tuesday said it reached a deal to supply music channels to telecommunications company Sprint Corp. (FON) in a mobile phone service to be introduced later this year.

The agreement is aimed at getting more listeners for Sirius' subscription radio service and is part of plans at Sprint, the third biggest U.S. mobile provider, to extend entertainment services it has recently begun to deliver to mobile phones.

Sirius, which will be Sprint's third provider of audio music channels, said the companies were evaluating channels including new hits, classic rock, hip-hop, country and blues.

Financial details of the agreement between the two companies were not disclosed by the companies, which plan to reveal more details about the service later this year.

Sirius said the cost of the new channels would be included in the cell-phone service package that Sprint sells to its customers, rather than sold separately by Sirius.

Wireless service providers are betting that the sale of music and video through phones will offset falling revenue from mobile phone calls. While music ringtones are popular, other services have yet to catch on in the United States.

Sprint has sold musical ringtones for about two years and in recent months began offering audio channels to its phones from privately held MSpot and Music Choice, backed by Microsoft Corp. (MSFT), Sony Corp. (SNE) and other companies.

Sprint spokeswoman Mary Nell Westbrook said its Sirius service would be similar to MSpot and Music Choice, which cost about $6 a month. But she did not give price details for the Sirius offering which will work on most Sprint phones.

Sprint already delivers channels with the same music genres as Sirius is evaluating but the operator hopes existing Sirius customers would want a similar style service on their phone, said Westbrook.

But wireless analyst Ed Snyder of Charter Equity Research said the jury is still out on whether consumers would pay to listen to music on phones, which are still used mostly for talking.

"As MP3 players become more prevalent you'll need less and less of this stuff," said Snyder, referring to dedicated digital music playing devices. "Consumers won't pay for what they can get for free now."

Sirius said the deal is part of a move to deliver its content to consumers beyond those who buy its satellite receivers and pay about $13 a month for coast-to-coast radio service.

Sirius competes with bigger rival XM Satellite Radio Holdings (XMSR) in the emerging pay-radio market, which delivers more than 100 channels of music talk and sports programs, some commercial-free.