Sirius, Microsoft in Deal

Sirius (SIRI) has attracted another big partner.

The satellite radio company is teaming up with Microsoft (MSFT ) to develop video services for use in automobiles.

Sirius said it plans to offer a video service in the second half of 2006, and expects to devote two to three channels for children's programming.

In its announcement Wednesday, Sirius said that it has selected Microsoft's Windows Media Video 9 for use in its mobile video platform.

"We will take the DVD experience to the next level, offering the best content easily available to families and consumers," Sirius said. "Working together with Microsoft will help ensure the exciting development of a solid and user-friendly video platform for Sirius for years to come."

On Tuesday Ford Motor (F) said it will help the upstart pay-radio company double its subscriber rolls.

The automaker will offer factory installation of Sirius satellite radios starting this summer. Ford will make Sirius service optional on as many as 21 Ford and Lincoln Mercury models and expects to generate as many as a million new users for the company.

The Ford deal will expand the reach of New York-based Sirius, which became something of a Wall Street darling late last year after it signed up New York shock jock Howard Stern and former Viacom (VIA) chief Mel Karmazin.

Sirius shares rose 19 cents, or 2.5%, to $7.70 in premarket trading.