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Karmazin: Sirius Will Raise Price In Future

4/24/2006 02:00:00 AM Eastern

Sirius Satellite Radio CEO Mel Karmazin stated that Sirius will raise the monthly fee for Sirius, up from $12.95 in the future.

At the Morgan Stanley Global Automotive Conference, held here, Karmazin was asked by a member of the audience if Sirius will raise prices in the future for services such as real-time traffic. Karmazin responded, “Our prices will go up without traffic. The 43 cents a day we're charging is a steal.” In addition to that, “somewhere down the line, you should assume that there will be additional charges for telematics and traffic.”

Karmazin said that Sirius is “looking at” telematics services such as alerting drivers where the cheapest gas is available in their area.

A Morgan Stanley spokesman also asked Sirius if it will pay more to the music companies as its agreements with the RIAA are due to expire at the end of the year. Those fees are now 5 percent to 8 percent of revenue, said Morgan Stanley.

Karmazin said, “I told the music companies that if they would like to get a big increase, they ought to take music off every place in radio, and then the only way you'd be able to hear it was by listening to satellite radio. Then I think we could pay them a significant increase.”

Karmazin declared that the music companies will benefit by Sirius' projected growth. Sirius anticipates revenues this year of $600 million, up from $242 million in 2005, and forecasts an increase to $1 billion in 2007. He said that the music industry expecting an increase in percentage terms on top of that growth would be “double dipping.”

He further noted that terrestrial radio does not pay fees for airing music.