New York – Subscription-price
increases that Sirius XM could have imposed after the July 28 lapse of a
voluntary price cap won’t happen until next year at the earliest because of a
settlement in a class-action lawsuit that alleged antitrust violations.
The suit, filed here is U.S.
District Court for the Southern District of New York, charged the
satellite-radio company abused its monopoly position by imposing a
music-royalty fee, raising the price for additional-radio subscriptions from
$6.99 to $8.99, and charging for its previously free Internet streaming
Under the settlement, still to be
approved by the court, Sirius XM agreed through December 31 not to raise rates
on its basic programming package, other programming packages, its internet
streaming services, and its U.S. music royalty fee. Under the settlement,
however, the company won’t have to decrease its subscription discounts for
owning multiple radios.
Also under the settlement, former
subscribers who ended their subscriptions after July 29, 2009, will be
able to go to the company’s web site to receive for free either one month of
basic satellite radio service or one month of Internet streaming.
Sirius XM will pay up to $13 million
to pay the costs of providing notice to the plaintiff class and reimburse plaintiffs’
fees and expenses. The settlement does not require the company to make any
other cash payments in the suit, which sought treble damages.
“Despite our belief that the claims
asserted by the plaintiffs were untrue, we entered into this settlement because
we believe it was in the best interest of our stockholders to avoid further
legal expense and inconvenience and eliminate the distraction of this
protracted litigation,” the company said in an SEC filing.
Rate caps were one of many
conditions required by the Federal Communications Commission (FCC) to approve
the 2008 merger of Sirius and XM into a single company. The rate caps are to
expire July 28. Although the FCC has asked for public comments on whether the
satellite-radio rate caps should be extended, Sirius XM has previously said the
caps would likely expire as planned.
Sirius XM executives have also said
they would likely raise the $12.95/month basic subscription rate in the future
after holding it steady since the launch of service 10 years ago.
Meantime, the company’s lawsuit with
personality Howard Stern continues.
In March, Stern’s production company
and his agent filed a suit in the New York State Supreme Court claiming the
company didn’t live up to the performance-based compensation provisions of an
employment contract dated October 2004. Stern’s compensation was linked to
the number of Sirius subscribers exceeding certain levels. Stern contends the
number of post-merger XM subscribers should be counted in his compensation.
That suit seeks damages, plus
interest and costs, in an amount to be determined. SiriusXM claims the suit is