Sirius, XM royalties set

By Sue Zeidler

LOS ANGELES (Reuters) - U.S. copyright authorities on Tuesday set new song recording royalty rates for proposed merger partners Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., that were in line, or lower than Wall Street expectations.

The Copyright Royalty Board of the U.S. Library of Congress set royalties for sound recordings at 6 percent of gross revenues for 2007 and 2008, with some exclusions, 6.5 percent for 2009, 7 percent for 2010, 7.5 percent for 2011 and 8 percent for 2012.

SoundExchange, the music industry group that collects royalties, had sought rates starting at 8 percent and rising.

"We're happy that they valued the music higher (than presently) but would have been happier if the rates had been set higher (still)," said Richard Ades, a spokesman for SoundExchange.

Neither XM nor Sirius had released royalty levels before, although Wall Street analysts widely believe they have been paying between 4 percent and 7 percent.

XM in a statement said the range was broadly in line with predictions by financial analysts.

"Today's ruling by the Copyright Royalty Board brings to an end a year-long proceeding with the record labels and provides our company certainty regarding music performance royalties to be paid through 2012," Gary Parsons, Chairman of XM, said in a statement.

Deutsche Bank analyst James Dix said he viewed the CRB decision favorably. "The CRB ruling appears better than we had forecast," he said, saying the new rates would cut $50 million from his forecasted 2008 annual royalty costs for Sirius.