Dec 17 Sirius XM Radio Inc will pay a
bigger percentage of revenue toward music royalties for sound
recordings, following a decision made by the U.S. Copyright
Royalty Board, the satellite radio provider said on Monday.
Judges at the U.S. Copyright Royalty Board determined last
Friday that Sirius should pay higher royalty rates over the next
five years to SoundExchange, the non-profit group that collects
royalties from Sirius as well as Internet radio and cable TV
companies on behalf of recording artists and record labels.
Sirius currently pays 8 percent of a portion of its gross
revenue to SoundExchange, but after Friday's ruling, the rate
will rise each year until 2017, when the agreement expires.
ISI analyst Vijay Jayant estimated the company paid about
$250 million to SoundExchange in 2012, and will pay $324 million
Analysts, on average, expect Sirius to generate $3.41
billion in revenue in 2012, according to Thomson Reuters
The royalty will increase to 9 percent in 2013, 9.5 percent
in 2014, 10 percent in 2015, 10.5 percent for 2016, and 11
percent for 2017, Sirius said in a filing with the U.S.
Securities and Exchange Commission.
Sirius XM and SoundExchange were involved in lawsuits over
The new rates were better than expected and will be
"modestly positive" for Sirius' earnings before interest, taxes,
depreciation and amortization," according to ISI, an investment
Last Friday, when the Copyright Royalty Board issued its
decision, Sirius XM shares rose 6 percent.
"With increased clarity on the royalty fee front, we now
expect there could be upside" to the company's earnings forecast
next year, said Macquarie analyst Amy Yong said.
The board oversees copyright licenses and royalty payments
in the United States.
Sirius, the largest U.S. satellite radio provider with more
than 23 million subscribers, approved a $2 billion stock
repurchase program on Dec. 6 and issued a special dividend.
Its shares dipped 2 cents to $2.89 on Monday.