The Copyright Royalty Board (CRB) has made a decision on the royalty rates for Satellite Radio.
(Note: The press release was just issued by XM and is worded for XM only - but I assume that these apply to Sirius as well. UPDATE: David Frear is talking about it at the UBS conference, so yes, this includes Sirius as well) The terms are for six-years (starting January 1, 2007) ending December 31, 2012.
XM, and Sirius, will pay a performance license rate of 6.0% of those gross revenues subject to the fees for 2007 and 2008, 6.5% for 2009, 7.0% for 2010, 7.5% for 2011 and 8.0% for 2012. This is much less than what SoundExchange wanted, which was a scale from 8% to 23% of total revenue.
In addition, the revenue that is subject to royalty fees includes subscription revenue only from subscribers and advertising revenues from channels other than those that use only incidental performances of music. The revenue percentages are not from equipment sales or data services.
"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," said Gary Parsons, Chairman, XM Satellite Radio. "Moreover, the music performance fees set by the CRB are in the range projected by many financial analysts who cover this industry."
UPDATE: At the UBS Media conference, David Frear CFO at Sirius Satellite Radio Inc. has said that the company has not had the chance to look at the entire agreement and have not made a decision on whether they will dispute the CRB's decision. They have 15 days from the Dec 3 decision to move for a rehearing.
UPDATE 2: Sirius has an SEC filing on all this as well.
6% huh... at 1 billion in revenue thats 60 million per year in aditional fees/costs (less cause I included all revenue)
That should fund a few more needless lawsuits.
What does earthly have to pay .....or are they grandfathered? TV
As if satellite radio didn't have enough money problems all ready, now this.
How does this compare to the rates they are currently paying? Undoubtedly the new rates will be higher, but by how much?
Guys, this isn't totally new expense for Sirius and XM. I don't know what rates they have been paying prior to this, but BOTH Sirius and XM have paid royalties to the mafia from the start.
its only a slight increase over what they pay now, almost in line with an expected increase. This is actually great news compared to what happened to internet radion and what sound exchange wanted..Its funny that when sound exchange came out with what they wanted the stock got hammered, but when they didnt get it and the deal was as favorable as paying the mafia can be came in the stocks didnt notice..This merger needs to pass so we can move on with business...for the love of god, decide already..let the two companies merge and go back to business! No wonder the rest of the world is catching us at warp spead...
It is, I think, a couple of percentage points -- which is a damned sight better than what SoundExchange was wanting.
Ryan - What is the rationale behind the increasing pecentage over the years. I understand the same thing happened with the net rates as far as increasing over the years but to a much larger degree.
Why does the CRB think percentages should increase as the years go by? Why isn't just the same percentage every year? If the average is around 7% why don't they just say 7% this year and 7% in 2012 etc.?
What does earthly have to pay .....or are they grandfathered? TV