The waiting is over for Sirius XM Radio (NAS: SIRI) .
The satellite radio giant can now turn its attention to upgrading its platform later this year and figuring out how high to bump its rates early next year.
Last-minute objections that were seeking to derail a settlement were shot down by a district court judge yesterday. Terms of the Sirius XM-backed settlement will stand.
It's been nearly two years since a disgruntled subscriber initiated the legal fisticuffs, arguing that Sirius XM didn't have a right to bump secondary rates higher after the merger between Sirius and XM. The media company had promised to freeze its basic rate for three years to appease regulators, but it still went on to raise the rates of secondary accounts and initiate fees for online streaming access and to fund music royalties.
Carl Blessing's complaint became a class action lawsuit, settled in May with Sirius XM agreeing to pay as much as $13 million in plaintiff legal fees and offer a small taste of service credit. It also agreed to hold off raising its rates until 2012 instead of this summer. In short, Sirius XM dodged a bullet then -- and U.S. District Judge Harold Baer is upholding the bullet dodging now.
Can we all just let this go now?
It's quite frankly ridiculous that Sirius XM found itself keeping its rates iced up for what will be three-and-a-half years. Do you think satellite television giants DIRECTV (NYS: DTV) and DISH (NAS: DISH) think twice about inching their rates higher year after year?
If you counter that satellite television isn't a monopoly, I'll agree. If you imply that satellite radio is a monopoly, I'll laugh. Less than 10% of the registered cars in this country have activated satellite receivers. How is that a monopoly? Between terrestrial radio and the growing accessibility of Pandora (NYS: P) streaming on the open road, no one has to pay for satellite radio.
We'll have a clearer picture on just how captive Sirius XM's audience is when it does raise its rates next year. And now that this class action settlement appears to be out of the way, Sirius XM can go on to worry about that meaty question and the even meatier margin implications.
How high do you think Sirius XM will go with next year's hike? Share your thoughts in the comment box below.
At the time thisarticle was published Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Longtime Fool contributor Rick Munarriz has been a subscriber to Sirius since 2004. He does not own shares in any of the stocks in this article. He is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance.
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