Sirius XM Set to Raise Rates Yet Again

By  |  Friday, May 29, 2009 at 11:58 pm

sirius-xm-mergerAlready peeved satellite radio customers will have one more reason to be upset with Sirius XM: yet another rate increase. While you were able to escape the last one by simply electing to forgo online access, this one is unavoidable.

Every subscriber will pay at least $2 more per month. The reason is this: beginning in August, the company would be able to raise rates to cover the costs of higher royalty payments to the record companies.

The royalty rate increases were allowed by the FCC as a result of a December 2007 agreement on those rates. The company was not able to pass along these increases due to the stipulations of the approval of the merger. However:

“After the first anniversary of the consummation of the merger, the combined company may pass through cost increases incurred since the filing of the combined company’s FCC merger application as a result of statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees.”

That anniversary is coming up on July 29. According to unconfirmed reports, after this date a $2 charge on the primary radio, and a 97 cent charge on additional radios will be applied as a “royalty fee.” In other words, you will be paying at a minimum $14.95 per month for service.

People with knowledge of the situation are quick to point out that this isn’t an increase from Sirius XM per se, but rather a pass through of charges that were already being paid by the company because it can no longer afford them. You don’t say–after all its financial situation is pretty damn bad.

(See this link for a copy of the internal memo to customer service reps who are sure to be facing the brunt of yet more consumer dissatisfaction.)

Worse yet, this fee will increase by .5% per year through 2012. Thus it will be at least $2.10 in 2010, $2.21 in 2011, and and $2.32 in 2012. So much for those rate freezes eh?

This is really bad for Sirius XM. The Internets are flooded with consumer complaints about the service post-merger, and many are looking for a reason to drop sat radio like a rock.

I don’t see how the company doesn’t lose more customers over this. The company better get more responsive to programming complaints or there may be big trouble in sat radio-land.

Sirius XM customers out there — is this the last straw for you?

 
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17 Comments For This Post

  1. Mark Says:

    It isn’t the last straw for me. But they cannot continue to raise rates and subscribers at the same time. At some point they will either make less then they hope or attract less subscribers paying a higher rate.

    The company folding isn’t out of the question either. We’ll see.

  2. mark Says:

    the company wont fold anytime soon, liberty has said they are open to providing further help if needed which i dont think will be needed. this is not sirius fault that they have to pay royalties. it should be no suprise that having royalty costs raised on them every 2 seconds is finally going to get passed on to the consumer. you wait till every music delivery service has to pay the same royalties as sirixm does. most wouldnt make it. siri has 15 million self paying subs, being one of them i can tell you they would not mind paying 30 a month for the service.

  3. JDoors Says:

    A whopping twenty-four dollars more a year? Have you dealt with cable TV increases? A twenty-four dollar hike is a pittance by comparison. The issue of whether or not satellite radio is a viable business model (at any cost, or even none) is still up in the air however.

  4. mark Says:

    i dont think it is jdoors, look at their 1st qtr numbers, more rev then opex for the first time mostly due to the merger. the merger synergies are coming into play. to go from never producing positive cash flow to producing more than 350 million ebitda in 09 will show u its a viable business model. specially now that they are merged.

  5. JOHN GILBUNNY Says:

    AS LONG AS HOWARD STERN IS THERE I’LL PAY BUT IF THEY DON’T RESIGN HIM I’M GONE

  6. NICK GEERZ Says:

    RESIGN HOWARD OR THAT COMPANY WILL BE OFFICIALLY DONE 50 CENTS A DAY ISN’T BAD FOR THE BEST SHOW ON RADIO BUT IF HE GOES I GO

  7. Darren Says:

    I have had XM since the day it came out. I have not listened to regular radio since that. Obviously no one wants to pay more, but as someone who drives a lot for work it is worth ever cent.

  8. Stilgar Says:

    I’m never happy to pay a higher monthly fee, but I’m not going to drop my subscription. I have absolutely loved Sirius the entire time I’ve had it, and I don’t feel as though I could live without it. I pay more than twice the rate for my Uverse U200 plan, and I listen to my Sirius a helluva lot more than I watch Uverse.

  9. Stilgar Says:

    Complete agreement here. I have an iTunes and iPod as well, but who wants to do all the "station programming?" I enjoy Sirius and mp3's, I think there's room for both in this world, but I guess I'm a minority.

  10. Flyingsosser Says:

    I think people focus too much on the music aspect of the business model other then the content. It costs several hundreds of dollars to get sport packages from Direct TV and you have to pay for live talk coverage online. Who else offers Bloomberg Radio, FOX sports radio, and the other numerous sports and news coverage in all areas of the country without turning the dial? The terrestrial radio stations variety is for either classic rock,current, country, or classical and not everything in between…reggae, hair metal, blues, etc. I am surprised people sink thousands of dollars and hours in their ipods organizing their play list for the day. I did that back in 2000, before the ipod, and it got old and way too time consuming! Nobody wanted to pay for cable TV when it came out and now everyone puts away $100 a month for it. I have had satellite radio for 4 years now and cant imagine losing that luxury.

  11. RobF Says:

    Well, considering the playlists on XM have become increasingly shallow since the merger compared to what they were when I joined, single artist channels replacing other channels I can not justify paying more.

    my listening has dropped significantly in the past year, and the increase of the family plan sub a while back was enough to cancel that radio. I will not pay for internet access as there is better alternatives for online listening. My ipod has a more diverse playlist than the music channels i listen to most, so i think once the subscription for the radio in my wifes car runs out, that could possibly be it.

  12. DB Says:

    I cancelled as soon as it would cost my wife and I an extra $6.00 a month for online listening. Also, after the merger, sirius lost a ton of good stations. I could foresee that this company was going down the drain and would continue to raise their rates. Just wait and see what’s going to happen with the sports packages!

  13. aalksj Says:

    hahaha screw sirius xm… they alienated millions of fans with the merger and now this, i’m cancelling my subscription asap… the countdown to REAL66RAW.COM begins

  14. Boo Says:

    They’re finding reasons to get around the three year ban on raising prices as part of the merger. It isn’t going to stop, and will never stop because evidently there are a bunch of lap dogs out there who don’t care that this company is slowly increasing your bill. I’m canceling, there are other options.

  15. Anon Says:

    I canceled my XM subscription. Why. Post merger the pointy haired bosses let the DJ’s start talking on the stations I listened to, and that made them less valuable than simply using my iPod in the car. If I wanted to listen to talking DJ’s, I can do that on terrestrial FM radio. So now I listen to my iPod, with zero monthly charge, and zero talking DJs. XM’s loss.

  16. Tim Says:

    I’m done with this rate increase garbage. There are plenty of alternatives out there, Pandora is my first. Screw XM and Sirius for this nonsense. When they took our included online subscription away from us and wanted to charge additional for that, it made my blood boil, now this new increase…I’m finally calling it quits!

  17. Mike A Says:

    I have been a customer since the beginning. That being said, I am not above canceling. My only hesitation is MLB. I told myself years ago, when the rumors of MLB on XM started, I would pay an extra $10 a month for the service. For a life long Detroit Tiger fan in Alabama, XM is great for me. I’m paid up for the remainder of this year, so we’ll see.

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