News

Reports surfaced this week that SiriusXM will soon raise prices for many of its satellite radio packages in the coming months.  Price increases are usually a sign of strong product demand and a healthy business.  SiriusXM has both.

The news noted that price increases will mean more money for artists and labels.  That is certainly true.  But the reports did not explain that the increase in royalties is blunted by a government license that grants SiriusXM below-market royalty rates for music.  The result over time?  Hundreds of millions in royalties lost because of an outdated below-market rate standard.

SiriusXM has had impressive success growing both its subscriber base and total revenues.  The number of subscribers to the service has grown steadily, up 47% over the last five years, closing in on 30 million:

The company’s total revenues grew as well – up 62% over that same period to $4.6 billion:

SiriusXM’s growth was not limited to its top-line.  Since its business model scales so well, the increases in subscribers and revenues translated to incredible growth on the bottom line.  The company’s operations have been generating so much money that its free cash flow has grown an astounding 525% over the same 5 year period, now surpassing $1 billion per year:

We applaud SiriusXM for its success and hope it continues.  We merely wish that SiriusXM would pay its fair share to artists and labels by no longer hiding behind an antiquated law enacted before satellite radio even beamed music to its first subscriber.  The SiriusXM subsidy should vanish into a black hole.

Steve Marks

Chief, Digital Business & General Counsel