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SiriusXM Admits Its Business Has Changed-And So Should Its Below Market Royalties

03 June 2015

About a month ago we wrote in Billboard about SiriusXM’s strong financial position and the outrage of its special “grandfathered” below market royalty standard. SiriusXM is one of the most profitable radio companies in the world – yet it has a special Congressionally granted exemption from the fair market value royalty standards that its digital competitor must pay? Absurd.

One of our central points was that, whatever sense that below-market exception may have made twenty years ago when it was granted, it is unfair and unjust to continue it today. “The world has changed,” we wrote – quoting Sirius’s own words back at them from one of their old quotes – and so should the SiriusXM’s royalty giveaway.

Well yesterday, SiriusXM’s CFO addressed investors in London – at the Bank of America Merrill Lynch Global Telecom & Media Conference, no less (sounds like a place you would find a struggling radio business that can’t afford to pay market value to its artists…)

And he repeated that times have changed for SiriusXM: “We have seen the fortunes of satellite radio change significantly in 10 years.” Presumably, that puts an end to any claim by SiriusXM that it still needs the royalty exemption it won twenty years ago!

And as to the company’s financial health, “advertising sales at SiriusXM now amounted to more than $100 million ‘with really high incremental margins'” – a company earning “high incremental margins” on ads is a company that can afford to pay market value for the music it uses to sell those ads.

The Fair Play Fair Pay Act will unstack the deck and put SiriusXM on a level playing field with its digital and AM/FM competitors.

That is fair and right for all radio businesses – and a clear win for consumers and everyone who listens to radio in any of its forms.

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