January 22, 2009
Emerging Debt Prompts Sirius XM To Raise Some Prices
In order to meet looming debt payments, Sirius XM Radio Inc is planning a price increase for subscribers with multiple accounts as well as charging for its online music feed.
Sirius and XM Satellite Radio made an agreement last year to keep its core rates unchanged as a stipulation to close their merger.The new price adjustments are likely to anger subscribers still raw from a series of programming changes enacted in November.
A customer service representative for the New York-based company said on Wednesday that starting March 11, users with more than one account would pay about $9 for additional accounts, up from about $7.
Subscribers will also have to pay about $3 a month for the previously free online version of the service.
Representatives said users will be able to defer the increases if they sign up for a long-term annual contract extension, or pay up to $500 for a lifetime subscription. There is currently no plan to change the price for a standard monthly subscription.
Sirius has yet to comment on the price increases.
The Federal Communications Commission came to an agreement with Sirius that the company would not raise standard retail prices for three years. Sirius's basic per month subscription is to remain $13, and other programming packages such as a la carte; "best of both"; its news, sports, and talk package; and a discounted family-friendly programming package are to remain fixed for those three years.
Sirius XM entered the year with about $1 billion in debt and the increased revenue derived from the new charges and long-term commitments would go a long way towards righting the company's books.
Sirius has $175 million of convertible notes maturing next month, $350 million of secured bank debt due May 2009, and $433 million in convertible notes due December 2009, according to figures from Standard & Poor's.
Sirius Chief Executive Mel Karmazin stated last month that while the tight credit market has made it difficult to get optimal terms, he is still confident the company can refinance the debt.
Karmazin also forecast double-digit revenue growth for Sirius in the fourth quarter.
However, shares in Sirius fell 4.27 percent to 10.5 cents at mid-afternoon, down 8 percent this month and off 95 percent in the past six months.
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