Sirius XM Radio Inc. (SIRI) won court approval for settlement with subscribers who sued the satellite- radio broadcaster over claims it broke the law by raising prices after acquiring its only rival.
U.S. District Judge Harold Baer in Manhattan endorsed the accord in a filing today over the objections of some subscribers who had argued at an Aug. 8 hearing that the deal paid them too little and the lawyers too much.
“I have reviewed the settlement’s substantive terms and conclude that they demonstrate sufficient fairness, adequacy and reasonableness,” Baer wrote. “The vast majority of class members will benefit in the course of their normal subscription payments.”
Subscriber Carl Blessing of Florida sued Sirius XM in 2009, claiming the company violated federal antitrust law and state consumer-protection law when it raised some prices and levied a music royalty fee after Sirius Satellite Radio acquired XM Satellite Radio in 2008.
The subscribers said New York-based Sirius XM broke promises it made to win approval of the merger from the U.S. Federal Communications Commission and Justice Department. Sirius XM said the increases were imposed to cover higher costs.
In March, Baer let the federal antitrust claim proceed as a class action, or group lawsuit, on behalf of Sirius XM subscribers from July 29, 2008, to July 5, 2011. He denied class-action status on the state-law claims. The subscriber group and Sirius XM reached a settlement before trial, and Baer gave preliminary approval to the agreement in May.
The deal, valued at $180 million, provides that prices for basic service and Internet access, as well as the music royalty fee, will remain at current levels through the end of the year. Subscribers who canceled can reconnect without paying a fee. Those whose plans expire after Dec. 31 can renew before that time at current rates. Subscribers will get no cash.
Sirius XM declined to comment on Baer’s decision, spokeswoman Kelly Sullivan said in an e-mail.
Objectors called the settlement of “dubious value” because Sirius XM hadn’t ever said it planned to raise prices this year. They also objected to the $13 million in fees to be paid to the lawyers representing the class.
“I have reviewed the attorney expense sheets as well as the attorney time-keeping records, and found nothing to suggest exorbitant rates nor double billing nor padding of any kind,” the judge wrote.
The basic monthly charge is $12.99. Sirius XM increased the rate a subscriber paid to get service on an additional radio to $8.99 a month from $6.99. The class also decried a $2.99 charge for Internet access, which had been free. The music charge, assessed after new royalty rates with record companies were set, amounted to $1.98 a month.
Sirius had 21 million subscribers as of June 30, 8 percent more than the previous year. It provides 135 channels of commercial-free music as well as sports broadcasts and talk shows featuring Howard Stern and Martha Stewart, which carry advertisements.
Sirius XM rose 5.5 cents, or 3.3 percent, to $1.75 at 4:30 p.m. New York time in Nasdaq Stock Market trading. The shares have gained 7 percent this year.
The case is Blessing v. Sirius XM Radio, 09-10035, U.S. District Court, Southern District of New York (Manhattan).
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