Sirius XM Radio Inc. (SIRI), the U.S. satellite-radio broadcaster, rose the most in four months after a favorable ruling by the Copyright Royalty Board on how much the company has to pay in music royalties through 2017.
The judges that make up the board determined that the rates for Sirius to pay SoundExchange, an organization that collects royalties for musicians, will increase to 9 percent of gross revenue in 2013 from 8 percent this year. The fees will then increase by half a percentage point every year until 2017.
The costs of the fees are passed on as charges to Sirius customers, said Bryan Kraft, an analyst at Evercore Partners Inc. (EVR) in New York. The “manageable” royalty increase means the New York-based company won’t see a defection of customers because of higher rates, he said.
“If the rate increase were larger, you’d have to wonder if Sirius can pass that through,” Kraft said. “Because the step- ups are small, they can be passed through quite easily. It removes an uncertainty.”
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