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Monday, May 16, 2011

Sirius XM settles shareholder suit, agrees to hold off on price increases

Subscriber Carl Blessing had filed a suit against the satellite radio operator, alleging that it had improperly raised its "additional-radio" price from $6.99 to $8.99 a month; passed along the music royalty fee, starting two years after its merger; and had begun charging subscribers for access to the online stream. In today's SEC filing, Sirius XM says "earlier, the court dismissed the plaintiffs' claims for breach of contract and granted our motion for summary judgment as to various state law claims." However: to move forward, the company has reached a settlement in the case that involves paying attorneys fees of $13 million; giving a month of free service to former subscribers who sign up on the website; and keeping the price of the basic service where it is through December 31. CEO Mel Karmazin previously told analysts to expect price increases later this year, and for amounts "more than inflation." There are other pieces of the agreement, which you can see in the SEC filing here.

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