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SiriusXM Radio (NASDAQ:SIRI) will make a “voluntary contribution” of $240,000 to the U.S. Treasury as part of its settlement with the Federal Communications Commission in a pricing investigation. The consent decree between the two will resolve the issue of whether Sirius raised prices in violation of a three-year post-merger pricing condition placed upon it by the FCC.
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When the regulatory agency approved the merger of Sirius Satellite Radio and XM Satellite Radio in July 2008, it made the condition that the new entity was not allowed to raise subscription rates for three years. SiriusXM has kept the base subscription rate at $12.99, but started charging for its Internet service as well as service to additional receivers and applied a music licensing fee to every subscription.
FCC let the price freeze lapse after three years after seeking public input and deciding that the competitive landscape had changed since 2008. It said Sirius had claimed it now faced intense competition from several services including AM/FM radio, HD radio, and Apple (NASDAQ:AAPL) iPods, as well as smartphone streaming apps. The FCC also said Pandora (NYSE:P) had showed “remarkable growth” since the merger and also mentioned Rhapsody, Slacker, Last.fm, and iHeartRadio as other new rivals for the satellite radio company. SiriusXM increased its base subscription fee to $14.49 per month post the relaxation.
However, the commission was investigating the additional fees Sirus had imposed on subscribers before the relaxation took effect. The latest fine agreement does not hold SiriusXM liable, and ends the agency investigation if the radio pays the money within 30 days.
SiriusXM also settled a $180 million class-action lawsuit on behalf of subscribers last year.
Shares of SiriusXM (NASDAQ:SIRI) closed at $2.05 on Friday.
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