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Sirius’ XM Debt Sale Attracts Surprisingly Strong Demand; Subs Get Hit With Royalty Rate Hike

The XM Satellite unit of Sirius XM Radio (NSDQ: SIRI) decided to raise its $350 million debt sale to $525 million as it sought to meet unexpectedly strong demand from buyers. That sent the company’s share price up nearly 16 percent to 45 cents. The senior notes, which come due in 2013, carry an annual rate of 11.25 percent. The satellite radio company expects to realize over $499 million in proceeds from the sale, not counting commissions and related expenses. Sirius will use the money to repay outstanding and replace the $150 million high-interest loan from Liberty Media (NSDQ: LINTA) Corporation, which helped it stave off the threat of bankruptcy — and prevent TV satellite company EchoStar (NSDQ: SATS) from gaining control — in February. Release

Higher royalty fees being passed on to subs: Separately, Sirius told its subs that they will have to bear increased costs related to music fees, CNET reported.

The company informs its subscribers, in a letter posted on Sirius XM News, that there will be hit with a U.S. Music Royalty Fee of $1.98 per month for primary subscriptions. A $.97 per month charge for multi-receiver subscriptions will be levied the next time they renew their subscription. The Copyright Royalty Board set performance fees for satellite radio two years ago. Since then, CNET notes, fees have gone from 6 percent in 2008 to 6.5 percent this year. Rates are scheduled to rise annual until 2012, when the rate hits its 8 percent ceiling.