We're just six months away from the third anniversary of the merger between Sirius and XM, and this is no ordinary milestone.
Under terms of the original Sirius XM Radio
Like many out there, I figured that Sirius XM would be free to raise or lower its prices as the market deems fit starting this summer.
Not so fast.
Bloomberg is reporting that Sirius XM recently put in a claim with the Securities and Exchange Commission to have the freeze lifted when the three-year anniversary comes up on July 28. FCC spokeswoman Janice Wise tells Bloomberg that the agency is reviewing the request.
Yikes! Reviewing the request? Regulators can keep meddling here by extending the freeze? It's bad enough that the FCC took a year and a half to approve the deal in the first place. Terrestrial-radio lobbyists and legitimate antitrust concerns bogged down the process. It's really too late for the FCC to begin flexing its muscles. The genie's out of the bottle.
Regardless of how this plays out, it's not as if Sirius XM has had its hands tied. It had no problem breaking in a $2 monthly music royalty fee on many of its accounts. It also jacked up prices for secondary accounts and began charging for Web-based streaming. If the FCC shakes its head, Sirius XM will just find creative ways to price its service accordingly.
It also may decide not raise its rates at all.
Despite a surge in new car sales, Sirius XM's subscriber base has only grown by 7% during the past four quarters ending in September. Now that Sirius XM is profitable, it will be that much harder to introduce new fees or bump rates higher by justifying them as necessary to offset programming or operating costs. Sirius XM would need to add more to its channel lineup, and that's something that may have to wait until Sirius XM 2.0 rolls out by year's end.
Rate hikes can get tricky. Netflix
Cable companies and your local grocer may get away with gradual hikes, but it remains to be seen just how flexible Sirius XM's 20 million drivers will be once the inevitable price adjustments kick in.
The FCC may be reviewing the issue, but I'm guessing that Sirius XM is well ahead of the regulators in either formulating a new pricing strategy or drumming up ways to charge more for incremental content and services.
How high can Sirius XM rates go without shedding subscribers? Share your thoughts in the comment box below.