XM Keeps Shaking the Wrong Hands

Whether or not XM Satellite Radio (Nasdaq: XMSR  ) is ultimately allowed to merge with Sirius (Nasdaq: SIRI  ) , at least it's getting a lot of handshake practice before the ceremony. The company has settled with Sony BMG, the third of the four major record labels to come to terms with it.

The lawsuits hurled at XM's direction stem from its portable Inno player. Executives at the labels were incensed when the device hit the market two years ago, given its ability to record songs in their entirety that play on XM's dozens of commercial-free digital music channels.

Companies like Sirius typically agree to pay a set amount to record labels to account for any potential copyright trampling. XM foolishly decided to forgo the formality. It was a risky move, especially because satellite radio and the music labels are in what would otherwise be a symbiotic relationship where each one benefits the other. XM provides broader exposure than conventional ad-laden radio with limited play lists. In turn, the allure of commercial-free tunes is a big seller for XM and Sirius in the auto showroom.

At least XM is settling now. Universal, Warner Music (NYSE: WMG  ) , and now Sony BMG -- a 50-50 venture between Sony (NYSE: SNE  ) and Germany's Bertelsmann A.G. -- have all come to terms with XM. Even if portable devices like XM's Inno and Sirius' Stiletto have become less important to the companies, with most of their growth coming from factory-installed car receivers, there's no point in stirring up disharmonious sentiment within the industry.

This is also the kind of concession that will look good on XM's resume as it continues to petition the Federal Communications Commission and the Department of Justice to approve its combination with Sirius. It's February now, meaning we are approaching the one-year anniversary of the deal's announcement.

Just keep smiling and shaking hands, XM. It won't be long before you run out of hands to shake and find that you're alone with Sirius, the way you've always wanted to be.


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 568629, ~/Articles/ArticleHandler.aspx, 10/24/2014 7:09:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement