The little guy wins sometimes. That doesn't always translate into killing the big guy, though.
A disgruntled subscriber lashed out at Sirius XM Satellite Radio
Well, the Blessing case has reached its final destination, ending up as a low-key settlement. Sirius will not pay any damages or reimbursements to Blessing and other purported price-hike victims, though current and some former customers are entitled to a small helping of free service. Up to $13 million of the plaintiff's legal fees will be covered, but that's the only monetary damage to Sirius.
The eye-catcher in this settlement, however, is the solemn promise not to raise subscription fees until the start of 2012, pushing back the deadline from July 28.
The non-hike promise was an important factor in the Sirius-XM merger, without which the satellite radio provider would still be competitors rather than partners. The end of that price freeze has been widely regarded as a catalyst for the stock, as fatter average monthly collections per subscriber would translate into higher profits very quickly. That's the operating leverage you're dreaming of in a business with high fixed costs, which describes Sirius to a T.
CEO Mel Karmazin as much as promised to raise rates as soon as possible in the latest earnings call, and this settlement doesn't change that plan. It just marked a new day for it in the calendar.
When Blessing filed that suit, Sirius had 18.5 million subscribers; now, the tally stands at 20.2 million. A 9% rise over 18 months is hardly the stuff of legend, considering that fellow subscription entertainer DirecTV
So I think it's fair to say that Sirius hasn't exactly milked its frozen rates for all they're worth -- yet. But I wouldn't be surprised to see a marketing blitz in the coming weeks, built around the promise of another few stable months and pleas to former customers to come back and see what they've been missing. This Blessing could still play out exactly the way Rick saw it.
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