By Demian Russian
With a newly issued research report, Wunderlich Securities Media Analyst Matthew Harrigan reiterates his previous HOLD rating and a 12-18 month price target of $2.80 on Sirius XM Radio Inc. (NASDAQ:SIRI). Harrigan saw Sirius XM avoiding “major fallout” with the recently rendered Copyright Royalty Board (CRB) decision setting Sirius XM’s royalty rates through 2017. Sirius XM’s new percentage rate on gross revenues paid to SoundExchange will increase from 8% to 9% in 2013 and increase .05% annually, arriving at 11% in 2017.
“Sirius XM Radio certainly avoided major fallout in Friday’s Copyright Royalty Board decision.”
– Matthew Harrigan, Wunderlich Securities
In light of the fact that SoundExchange had been looking for Sirius XM Radio’s royalty rate percentage to be reset to 13% of gross revenues in 2013 and then subsequently increase to 20% in 2017, Harrigan views Sirius XM’s new royalty rate structure handed down by the CRB as being “quite manageable.” Sirius XM was seeking a royalty rate percentage reduction to 6%, with subsequent hikes following through 2017. While he views the possibilities of Sirius XM passing this new additional royalty cost through to its subscribers as being credible, Harrigan expects Sirius XM to be ”restrained in implementing a formal pass-through.” Read More
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