A Deeper Look at the Preliminary Approval on the Blessing Lawsuit
As we reported earlier today, there has been new information released in the Blessing vs. Sirius XM class action suit. The new filing gives preliminary approval to the proposed settlement, details information about how the class will be informed, and establishes a date for a hearing on the matter.
The new filing, linked to in our previous article, has some interesting details that investors in Sirius XM Satellite Radio (NASDAQ:SIRI) will want to know about. For example, one potential benefit from the suit is that the company will be able to get existing subscribers to “lock in” for a long term current rates prior to an anticipated increase in January of 2012. This would make perfect sense, and could potentially help fill Sirius XM’s coffers with cash in the form of long term up front payments. However, it appears from the documentation that in order to lock these rates in a current subscriber would need to go to a special page (siriusxm.com/blessingclassaction – not active yet) on Sirius XM’s website. Personally I believe that any current subscriber with the desire to lock in rates will be able to do so without having to jump through this hoop.
Sirius XM investors are a passionate bunch, and many may be inclined to opt out of the suit, or even object to it. While I am not an attorney and can not offer legal advise, these investors should consider a few things. First, think about what is happening here. A possible, not guaranteed, price increase is being pushed off by 5 months. This is not a big deal in terms of company performance. They will still likely meet all of their guidance for 2011. Second, the real cost to Sirius XM in cash is about $13 million. This is cheap insurance when you consider that the company will not be able to get sued for the royalty rate increases, family plan increases, etc., as this case resolves those issues from a legal standpoint. Simply stated, for the nominal charge of $13 million Sirius XM makes it difficult for other suits regarding the subject matter covered in this one to even get off the ground.
The last item to note is that a resolution in this case would possibly bring closure to the Fialkov matter filed in New York Supreme Court, which has a Stay order pending the results of the Blessing case. Ironically, the new Shenk case seems to mirror the Fialkov matter relatively closely, even in naming Sirius XM as a nominal defendant. Sirius XM has long listed the Fialkov matter as pending litigation against them, but due to the Stay, has not yet had to deal with it in great detail. In theory, if the Fialkov matter is resolved because of the proposed Blessing settlement, it would take a lot of wind out of the sails in the Shenk matter. If Sirius XM can resolve all three matters, and perhaps a few others, for the reasonable sum of $13 million, I would say they are getting pretty good bang for their buck.
Stay tuned to SiriusBuzz for more developments.
Position – Long Sirius XM Radio
spencer , how do WE deal with this guy from satpro?
There is nothing to deal with. Simply ignore him as 99.5% of the people out there do.
Good analysis. This is maybe why they choose it would be better to delay the rate increase. The benefits here are worth more than the 5months potentially lost, assuming the FCC lifted the cap in July. So although Siri would never go out and say all this, what u wrote probably is why they did it. And not to mention, Siri gets a chance to maybe convince some of the 4M to give it another chance.
PS. If u guys are referring to BM, he’s good. He knows what he’s doing.
From what I see he does not know what he is doing. He can’t count subs to save his life, was screaming for everyone to sell on the morning of the conference call (only to remove all evidence of it later), and has no concept of why SIRI investors should pray to god that the Blessing suit is settled. Further, he finds some way to destroy the SIRI community with each passing day. His accusations about me stealing an article are baseless, uncalled for, and only demonstrate the sophomoric nature of his site. Heck, at this point he is already trying to pump up the crowd with a potential 4 million subs that the company has about 0% chance of getting.
I will stop now so that the BM circus does not go into full force again.