SiriusXM Settles Royalty Lawsuit For $210 Million
Fresh off of what could only be considered a legal victory in Florida, SiriusXM Satellite Radio made a decision to settle a lawsuit regarding royalties of pre-1972 music. The company announced Friday that it was had reached a settlement on the issue and will pay $210 million. SiriusXM gets to use pre-1972 recordings without any additional payment through the end of 2017, and can then negotiate with parties regarding use of the recordings through 2022.
The suit originated from Flo and Eddie of the Turtles, which brought the case on behalf of themselves, and eventually sought and gained class action status. The Turtles are most famous for their song “Happy Together”. Current royalty law only covers recordings after 1972. SiriusXM does have a few direct deals negotiated with various parties regarding pre-1972 music. An example is the Elvis Channel on SiriusXM.
While the settlement is expensive, a cloud over the head of SiriusXM has been removed. The settlements may also pave the way for other settlements with companies like Pandora. SiriusXM is a highly profitable company, and should be able to absorb the settlement without much impact on the stock price. Stay Tuned!
“should be able to absorb the settlement without much impact on the stock price.”
Wow. Nice call.
My thinking is that they chose to settle for 2 main reasons.
1) They settled to set a precedent for Pandora. If Sirius pays 200 million, then it sets a precedent for Pandora and other companies to pay up too. Sirius can afford it… but some smaller companies cannot or not as easily.
2) Sirius probably know that the price would have been higher if it was Sirius-Liberty making the settlement. So, they got a better settlement price as an independent company and now can likely put some attention into reviving the takeover process. I anticipate another takeover offer by the end of the year. Probably just shy of $5. Wait for it.
Knowing liberty, a bid “shy of $5” is a fantacy. If they offer “shy” over $4 I will not be surpirsed.
We don’t know which party got sufficiently worried about the final rulings to agree to the settlement.
Sirius won in Florida and the New York judge certified her legal decision to an early appeal to the New York federal appellate Court of Appeals, which in turn could have certified the question to the highest New York State court. The decision of the highest New York appellate court would have had a lot of weight.
In any event, Sirius and the record labels want to keep a good working relationship since they have to work together on post-1972 recordings.