The Copyright Royalty Board (CRB) issued its determination and order setting the
royalty rate payable by XM Satellite Radio (NASDAQ: XMSR) under the statutory
license covering the performance of sound recordings over the XM system for
the six-year period starting January 1, 2007 and ending December 31, 2012.
Under the terms of the CRB Satellite Radio Services, XM will pay a
performance license rate of 6.0% of those gross revenues subject to the fees
for 2007 and 2008, 6.5% for 2009, 7.0% for 2010, 7.5% for 2011 and 8.0% for
2012.
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The revenue that is subject to royalty fees includes subscription revenue
from our subscribers and advertising revenues from channels other than those
that use only incidental performances of music. Other exclusions and
deductions from revenue subject to the statutory license fee include but are
not limited to revenue from channels, programming and products or other
services offered for a separate charge where such channels use only
incidental performances of sound recordings, revenue from equipment sales,
revenue from current and future data services, fulfillment service fees, and
bad debt expense.
“Today’s ruling by the Copyright Royalty Board brings to an end a year- long
proceeding with the record labels and provides our company certainty
regarding music performance royalties to be paid through 2012,” said Gary
Parsons, Chairman, XM Satellite Radio. “Moreover, the music performance fees
set by the CRB are in the range projected by many financial analysts who
cover this industry. XM remains strongly committed to providing consumers
the very best in both music and non-music programming, to compensating
artists for their creative work, and to providing our shareholders a fair
return on the multi-billion dollar investment in this new audio entertainment
platform.”
Parties have 15 days from the December 3, 2007 decision to move for
rehearing. Once the CRB has considered any rehearing motions, the Librarian
of Congress will publish the final determination in the Federal Register.
Parties will have thirty (30) days from that publication to appeal the
decision to the U.S. Court of Appeals for the District of Columbia.
