Sirius-XM Rates Increase Planned for March

After a lengthy merger approval process, Sirius-XM finally merged its channel lineup across both services in November 2008.  This was heralded as the signs of a new satellite radio service that would be beneficial to its subscribers.  However, rumors of the possibility of rate increases had been surfacing amidst these new changes.

As confirmed by its own respective websites, Sirius and XM subscribers can expect an official rate increase beginning on March 11, 2009.  The reason stated by Sirius-XM is that its online audio stream will be upgrading to a 128 KB stream, which its claiming to be "near CD-Quality".  This change will therefore cost subscribers $2.99 additional per month.

Sirius-XM also plans on increasing the regular monthly rate by $2 per month while removing the previously standard free internet streaming.  Marketing spin on the rate increases are being advertised as a "$90 savings" (which is the average savings for two radios on an annual plan) while the company encourages current and new subscribers to lock in their plans now.  According to Sirius-XM, a locked in plan prior to March 11 will guarantee you the current rate and "grandfather" the free internet streaming bonus. 

Current rates range from $7.99 for online only listening to $16.99 for the combined channels from both services.  We contacted customer service for XM Canada for clarification as the Canadian services did not merge with Sirius.  XM Canada said that there were currently no rate increases planned nor if there is any indication the increased online streaming quality applies to Canadian accounts.  There is also no subscription plan offered that includes the channels from both Sirius and XM as is the case in the U.S.; however, the channel lineup changes are still applicable.

This news comes shortly after the announcement of a new "all-in-one" radio that can receive signals from both service's satellites.  Sirius-XM is the only provider of commercial satellite radio in the U.S. and had traded $30.5 million of debt for 67 million common shares in 2008.  Reduced earnings and subscription numbers were blamed on the 27% drop in new vehicle sales in the U.S. last year.  Sirius-XM has $995 million in debt that will be due for repayment in 2009; its currently in talks with its debtors on repayment terms.