Analyst Positive on SIRIUS XM (SIRI) as Royalty Fee Increase Less Than Expected

On Friday, shares of SIRIUS XM Radio Inc. (NASDAQ: SIRI) closed higher on news that the Copyright Royalty Board rendered judgement on Sirius music fees over the next 5-years. While royalty fees increased, the rise was less than many Wall Street estimates.

Commenting on development, Pivotal Research Group analyst Jeffrey Wlodarczak said, "The judges decided that satellite radio music royalty fees would rise from 8% of gross revenue in '12 to 9% in '13 (vs. our 10% forecast), 9.5% in '14 (vs. our 11% forecast), 10% in '15 (vs. our 12% forecast), 10.5% in '16 (vs. our 13% forecast) and 11% in '17 (vs. our 13% forecast)."

Wlodarczak said he views this as a positive for both SIRI and Liberty Media Corporation (Nasaq: LMCA), its controlling shareholder.

"SIRI shares have been in somewhat of a holding pattern in front of this judgment and this should break the log jam, boosted by likely still solid auto sales, likely better than guidance 4Q subscriber results and their new $2B share repurchase authorization (which we expect to be completed in 2013)," said the analyst.

Pivotal Research has a Buy rating on Sirius XM Radio (NASDAQ: SIRI) with a modified price target of $3.55 (from $3.45).

For an analyst ratings summary and ratings history on Sirius XM Radio click here. For more ratings news on Sirius XM Radio click here.

Shares of Sirius XM Radio closed at $2.91 yesterday.

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