Sirius XM Holdings Inc (SIRI)

[SeriousMoney]

Sirius strikes deals to settle dispute over portable player
ALEX VEIGA, Associated Press
Posted on Mon, Mar. 20, 2006

LOS ANGELES - Sirius Satellite Radio Inc. reached agreements with three major recording companies to settle disputes over a portable music player that enables users to store digital copies of music, a Sirius spokesman said Monday.

Sirius wrapped up separate deals with Universal Music Group, Warner Music Group and Sony BMG Music Entertainment, Sirius spokesman Patrick Reilly said.

The agreements address the music companies' concerns over the Sirius S50 player that can record up to 50 hours of music beamed by the broadcaster.

The recording industry argued that such digital radio devices could threaten online music sales because users get to keep CD-quality songs without paying.

Financial details of the agreements were not made public. But a deal with at least two of the companies calls for Sirius to pay a fee for every S50 it sells, two record company executives said on condition of anonymity, citing a confidentiality agreement.

Sirius also agreed to cap the number of S50s it will make, one of the executives said.

The company declined to discuss details of the agreements.

Sirius and rival XM Satellite Radio Holdings Inc. already pay a compulsory license fee to broadcast music to the satellite receivers of subscribers. The recording industry argued the license doesn't cover making a permanent digital copy.

Earlier this year, the industry's trade group brought its concerns to Congress with testimony that digital radio devices are not fair to record labels or online music retailers who charge consumers to download music.

Satellite radio devices have become a key issue as recording companies grow increasingly reliant on revenue from online music sales amid a slump in CD sales.

It's unclear whether the deals will lead the way for similar agreements between recording companies and Washington, D.C.-based XM, which earlier this year announced a line of portable devices that allow users to store music and other content.

XM's main player, the Samsung Helix XM2go, lets users keep track of songs they hear for later purchase on the Napster online music service. It can also store as many as 50 hours of radio broadcasts.

In a statement Monday, XM said it's in "constructive business discussions" with the record labels. The company declined to comment on the Sirius deals.

Shares of Sirius rose 22 cents, or 4.5 percent, to close at $5.11 Monday on the Nasdaq.

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