XM Radio 2010 Annual Report Download - page 129

Missouri Telemarketing No-Call List Act. The suit seeks a permanent injunction prohibiting us from making, or
causing to be made, telephone solicitations to our subscribers in the State of Missouri who are on Missouri’s no-call
list, statutory penalties and reimbursement of costs. We believe our telemarketing activities to our subscribers in
Missouri fully comply with applicable law.
We are cooperating with these investigations and believe our consumer practices comply with all applicable
federal and state laws and regulations.
Carl Blessing et al. v. Sirius XM Radio Inc. A subscriber, Carl Blessing, filed a lawsuit against us in the
United States District Court for the Southern District of New York. Mr. Blessing’s lawsuit has been consolidated
with substantially identical lawsuits brought by other subscribers. Mr. Blessing and 23 other plaintiffs purport to
represent all subscribers who were subject to: an increase in the price for additional-radio subscriptions from $6.99
to $8.99; the imposition of the US Music Royalty Fee; and the elimination of our free streaming internet service.
Based on these pricing changes, the suit raises four claims. First, the suit claims the pricing changes show that the
Merger lessened competition or led to a monopoly in violation of the Clayton Act. Second, it claims that, for the
same reason, the Merger led to monopolization in violation of the Sherman Act. Third, it claims that our subscriber
service agreement misrepresents that the US Music Royalty Fee will be used exclusively to defray increases in
royalty costs incurred since the filing of the merger application with the FCC (and as permitted by the FCC order) in
violation of the consumer protection and unfair trade practice laws of 41 states and the District of Columbia. A
fourth claim — that the alleged misrepresentation violates the implied duty of good faith and fair dealing we owe
our subscribers under New York contract law — has been dismissed by the court. The complaint seeks monetary
damages as well as treble damages under the Clayton Act. Discovery in this matter is substantially complete and a
trial has been scheduled for May 2011. We believe that the plaintiffs’ claims are without merit and we are vigorously
defending ourselves in this litigation.
A stockholder, Mark Fialkov, also filed a shareholder derivative suit in the Supreme Court of the State of New
York claiming that, by allowing the price increases that prompted the Blessing litigation, our board of directors
breached its duty of loyalty to the corporation. The action names as defendants Sirius XM and fifteen individuals —
all directors or former directors of Sirius XM. This lawsuit has been stayed pending resolution of the Blessing
litigation.
Other Matters. In the ordinary course of business, we are a defendant in various lawsuits and arbitration
proceedings, including actions filed by subscribers, both on behalf of themselves and on a class action basis; former
employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual
property. None of these actions are, in our opinion, likely to have a material adverse effect on our business, financial
condition or results of operations.
(16) Subsequent Events
Merger of XM Satellite Radio Inc. and Sirius XM Radio Inc.
On January 12, 2011, XM Satellite Radio Inc., our wholly-owned subsidiary, merged with and into Sirius XM
Radio Inc. Prior to January 12, 2011, we operated XM Satellite Radio Inc., together with its subsidiaries, as an
unrestricted subsidiary under the agreements governing our indebtedness.
Repurchase of 11.25% Notes
The remainder of the 11.25% Notes of $36,685 was purchased in January 2011, for an aggregate purchase
price of $40,376. A loss from extinguishment of debt of $4,891 will be recorded in the first quarter of 2011.
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SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)