updated 08:30 am EST, Mon November 3, 2008
Shareholders Sue Sirius XM
A group of "incensed shareholders" calling itself Save Sirius today said it was suing Sirius XM over allegedly profiteering at the expense of investors. The lawsuit, filed in a California Central District, Southern Division court, accuses the satellite radio provider of violating RICO anti-racketeering laws and the Sherman antitrust act through decisions relating to the Sirius and XM merger only completed earlier this year.
Company chief Mel Karmazin and other executives have allegedly damaged the value of Sirius XM stock by not only waiting through the entire FCC approval of the deal, which at 16 months long was the longest in FCC history, but also of maintaining agreements between Sirius and XM that kept either from looking for alternative deals or of canceling altogether. Executives from the two companies were bent on completing the merger at "any and all costs," the plaintiffs claim.
They also accuse Sirius XM of making shorter-term mistakes that hurt the company's well-being, including no near-term plans for interoperable radios that handle both Sirius and XM networks as well as giving 300 million shares to the financiers of XM's debt that were promptly sold short.
Save Sirius hopes that it will ultimately remove Karmazin as well as at least some existing board members.
Sirius XM hasn't yet responded to the charges made in the lawsuit but has previously said the merger was necessary to fend off competition from not just traditional radio but also any digital media, including iPods and other portable media players.