- The Washington Times - Thursday, January 19, 2006

An Arkansas man filed a federal lawsuit against XM Satellite Radio that says the company’s marketing of its music channels as completely commercial free is “false, misleading and deceptive.”

Matthew Enderlin filed the suit, which seeks punitive damages and to prohibit the D.C. company from advertising and selling “commercial-free” products.

“They advertise that their service is commercial-free when, in fact, it’s anything but,” said S. Gene Cauley, managing partner of the Little Rock law firm Cauley Bowman Carney & Williams, which is representing Mr. Enderlin.

As an example, Mr. Enderlin said he repeatedly heard promotions for text-messaging services provided by a large telecommunications company on XM music channels, said Darrin Williams, another partner at the law firm, who declined to name the sponsor.

“The suit is without merit,” said XM spokesman Nathaniel Brown. “The accusations are baseless. The fact is XM does not air commercials on its music channels.”

Mr. Cauley said he would file a motion for class-action certification within the next 60 days in which Mr. Enderlin would represent a national group of fellow consumers who subscribed to the service or bought equipment needed to hear it since Nov. 12, 2001.

The suit does not give an exact number of potentially affected consumers, but it estimates it to be “in the millions.” XM recently surpassed 6 million subscribers, compared with November 2001 when the company estimated it had 5,000.

The suit, which says XM’s commercial-free claim violates the Arkansas Deceptive Trade Practices Act and identifies similar statutes in 41 states and the District of Columbia, was filed on Jan. 10 in U.S. District Court for the Eastern District of Arkansas.

But variations from state to state are one major stumbling block the lawsuit faces in gaining class-action status, said Timothy E. Eble, a lawyer specializing in class-action litigation. He runs a Web site dedicated to the subject.

The other obstacle will be proving what exactly constitutes a commercial because XM channels often cross-promote, said Mr. Eble, who is an XM subscriber in Mount Pleasant, S.C.

“Basically, I don’t think much of their suit,” he said, adding that he normally does not disparage another plaintiff’s case.

XM airs cross-promotional spots on some of its music channels, but no commercials were heard by reporters for The Washington Times on numerous stations for extended time periods this week.

Mr. Cauley said a two-month investigation into XM’s advertising claims yielded many examples, starting with the company’s Web site that touts its 67 music channels as “100 percent commercial free,” as do its radio and TV advertisements. He added that he had recordings of ads on the music stations, as well as of XM sales managers telling potential customers that the music channels are commercial free.

“XM Radio’s audio programming includes promotional and advertisement segments,” according to the lawsuit. “Stated another way, XM Radio sells airtime to promote and advertise goods and services, from which it derives substantial revenue.”

XM charges a $12.95 monthly subscription fee. While numerous automobiles come with XM receivers installed, subscribers can purchase the equipment for anywhere from $50 to $200.

XM competitor Sirius Satellite Radio has more than 3 million subscribers and also markets its music channels as commercial free.

“This has been an important part of the marketing weaponry for both satellite services as they attempt to position themselves against commercial radio: We give you the good stuff, but we don’t give you the ads,” said Tom Taylor, editor of Inside Radio, a daily industry newsletter owned by Clear Channel Communications, which also owns eight Washington-area stations among its 1,200 nationally.

If a program runs on AM or FM radio or on broadcast TV, content that was paid for must be disclosed under Federal Communications Commission requirements, but satellite radio providers do not operate under those constraints, Mr. Taylor said.

Mr. Cauley has no plans to file suit against New York City provider Sirius, but said a Sirius customer who heard about the XM suit expressed similar complaints.

Sirius spokesmen did not return repeated calls for comment.

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