Six U.S. states led by Ohio are investigating Sirius XM Radio's (NASDAQ:SIRI) consumer practices, following complaints about the satellite radio company's billing practices.
The investigation began earlier this month and involves Arizona, Connecticut, Tennessee, Vermont and the District of Columbia, Sirius XM said in a filing with securities regulators on Wednesday.
The states are examining a range of allegations surrounding Sirius XM's policies on billing, customer solicitation and subscription cancellations and renewals.
The investigations come just as Sirius XM, home to programs by Howard Stern and Oprah Winfrey as well as Major League Baseball, follows a revival of sorts for the company.
It has posted three straight quarters of profit and a steady addition of subscribers, distancing itself from years of huge losses and questions about its business model.
But its aggressive push to find new subscribers and retain existing ones has come under fire by some consumers.
Complaints that have ended up in court include people on Missouri's no-call list being repeatedly contacted by Sirius XM after the customers had canceled their subscriptions.
Florida customers complained about being charged for automatic renewals of accounts they have canceled. A Sirius XM customer also sued the company last year in a Manhattan federal court for deceptively increasing its prices in breach of its subscriber contracts.
The Better Business Bureau said 3,462 complaints had been filed against Sirius XM in the past 36 months and that half of them involve billing or collection issues.
Sirius is not the first media company to face complaints from consumers over subscription policies.
In 2007, AOL (AOL.N: Quote, Profile, Research, Stock Buzz) paid a total of $3 million to 48 states and the District of Columbia, stemming from consumer complaints about AOL making it difficult for customers to close down accounts.
Sirius, in a statement, said it was cooperating with the investigations and that it believed its "consumer-related practices comply with all applicable federal and state laws and regulations."
Analysts brushed off the investigation and focused instead on the strong subscriber numbers Sirius XM released for the third quarter on Wednesday. The company added 334,727 subscribers, more than three times year-earlier levels.
"All sorts of companies go through lawsuits," said Barrington Research analyst Jim Goss. "The market hates uncertainty, but today the market seems to be enjoying these subscriber gains and high conversation rates."
Moody's also upgraded Sirius XM's debt to a B3 rating on Wednesday.
Sirius XM shares were up 4.8 percent at $1.41 in Nasdaq trading.