XM Radio 2008 Annual Report Download - page 16

Year Ended December 31, 2008 Compared with Year Ended December 31, 2007 and Year Ended
December 31, 2007 Compared with Year Ended December 31, 2006 — Actual
Total Revenue
Subscriber Revenue. Subscriber revenue includes subscription fees, activation fees and the effects of rebates.
•2008 vs. 2007: For the years ended December 31, 2008 and 2007, subscriber revenue was $1,543,951 and
$854,933, respectively, an increase of 81% or $689,018. The Merger was responsible for approximately
$467,489 of the increase and the remaining increase was primarily attributable to the growth of subscribers
to our services.
•2007 vs. 2006: For the years ended December 31, 2007 and 2006, subscriber revenue was $854,933 and
$575,404, respectively, an increase of 49% or $279,529. The increase was primarily attributable to the 38%
growth of subscribers to our service.
The following table contains a breakdown of our subscriber revenue for the periods presented:
2008 2007 2006
For the Years Ended December 31,
Subscription fees .................................. $1,524,758 $853,832 $572,386
Activation fees ................................... 23,025 20,878 15,612
Effect of rebates .................................. (3,832) (19,777) (12,594)
Total subscriber revenue........................... $1,543,951 $854,933 $575,404
Future subscriber revenue will be dependent upon, among other things, the growth of our subscriber base,
promotions, rebates offered to subscribers and corresponding take-rates, plan mix, subscription prices and the
identification of additional revenue streams from subscribers. Overall, we expect subscription revenue to increase
due to the inclusion of the full period results of XM.
Advertising Revenue. Advertising revenue includes the sale of advertising on our non-music channels, net of
agency fees. Agency fees are based on a stated percentage per the advertising agreements applied to gross billing
revenue.
•2008 vs. 2007: For the years ended December 31, 2008 and 2007, net advertising revenue was $47,190 and
$34,192, respectively, which represents an increase of $12,998. The Merger was responsible for approx-
imately $9,745 of the increase and the remaining increase was primarily attributable to an increase in
advertisers compared to the year ended December 31, 2007.
•2007 vs. 2006: For the years ended December 31, 2007 and 2006, net advertising revenue was $34,192 and
$31,044, respectively, an increase of $3,148.
We expect advertising revenue to grow as our subscribers increase, as we continue to improve brand awareness
and content, and as we increase the size and effectiveness of our advertising sales force. Additionally, advertising
revenue will increase as a result of the inclusion of the full period results of XM. Advertising revenue is subject to
fluctuation based on the national advertising environment.
Equipment Revenue. Equipment revenue includes revenue and royalties from the sale of SIRIUS and XM
radios, components and accessories.
•2008 vs. 2007: For the years ended December 31, 2008 and 2007, equipment revenue was $56,001 and
$29,281, respectively, which represents an increase of $26,720. The Merger was responsible for approx-
imately $18,991 of the increase and the remaining increase was primarily attributable to higher unit sales at
higher average prices.
•2007 vs. 2006: For the years ended December 31, 2007 and 2006, equipment revenue was $29,281 and
$26,798, respectively, an increase of $2,483. The increase was the result of higher sales through our direct to
consumer distribution channel, offset by the effects of promotional discounts and rebates.
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