XM Radio 2009 Annual Report Download - page 110

Subscribers. At December 31, 2009, we had 18,772,758 subscribers, a decrease of 231,098 subscribers, or
1%, from the 19,003,856 subscribers as of December 31, 2008. Net subscriber additions increased 174,083, or
210%, in the three months ended December 31, 2009 compared to 2008. Net subscriber additions in our OEM
channel increased 224,173, or 103%, in the three months ended December 31, 2009 compared to 2008. Net
subscriber additions in our retail channel decreased 68,821, or 52%, in the three months ended December 31, 2009
compared to 2008. Deactivation rates for self-pay subscriptions in the quarter increased to 2.0% per month
reflecting reductions in consumer discretionary spending, subscriber response to our increase in prices for multi-
subscription accounts, channel line-up changes in 2008, the institution of a monthly charge for our upgraded
streaming service and the introduction of the U.S. Music Royalty Fee.
We ended the fourth quarter 2008 with 19,003,856 subscribers, an increase of 1,655,234 subscribers, or 10%,
from the 17,348,622 subscribers as of December 31, 2007. Net subscriber additions decreased 1,031,607, or 93%, in
the three months ended December 31, 2008 compared to 2007. Net additions in our OEM channel decreased
573,107, or 72%, in the three months ended December 31, 2008 compared to 2007. Net subscriber additions in our
retail channel decreased 446,241, or 142%, in the three months ended December 31, 2008 compared to 2007.
Deactivation rates for self-pay subscriptions in the quarter increased slightly to 1.8% per month.
ARPU. ARPU is derived from total earned subscriber revenue and net advertising revenue, divided by the
number of months in the period, divided by the daily weighted average number of subscribers for the period. See
accompanying footnotes for more details. For the three months ended December 31, 2009 and 2008, total ARPU
was $10.92 and $10.65, respectively. The increase was driven mainly by the sale of “Best of” programming,
increased rates on our multi-subscription packages and revenues earned on our internet packages, partially offset by
lower advertising revenue.
For the three months ended December 31, 2008 and 2007, total ARPU was $10.65 and $10.47, respectively.
The increase was driven by the start of our “Best of” package sales and by lower OEM inventories. These factors
were partially offset by an increase in the mix of discounted OEM promotional trials, subscriber win-back
programs, second subscribers and a decline in net advertising revenue per average subscriber.
SAC, As Adjusted, Per Gross Subscriber Addition. SAC, as adjusted, per gross subscriber addition is derived
from subscriber acquisition costs and margins from the direct sale of radios and accessories, excluding share-based
payment expense, divided by the number of gross subscriber additions for the period. See accompanying footnotes
for more details. For the three months ended December 31, 2009 and 2008, SAC, as adjusted, per gross subscriber
addition was $64 and $70, respectively. The decrease in SAC was primarily due to lower OEM subsidies, lower chip
set costs and lower aftermarket acquisition costs, partially offset by higher aftermarket inventory related charges
compared to the three months ended December 31, 2008.
For the three months ended December 31, 2008 and 2007, SAC, as adjusted, per gross subscriber addition was
$70 and $83, respectively. The decrease was primarily driven by lower retail and OEM subsidies due to better
product economics and improved equipment margin.
Customer Service and Billing Expenses, As Adjusted, Per Average Subscriber. Customer service and billing
expenses, as adjusted, per average subscriber is derived from total customer service and billing expenses, excluding
share-based payment expense, divided by the number of months in the period, divided by the daily weighted
average number of subscribers for the period. See accompanying footnotes for more details. For the three months
ended December 31, 2009 and 2008, customer service and billing expenses, as adjusted, per average subscriber was
$1.06 and $1.18, respectively. The decline was primarily due to decreases in personnel costs and customer call
center expenses.
For the three months ended December 31, 2008 and 2007, Customer service and billing expenses, as adjusted,
per average subscriber was $1.18 and $1.30, respectively. The decline was primarily due to efficiencies across a
larger subscriber base.
Adjusted Income (Loss) from Operations. We refer to net income (loss) before interest and investment
income; interest expense, net of amounts capitalized; income tax expense; loss on extinguishment of debt and credit
facilities, net; (gain) loss on investments; other expense (income); restructuring, impairments and related costs;
depreciation and amortization; and share-based payment expense as adjusted income (loss) from operations. See
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