XM Radio 2009 Annual Report Download - page 127

•2008 vs. 2007: For the years ended December 31, 2008 and 2007, subscriber revenue was $1,548,919 and
$854,933, respectively, an increase of 81%, or $693,986. The Merger was responsible for approximately
$472,457 of the increase and the remaining increase was primarily attributable to the growth of subscribers
to our services.
The following table contains a breakdown of our subscriber revenue for the periods presented:
2009 2008 2007
For the Years Ended December 31,
Subscription fees ................................ $2,266,809 $1,529,726 $853,832
Activation fees .................................. 21,837 23,025 20,878
Effect of rebates ................................. (1,143) (3,832) (19,777)
Total subscriber revenue ......................... $2,287,503 $1,548,919 $854,933
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.
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.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, net advertising revenue was $51,754 and
$47,190, respectively, which represents an increase of 10%, or $4,564. The increase was due to the inclusion
of XM revenue from the Merger, which was offset by a decrease in ad revenue due to the current economic
environment.
•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 38%, or $12,998. The Merger was responsible for
approximately $10,010 of the increase and the remaining increase was primarily attributable to an increase
in advertisers compared to 2007.
Our advertising revenue is subject to fluctuation based on the national economic environment. We believe
general economic conditions have negatively affected our advertising revenue in recent quarters. We expect
advertising revenue to grow as our subscribers increase, as the economy improves and as we increase the size and
effectiveness of our advertising sales force.
Equipment Revenue. Equipment revenue includes revenue and royalties from the sale of SIRIUS and XM
radios, components and accessories.
•2009 vs. 2008: For the years ended December 31, 2009 and 2008, equipment revenue was $50,352 and
$56,001, respectively, which represents a decrease of 10%, or $5,649. The decrease was primarily due to a
decrease in sales through our direct to consumer distribution channel and lower product royalties, partially
offset by the inclusion of XM revenue for a full year.
•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 91%, or $26,720. The Merger was responsible for
approximately $18,991 of the increase and the remaining increase was primarily attributable to higher unit
sales at higher average prices.
We expect equipment revenue to increase as we introduce new products and as sales grow through our direct to
consumer distribution channel.
Other Revenue. Other revenue includes the U.S. Music Royalty Fee, revenue from affiliates, content
licensing fees and syndication fees.
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