XM Radio 2009 Annual Report Download - page 177

games for the 10-year term of XM’s contract with the NHL. We recognize these payments on a gross basis as a
principal obligor pursuant to the provisions of ASC 605, Revenue Recognition.
The estimated fair value of deferred revenue from XM Canada as of the Merger date was approximately
$34,000, and is being amortized on a straight-line basis over the remaining expected term of the agreements. As of
December 31, 2009 and 2008, the carrying value of Deferred revenue related to XM Canada was $31,568 and
$36,002, respectively.
XM has extended a Cdn$45,000 standby credit facility to XM Canada which can be utilized to purchase
terrestrial repeaters or finance the payment of subscription fees. The facility matures on December 31, 2012 and
bears interest at a rate of 17.75% per annum. XM has the right to convert unpaid principal amounts into Class A
subordinate voting shares of XM Canada at the price of Cdn$16.00 per share. As of December 31, 2009 and 2008,
amounts drawn by XM Canada on this facility in lieu of payment of subscription fees recorded in Related party
long-term assets were $18,429 and $8,311, respectively.
As of December 31, 2009 and 2008, amounts due from XM Canada (in addition to the amounts drawn on the
standby credit facility) recorded in Related party long-term assets were $6,000 and $3,750, respectively.
We recorded the following revenue from XM Canada as Other revenue in our consolidated statements of
operations, in connection with the agreements above:
2009 2008 2007
For the Years Ended
December 31,
Amortization of XM Canada deferred income .................... $ 2,776 $1,156 $—
Subscriber and activation fee royalties .......................... 11,603 97 —
Licensing fee revenue ...................................... 6,000 2,500 —
Advertising reimbursements .................................. 1,067 366 —
Total revenue from XM Canada ............................. $21,446 $4,119 $—
General Motors and American Honda
XM has a long-term distribution agreement with General Motors Company (“GM”). GM has a representative
on our board of directors and is considered a related party. During the term of the agreement, GM has agreed to
distribute the XM service. XM subsidizes a portion of the cost of XM radios and makes incentive payments to GM
when the owners of GM vehicles with installed XM radios become subscribers to XM’s service. XM also shares
with GM a percentage of the subscriber revenue attributable to GM vehicles with installed XM radios. As part of the
agreement, GM provides certain call-center related services directly to XM subscribers who are also GM customers
for which we reimburse GM.
XM makes bandwidth available to OnStar Corporation for audio and data transmissions to owners of XM-
enabled GM vehicles, regardless of whether the owner is an XM subscriber. OnStar’s use of XM’s bandwidth must
be in compliance with applicable laws, must not compete or adversely interfere with XM’s business, and must meet
XM’s quality standards. XM also granted to OnStar a certain amount of time to use XM’s studios on an annual basis
and agreed to provide certain audio content for distribution on OnStar’s services.
XM has an agreement to make a certain amount of its bandwidth available to American Honda. American
Honda has a representative on our board of directors and is considered a related party. American Honda’s use of
XM’s bandwidth must be in compliance with applicable laws, must not compete or adversely interfere with XM’s
business, and must meet XM’s quality standards. This agreement remains in effect so long as American Honda
holds a certain amount of its investment in us. XM makes incentive payments to American Honda for each
F-23
SIRIUS XM RADIO INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)