XM Radio 2012 Annual Report Download - page 3

Dear Fellow Stockholders,
I am pleased to be writing to you about our
significant accomplishments in 2012 and our exciting
outlook for 2013.
This past year proved to be a record year for our
company, as we reached significant milestones both
financially and operationally. We achieved our
highest revenue to date, at $3.4 billion, and ended the
year with nearly 24 million subscribers, giving us one
of the largest subscription bases among all US media
businesses and positioning SiriusXM as the largest
radio company in the world, ranked by revenue. Our
company achieved significant growth in its free cash
flow, up 71% to $709 million, and began returning
capital to our stockholders for the first time in its
history, with a $327 million special dividend in
December and our announced $2 billion share
repurchase program. SiriusXM stockholders were
rewarded with a 59% gain in 2012.
What continues to drive our success is our unique
content. This is the foundation of our business and
with our brand name, talent and commercial-free
offerings, we will continue to set the programming
standard across the audio entertainment industry.
SiriusXM has become the home where newsmakers
from all fields come to speak, break news and
address a highly desirable national audience. Our
music channels are independently recognized for
discovering new talent and providing the platform to
champion the next rising stars in rock, country and
electronic dance music.
In sports, in addition to our satellite channels,
SiriusXM now offers expansive online coverage. Our
subscribers can tune in to hear any events from the
NFL, MLB, NASCAR, the NBA, the NHL and
soccer, in addition to our bevy of on-air sports
commentaries and highlights. In April 2012, we
announced a multi-year deal to become the Official
Internet Radio provider of MLB.com, allowing our
subscribers access to all MLB games. With over 40
channels exclusively dedicated to sports, we can
appeal to any market across the country, and ensure
that every fan can tune in to hear his or her team
online or on the radio.
Our original music and entertainment special
programs — Artist Confidential and SiriusXM Town
Hall series — continue to draw some of the biggest
names from music, entertainment, politics, and pop
culture, and are examples of content that is
unavailable to our competitors online or on terrestrial
radio. From our studios in New York in 2012, we
delivered interviews and performances from Taylor
Swift, Alicia Keys, Willie Nelson, Aerosmith, Usher
and One Direction. Our Town Hall series does not
limit itself to just music – it also invites notable
artists, actors and leaders to discuss their craft and
careers. In 2012, we conducted interviews and
discussions with remarkable newsmakers and some
of the greats in the entertainment world, including
Quentin Tarantino, James Gandolfini, Billy Crystal,
NFL Commissioner Roger Goodell, Cardinal Dolan,
Jane Fonda, Oliver Stone, John Travolta, Alec
Baldwin and Betty White, to name only a few. In
2012, we expanded several of our content segments,
including comedy, and we will continue to push the
envelope in 2013.
We launched satellite radio over a decade ago by
selling radios through consumer electronics retailers,
such as Best Buy and Radio Shack. Next, we worked
to leverage our close relationships with automakers to
incorporate our radios in the bulk of new cars sold
today. These relationships have given us an unequaled
position in the vehicle dashboard. Last year
automakers factory-installed more than 10 million of
our radios in new cars, a penetration rate of about two
thirds. Cumulatively, automakers have installed in
excess of 50 million of our radios in cars, a number
that should climb to over 150 million in ten years.
Today we are also working to market SiriusXM to
new owners of the growing base of previously-owned
vehicles with factory-installed satellite radios.
Previously owned vehicles can be found in
approximately 75% of U.S. households and represent
approximately 75% of car sales. This channel should
provide a substantial and growing source of
subscribers for years to come.