XM Radio 2015 Annual Report Download - page 100

(1) Business & Basis of Presentation
Business
We transmit music, sports, entertainment, comedy, talk, news, traffic and weather channels, as
well as infotainment services, in the United States on a subscription fee basis through our two
proprietary satellite radio systems. Subscribers can also receive music and other channels, plus
features such as SiriusXM On Demand and MySXM, over our Internet radio service, including
through applications for mobile devices. We are also a leader in providing connected vehicle
services. Our connected vehicle services are designed to enhance the safety, security and driving
experience for vehicle operators while providing marketing and operational benefits to automakers
and their dealers.
We have agreements with every major automaker (“OEMs”) to offer satellite radios in their
vehicles. We also acquire subscribers through marketing to owners and lessees of previously
owned vehicles that include factory-installed satellite radios that are not currently subscribing to our
services. Additionally, we distribute our satellite radios through retailers online and at locations
nationwide and through our website. Satellite radio services are also offered to customers of certain
rental car companies.
Our primary source of revenue is subscription fees, with most of our customers subscribing on
an annual, semi-annual, quarterly or monthly plan. We offer discounts for prepaid, longer term
subscription plans, as well as a multiple subscription discount. We also derive revenue from
activation and other fees, the sale of advertising on select non-music channels, the direct sale of
satellite radios and accessories, and other ancillary services, such as our weather, traffic and data
services.
In certain cases, a subscription to our radio services is included in the sale or lease price of
new or previously owned vehicles. The length of these subscriptions varies but is typically three to
twelve months. We receive payments for these subscriptions from certain automakers. We also
reimburse various automakers for certain costs associated with satellite radios installed in new
vehicles.
Liberty Media Corporation (“Liberty Media”) beneficially owns, directly and indirectly, over 50%
of the outstanding shares of our common stock. As a result, we are a “controlled company” for the
purposes of the NASDAQ corporate governance requirements. Liberty Media owns interests in a
range of media, communications and entertainment businesses.
Basis of Presentation
This Annual Report presents information for Sirius XM Holdings Inc. (“Holdings”). Holdings has
no operations independent of its wholly-owned subsidiary Sirius XM Radio Inc. (“Sirius XM”).
The accompanying consolidated financial statements of Holdings and its subsidiaries have been
prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant
intercompany transactions have been eliminated in consolidation. Certain numbers in our prior
period consolidated financial statements have been reclassified or consolidated to conform to our
current period presentation.
Public companies are required to disclose certain information about their reportable operating
segments. Operating segments are defined as significant components of an enterprise for which
separate financial information is available and is evaluated on a regular basis by the chief operating
decision makers in deciding how to allocate resources to an individual segment and in assessing
performance of the segment. We have determined that we have one reportable segment as our
chief operating decision maker, our Chief Executive Officer, assesses performance and allocates
resources based on the consolidated results of operations of our business.
F-9
SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars and shares in thousands, except per share amounts)