XM Radio 2011 Annual Report Download - page 5

that it will be the first automaker to provide the
expanded SiriusXM channel lineup as well as
SiriusXM Latino in select 2013 model year
vehicles. Adding this functionality on the Internet
and increasing our content lineup on the satellites
are two ways we are adding value to our service
and keeping it attractive to consumers in the face
of more competition. We will continue to strive to
be the leader in audio entertainment.
•Improving Customer Service. As always, our
success starts by improving the subscriber experi-
ence — whether through new programming,
expanded access or improved customer service.
We have always focused on customer service and
in 2012 we plan to pay special attention to our
customer’s experience. We will be introducing
new technology to improve the self-help function-
ality in our customer care website and will be roll-
ing out solutions to our call center agents and
throughout our billing systems that are designed to
speed and ease each customer’s interaction with
us. Improving customer service, in ways that are
big and small, is a major focus of our management,
and I am optimistic that we will be reporting sig-
nificant improvements in the year ahead.
•SiriusXM’s Differentiator: Our Scalable Busi-
ness Model. SiriusXM continues to have a prime
place in the car’s dashboard and we have the eco-
nomic model to maintain this position and to
deliver the content consumers love. The unique
distribution of our satellite service through auto-
makers remains important, and our relationship
with these manufacturers remains strong. In fact,
in 2011 SiriusXM was factory installed in 67% of
all new vehicles, up from 62% in 2010. Our
subscription-based business model is substantially
superior to traditional advertising models and
allows us to monetize our customers far better than
other businesses that rely on advertising revenue
alone. Last year, 98% of our revenue was gen-
erated from subscriptions to our services; in com-
parison, our competitors generated a vast majority
of their revenue from advertising. In 2011, our
business model helped us generate approximately
10 times the revenue per subscriber than terrestrial
radio did per listener, and approximately 22 times
the revenue per each active user of Internet-based
audio services in 2011.
This is an exciting time for SiriusXM and we look
forward to building on our momentum in 2012. Our
focus will continue to be on increasing our record
level of subscribers, accelerating our revenue growth,
and dramatically growing our free cash flow in 2012
and beyond. We will not stop investing in program-
ming in 2012. Just this month, we announced an
agreement to add the play-by-play call of every
Major League Baseball game to our online offering,
programming that we are certain will continue to set
us apart as the leader in audio entertainment. Our
service has been built on creative and innovative
programming, and we have not forgotten that enter-
tainment is the “lifeblood” of our service. Although
we are happy with our current lineup and believe it
continues to provide a compelling value, we are
always on the hunt for the next breakout artist or
program.
Everything we accomplish and all the value we create
is built on the dedication of our outstanding team of
employees, who are focused on increasing revenue,
managing costs, and delivering profits. It is their
creativity and diligence that enables us to exceed our
goals and execute on our future growth strategy. We
run an efficient organization and our employees are
our most valuable asset. In 2011, our revenues per
employee averaged approximately $2 million, far
outdistancing terrestrial radio companies and the
largest Internet-based audio services on a revenue per
employee basis. I extend my deepest appreciation and
thanks to our employees for their continued hard
work.
It is an honor to serve SiriusXM and a thrill to think
about what can be accomplished in the year ahead
and beyond. Thank you for your confidence and
support.
Sincerely,
M EL K ARMAZIN
Chief Executive Officer
SIRIUS XM Radio