XM Radio 2013 Annual Report Download - page 3

Dear Fellow Stockholders,
I am pleased to report that for SiriusXM, 2013 was
another year of reaching major milestones, setting
new records for growth, and building on successful
launches of new programming and services. We look
forward to delivering profitable growth in 2014 and
more dynamic programming on our satellite and
online platforms for subscribers nationwide.
For the third consecutive year, SiriusXM was the
largest radio company in the world by revenue. In
2013, we achieved our highest revenue ever of $3.8
billion, up 12 percent over 2012, and ended the year
with a record 25.6 million subscribers, up 7 percent
over 2012. Importantly, we achieved significant free
cash flow of $927 million — up 31% year-over-year.
On a per share basis, free cash flow rose at an even
faster 41% in 2013 as we reduced our share count by
520 million shares via stock repurchases. We also
announced a doubling of our existing stock repurchase
authorization from $2 billion to $4 billion, reflecting
our Board’s commitment to returning value to
stockholders and its confidence in the long-term
prospects of the business.
We are focused on delivering the best possible audio
entertainment and in-car services to our customers. As
we move forward, our superior content continues to
drive our success and represents the core of our
business. SiriusXM is the home of the best radio on
radio, and we continue to refresh and renew our
programming lineup across our unmatched array of
sports, talk, music, entertainment and Latino channels.
We launched new full-time channels including
Entertainment Weekly Radio and Comedy Central
Radio, two of the biggest brands in media and
entertainment today, and we continue to offer our
subscribers access to special live events such as
exclusive live concerts with John Mayer, country
music superstar Kenny Chesney, and metal icons
Metallica. In 2013, we also launched SiriusXM NBA
Radio, and earlier this year re-launched our SiriusXM
PGA TOUR Radio channel with top pros, such as Ben
Crenshaw. Our extensive live coverage of major
sports ensures that fans can follow their favorite teams
and leagues in real-time, anywhere they go.
We’ve bolstered our position as the leader in music
discovery, and we’ve held private concerts for our
subscribers by emerging artists and several new artists
who got their first airplay on SiriusXM, including
Florida Georgia Line at the legendary Troubadour in
Los Angeles. Our acclaimed Town Hall series is
thriving with such recent guests as Katy Perry,
Eminem, Lady Gaga, and Pearl Jam, all appearing in a
format that allows our subscribers inches-away access
to their favorite stars and enables the creation of truly
exclusive programming for a national audience.
This great programming is now more available than
ever to new and used car buyers. SiriusXM radios
were installed in nearly 70% of new cars sold in the
U.S. in 2013, driving sales of SiriusXM enabled
vehicles to a record 10.7 million. As of the end of the
year, approximately 60 million vehicles on the road
had a factory installed satellite radio. By the end of
2017, we expect the satellite radio fleet to reach
100 million vehicles and continue growing. Many of
these vehicles will be resold in the used car market,
making our service easily available to millions of
potential new subscribers. There are approximately
106 million car-owning households in the United
States; 80% of those households have a previously-
owned vehicle. The used car market is about three
times the size of the new car market, and we now
have a network of more than 11,000 auto dealers
reporting sales of previously-owned SiriusXM
enabled vehicles to us. We are well positioned to
drive long-term growth in this segment.
In addition, we are focused on being a leader in the
next generation of connected vehicles as we deliver to
subscribers personalized services, advanced audio
offerings and more seamless integration of satellite and
IP streaming to vehicles. Last November, we
significantly expanded our commitment to lead in this
area by acquiring the connected vehicle services unit of
Agero, Inc., which will be a core part of our long-term
growth strategy in connected cars. This acquisition