XM Radio 2013 Annual Report Download - page 96

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands, unless otherwise stated)
(1) Business & Basis of Presentation
These are the notes to the financial statements of Sirius XM Holdings Inc. (“Holdings”) and Sirius XM
Radio Inc. (“Sirius XM”). The terms “we,” “us,” “our,” and “our company” as used herein and unless otherwise
stated or indicated by context, refer to Sirius XM Radio Inc. and its subsidiaries prior to the corporate
reorganization described below and to Sirius XM Holdings Inc. and its subsidiaries after such corporate
reorganization.
Effective November 15, 2013, we completed a corporate reorganization. As part of the reorganization,
Holdings replaced Sirius XM as our publicly held corporation and Sirius XM became a wholly-owned subsidiary
of Holdings. Holdings was incorporated in the State of Delaware on May 21, 2013. Holdings has no operations
independent of its subsidiary Sirius XM.
Business
We broadcast 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 the Internet, including through applications for mobile devices.
We have agreements with every major automaker (“OEMs”) to offer satellite radios in their vehicles from
which we acquire a majority of our subscribers. We also acquire subscribers through marketing campaigns to
owners of factory-installed satellite radios that are not currently subscribing to our services. Additionally, we
distribute our satellite radios through retail locations nationwide and through our website. Satellite radio services
are also offered to customers of certain daily 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 basis. We offer discounts for prepaid and longer term subscription plans as
well as discounts for multiple subscriptions. 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, data and Backseat TV services.
Our satellite radios are primarily distributed through automakers; retail locations nationwide; and through
our website. Satellite radio services are also offered to customers of certain rental car companies.
In certain cases, automakers and dealers include a subscription to our radio services in the sale or lease price
of new or previously owned vehicles. The length of these trial subscriptions varies but is typically three to twelve
months. We receive subscription payments for these trials from certain automakers. We also reimburse various
automakers for certain costs associated with satellite radios installed in new vehicles.
We are also a leader in providing connected vehicle applications and services. Our connected vehicle
services are designed to enhance the safety, security and driving experience for vehicle owners while providing
marketing and operational benefits to automakers and their dealers. Subscribers to our connected vehicle services
are not included in our subscriber count.
Liberty Media Corporation beneficially owns, directly and indirectly, over 50% of the outstanding shares of
our common stock. Liberty Media owns interests in a broad range of media, communications and entertainment
businesses, including its subsidiaries, Atlanta National League Baseball Club, Inc. and TruePosition, Inc., its
interests in Charter Communications, Live Nation Entertainment and Barnes & Noble, and minority equity
investments in Time Warner Inc., Time Warner Cable, and Viacom.
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