XM Radio 2014 Annual Report Download - page 115

(1) Business & Basis of Presentation
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 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. Subscribers to our connected vehicle services are not included in our subscriber
count or subscriber-based operating metrics.
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 to owners and lessees of vehicles that include 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.
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.
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”).
Our financial statements 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, the 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
(Dollar amounts in thousands, unless otherwise stated)