XM Radio 2014 Annual Report Download - page 83

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As of December 31, 2014, we had 27,311,087 subscribers of which 22,522,638 were self-pay
subscribers and 4,788,449 were paid promotional subscribers. Our subscriber totals include
subscribers under our regular pricing plans; discounted pricing plans; subscribers that have prepaid,
including payments either made or due from automakers for subscriptions included in the sale or
lease price of a vehicle; subscribers to our Internet services who do not also have satellite radio
subscriptions; and certain subscribers to our weather, traffic, data and Backseat TV services who
do not also have satellite radio subscriptions.
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 vehicles 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 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.
We also have a 37% equity interest in Sirius XM Canada which offers satellite radio services in
Canada. Subscribers to the Sirius XM Canada service are not included in our subscriber count.
Results of Operations
Set forth below are our results of operations for the year ended December 31, 2014 compared
with the year ended December 31, 2013 and the year ended December 31, 2013 compared with
the year ended December 31, 2012.
2014 2013 2012 Amount % Amount %
For the Years Ended December 31,
2014 vs 2013
Change
2013 vs 2012
Change
(in thousands)
Revenue:
Subscriber revenue . . $3,554,302 $3,284,660 $2,962,665 $269,642 8% $ 321,995 11%
Advertising revenue . . 100,982 89,288 82,320 11,694 13% 6,968 8%
Equipment revenue . . 104,661 80,573 73,456 24,088 30% 7,117 10%
Other revenue . . . . . . . 421,150 344,574 283,599 76,576 22% 60,975 22%
Total revenue . . . . . . . . . . . . 4,181,095 3,799,095 3,402,040 382,000 10% 397,055 12%
Operating expenses:
Cost of services:
Revenue share
and royalties . . 810,028 677,642 551,012 132,386 20% 126,630 23%
Programming
and content . . . 297,313 290,323 278,997 6,990 2% 11,326 4%
Customer service
and billing . . . . . 370,585 320,755 294,980 49,830 16% 25,775 9%
Satellite and
transmission . . . 86,013 79,292 72,615 6,721 8% 6,677 9%
Cost of
equipment . . . . . 44,397 26,478 31,766 17,919 68% (5,288) (17)%
Subscriber acquisition
costs . . . . . . . . . . . . . . . . . . 493,464 495,610 474,697 (2,146) —% 20,913 4%
Sales and marketing. . . . . . 336,480 291,024 248,905 45,456 16% 42,119 17%
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