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What changed in SIRIUS XM HOLDINGS INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of SIRIUS XM HOLDINGS INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+411 added−375 removedSource: 10-K (2024-02-01) vs 10-K (2023-02-02)

Top changes in SIRIUS XM HOLDINGS INC.'s 2023 10-K

411 paragraphs added · 375 removed · 299 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

99 edited+49 added−34 removed62 unchanged
Biggest changeIn accordance with the amended and restated services and distribution agreement, the fee is payable on a monthly basis, in arrears, beginning January 1, 2022. In May 2017, Sirius XM extended a loan to Sirius XM Canada in the principal amount of $131 million.
Biggest changeSirius XM and Sirius XM Canada have entered into a services and distribution agreement pursuant to which Sirius XM Canada pays Sirius XM a variable fee evaluated annually based on comparable companies. In accordance with this services and distribution agreement, the fee is payable on a monthly basis. Sirius XM has also extended a loan to Sirius XM Canada.
Our Sirius XM business does not require a mechanical license. Pandora Business. We have arrangements with ASCAP, BMI, SESAC, GMR and a variety of other copyright owners to license the musical compositions performance rights we use on our Pandora services.
Our Sirius XM business does not require a mechanical license. Pandora Services. We have arrangements with ASCAP, BMI, SESAC, GMR and a variety of other copyright owners to license the musical compositions performance rights we use on our Pandora services.
Witz began her career in the Investment Banking Department at Kidder, Peabody & Co Inc. Scott A. Greenstein has served as our President and Chief Content Officer since May 2004. Prior to May 2004, Mr. Greenstein was Chief Executive Officer of The Greenstein Group, a media and entertainment consulting firm.
Witz began her career in the Investment Banking Department at Kidder, Peabody & Co Inc. Scott A. Greenstein has served as our President, Chief Content Officer, since May 2004. Prior to May 2004, Mr. Greenstein was Chief Executive Officer of The Greenstein Group, a media and entertainment consulting firm.
Streaming and On-Demand Competitors Streaming and on-demand services, including Amazon Prime, Apple Music, Spotify and YouTube, compete with our Sirius XM and Pandora services. Major online providers make high fidelity digital streams available at no cost or, in some cases, for less than the cost of a satellite radio subscription.
Streaming and On-Demand Competitors Streaming and on-demand services, including Amazon Prime, Apple Music, Spotify, TikTok and YouTube, compete with our Sirius XM and Pandora services. Major online providers make high fidelity digital streams available at no cost or, in some cases, for less than the cost of a satellite radio subscription.
We have agreements with major automakers to offer satellite radios in their vehicles. Satellite radios are available as a factory-installed feature in substantially all vehicle makes sold in the United States. Most automakers include a subscription to our service in the sale or lease of their new vehicles.
We have agreements with major automakers to offer satellite radios in their vehicles. Satellite radios are available as a factory-installed feature in substantially all vehicle makes sold in the United States. Most automakers include a trial subscription to our service in the sale or lease of their new vehicles.
Our Sirius XM business and our Pandora business use both statutory and direct music licenses as part of their businesses. We license varying rights - such as performance and mechanical rights - for use in our Sirius XM and Pandora businesses based on the various radio and interactive services they offer.
Our Sirius XM and Pandora services use both statutory and direct music licenses as part of their businesses. We license varying rights - such as performance and mechanical rights - for use in our Sirius XM and Pandora services based on the various radio and interactive services they offer.
We expect that 360L will be included in a majority of vehicles that include Sirius XM functionality in the future. 360L allows us to take advantage of advanced in-dash infotainment systems. 360L is intended to leverage the ubiquitous signal coverage and low delivery costs of our satellite infrastructure with the two-way communication capability of a wireless streaming service to provide consumers seamless access to our content, including our live channels, on demand service, podcasts and even more personalized music services.
We expect that 360L will be included in a majority of vehicles that include Sirius XM functionality in the future. 360L allows us to take advantage of advanced in-dash infotainment systems. 360L is intended to leverage the ubiquitous signal coverage and low delivery costs of our satellite infrastructure with the two-way communication capability of a wireless streaming service to provide consumers seamless access to our content, including our live channels, on demand service, podcasts and personalized music services.
The rates and terms permit us to reduce the payment due each month for those sound recordings directly licensed from copyright owners and exclude from our revenue certain other items, such as royalties paid to us for intellectual property, sales and use taxes, bad debt expense and generally revenue attributable to areas of our business that do not involve the use of copyrighted sound recordings.
The rates and terms permit us to reduce the payment due each month for those sound recordings that are separately licensed and sound recordings that are directly licensed from copyright owners and exclude from our revenue certain other items, such as royalties paid to us for intellectual property, sales and use taxes, bad debt expense and generally revenue attributable to areas of our business that do not involve the use of copyrighted sound recordings.
Traffic Services For our Sirius XM business, a number of providers compete with our traffic services, particularly by smartphones offering GPS mapping with sophisticated data-based turn navigation.
Traffic Services For our Sirius XM business, a number of providers compete with our traffic services, particularly smartphones offering GPS mapping with sophisticated data-based turn navigation.
SXM Media has a reach of more than 150 million listeners, and gives brands, creators, and publishers access to the largest digital audio advertising platform in North America. SXM Media also serves as the exclusive advertising representative for other third party platforms and podcasters, including such major entities as SoundCloud and NBCUniversal.
SiriusXM Media also serves as the exclusive advertising representative for other third party platforms and podcasters, including such major entities as SoundCloud and NBCUniversal. SiriusXM Media has a reach of more than 150 million listeners, and gives brands, creators, and publishers access to the largest digital audio advertising platform in North America.
We are the leading audio entertainment company in North America with a portfolio of audio businesses including our flagship subscription entertainment service, Sirius XM; the ad-supported and premium music streaming services of Pandora; a podcast network; an advertising sales group, SXM Media; and a suite of advertising technology solutions.
We are the leading audio entertainment company in North America with a portfolio of audio businesses including our flagship subscription entertainment service, Sirius XM; the ad-supported and premium music streaming services of Pandora; a podcast network; an advertising sales group, SiriusXM Media; and a suite of advertising technology solutions.
Subscription Radio Service (Pandora Plus) Our Pandora business offers Pandora Plus – an ad-free, subscription version of the radio service that includes options for replaying songs, skipping songs, offline listening, and higher quality audio on supported devices. Content provided to each listener of Pandora Plus is more tailored when the listener interacts with the platform.
Subscription Radio Service (Pandora Plus) Pandora offers Pandora Plus – an ad-free, subscription version of the radio service that includes options for replaying songs, skipping songs, offline listening, and higher quality audio on supported devices. Content provided to each listener of Pandora Plus is more tailored when the listener interacts with the platform.
Our Sirius XM Business Programming We offer a dynamic programming lineup of commercial-free music plus sports, entertainment, comedy, talk, and news, including: • an extensive selection of music genres, ranging from rock, pop and hip-hop to country, dance, jazz, Latin and classical; • live play-by-play sports from major leagues and colleges; • a multitude of talk, entertainment and comedy channels for a variety of audiences; • a wide range of national, international and financial news; and 5 Table of Contents • exclusive limited run channels.
Our Sirius XM Business Programming We offer a dynamic programming lineup of commercial-free music plus sports, entertainment, comedy, talk, and news, including: • an extensive selection of music genres, ranging from rock, pop and hip-hop to country, dance, jazz, Latin and classical; • live play-by-play sports from major leagues and colleges; • a multitude of talk, entertainment and comedy channels for a variety of audiences; • a wide range of national, international and financial news; and • exclusive limited run channels.
The changing market for musical compositions may have an adverse effect on our Sirius XM business and our Pandora business, including increasing our costs and limiting the musical works available to us. Sirius XM Business. We have arrangements with ASCAP, BMI, SESAC, and GMR to license the musical compositions we perform on our satellite radio and streaming services.
The changing market for musical compositions may have an adverse effect on our Sirius XM and Pandora services, including increasing our costs and limiting the musical works available to us. Sirius XM Service. We have arrangements with ASCAP, BMI, SESAC, and GMR to license the musical compositions we perform on our satellite radio and streaming services.
For our Pandora business, we have entered into direct license agreements with major and independent music labels and distributors for a significant majority of the sound recordings that stream on the Pandora ad-supported service, Pandora Plus and Pandora Premium.
For our Pandora services, we have entered into direct license agreements with major and independent music labels and distributors for a significant majority of the sound recordings that stream on the Pandora ad-supported service, Pandora Plus and Pandora Premium.
(“SoundExchange”), an organization which negotiates licenses, and collects and distributes royalties on behalf of record companies and performing artists. Interactive streaming services, such as Pandora Plus and Pandora Premium, do not qualify for the statutory license and those services must negotiate direct license arrangements with the owners of copyrights in sound recordings. Sirius XM Business .
(“SoundExchange”), an organization which negotiates licenses, and collects and distributes royalties on behalf of record companies and performing artists. Interactive streaming services, such as Pandora Plus and Pandora Premium, do not qualify for the statutory license and those services must negotiate direct license arrangements with the owners of copyrights in sound recordings. 14 Table of Contents Sirius XM Business .
SXM Media is the exclusive advertising sales representative for our Sirius XM, Pandora and Stitcher platforms. In addition to subscription fees, Sirius XM derives revenues from advertising on select non-music channels. Pandora’s primary source of revenue is the sale of audio, display and video advertising for connected device platforms, including computers and mobile devices.
SiriusXM Media is the exclusive advertising sales representative for our Sirius XM and Pandora platforms. In addition to subscription fees, Sirius XM derives revenues from advertising on select non-music channels. Pandora’s primary source of revenue is the sale of audio, display and video advertising for connected device platforms, including computers and mobile devices.
Our satellites are monitored, tracked and controlled by a third party satellite operator. Studios Our programming originates from studios in New York City, Los Angeles, Miami and Washington D.C. and, to a lesser extent, from smaller studios in Nashville and a variety of venues across the country. Our corporate headquarters is in New York City.
Our satellites are monitored, tracked and controlled by a third party satellite operator. 8 Table of Contents Studios Our programming originates from studios in New York City, Los Angeles, Miami, Nashville and Washington D.C. and, to a lesser extent, from smaller studios in a variety of venues across the country. Our corporate headquarters is in New York City.
The wireless streaming connection included in 360L enables enhanced search and recommendations functions, making discovery of our content in the vehicle easier. 360L also provides us data on how our subscribers use our service. 6 Table of Contents Distribution of Radios New Vehicles We distribute satellite radios through the sale and lease of new vehicles.
The wireless streaming connection included in 360L enables enhanced search and recommendations functions, making discovery of our content in the vehicle easier. 360L also provides us data on how our subscribers use our service. Distribution of Radios New Vehicles We distribute satellite radios through the sale and lease of new vehicles.
SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service. We have entered into agreements for the design and construction of four additional satellites, SXM-9, SXM-10, SXM-11 and SXM-12. We have also entered into agreements to launch two of those satellites.
SXM-7 remains in-orbit at its assigned orbital location, but is not being used to provide satellite radio service. We have entered into agreements for the design, construction and launch of four additional satellites, SXM-9, SXM-10, SXM-11 and SXM-12.
AdsWizz’s advertising technology also includes ad campaign monitoring tools and other audio advertising products, such as audio formats that enable consumers to trigger an action while listening to an ad as well as other personalization-based technology. AdsWizz’s technology is employed by Pandora in its ad-supported business as well as by third party customers.
AdsWizz’s advertising technology also includes ad campaign monitoring tools and other audio advertising products, such as audio formats that enable consumers to trigger an action while listening to an ad as well as other personalization-based technology. AdsWizz’s technology is employed by Pandora and our Off-platform business in its ad-supported business as well as by third party customers.
The transfer of such equipment, services and technical data outside the United States or to foreign persons is subject to strict export control and prior approval requirements from the United States government (including prohibitions on the sharing of certain satellite-related goods and services with China).
The transfer of such equipment, services and technical data outside the United States or to foreign persons is subject to strict export control and prior approval 13 Table of Contents requirements from the United States government (including prohibitions on the sharing of certain satellite-related goods and services with China).
We also reimburse various automakers for certain costs associated with the satellite radios installed in new vehicles, including in certain cases hardware costs, engineering expenses and promotional and advertising expenses. Previously Owned Vehicles We acquire subscribers through the sale and lease of previously owned vehicles with factory-installed satellite radios.
We also reimburse various automakers for certain costs associated with the satellite radios installed in new vehicles, including in certain cases hardware costs, engineering expenses and promotional and advertising expenses. 7 Table of Contents Previously Owned Vehicles We acquire subscribers through the sale and lease of previously owned vehicles with factory-installed satellite radios.
From September 2004 through December 2015, Mr. Verbrugge served in various senior positions for us and XM Satellite Radio Holdings Inc. Mr. Verbrugge was a consultant with The Dealy Strategy Group LLC, a management consulting firm specializing in international satellite communications and information services companies, from 1999 until 2004. Mr.
From September 2004 through December 2015, Mr. Verbrugge served in various senior positions for us and XM Satellite Radio Holdings Inc. Mr. Verbrugge was a 18 Table of Contents consultant with The Dealy Strategy Group LLC, a management consulting firm specializing in international satellite communications and information services companies, from 1999 until 2004. Mr.
Set forth below is a brief overview of the music composition and sound recording licenses employed by our Sirius XM and Pandora businesses. These music licensing arrangements are complex and the description below is only a summary of these complicated licensing schemes.
Set forth below is a brief overview of the music composition and sound recording licenses employed by our Sirius XM and Pandora services. These music licensing arrangements are complex and the description below is only a summary of these complicated licensing arrangements.
We compete against other connected vehicle service providers for automaker arrangements on the basis of innovation, service quality and reliability, technical capabilities and system customization, scope of service, industry experience, past performance and price. 11 Table of Contents Competition for Advertisers Our competition for advertisers includes large scale online advertising platforms such as Amazon, Facebook and Google; traditional media companies such as television broadcasters and national print outlets; broadcast radio providers; podcast distributors and networks; and companies in the broadcast radio market.
We compete against other connected vehicle service providers for automaker arrangements on the basis of innovation, service quality and reliability, marketing and other customer relationship management services, technical capabilities and system customization, scope of service, industry experience, past performance and price. 12 Table of Contents Competition for Advertisers Our competition for advertisers includes large scale online advertising platforms such as Amazon, Facebook and Google; traditional media companies such as television broadcasters and national print outlets; broadcast radio providers; podcast distributors and networks; and companies in the broadcast radio market.
This is reflected across the content provided to listeners, which includes channels dedicated to diverse and historically underrepresented groups, as well as broader programming celebrating such events as Black History Month, Latinx and Hispanic Heritage Month, LGBTQIA+ Pride Month, and Women’s History Month.
This is reflected across the content provided to listeners, which includes channels dedicated to diverse and historically underrepresented groups, as well as broader programming celebrating such events as Black History Month, Latinx and Hispanic 6 Table of Contents Heritage Month, LGBTQIA+ Pride Month, and Women’s History Month.
We also have arrangements with various services and consumer electronics manufacturers to include the Sirius XM streaming functionality with their service and devices. 360L Our next generation automotive platform, which we call “360L,” combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience.
In addition, we have arrangements with various services and consumer electronics manufacturers to include the Sirius XM streaming functionality with their service and devices. 360L Our advanced automotive platform, which we call “360L,” combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience.
We also derive revenue from advertising on select non-music channels, direct sales of our radios and accessories, and other ancillary services. As of December 31, 2022, our Sirius XM business had approximately 34.3 million subscribers. In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers.
We also derive revenue from advertising on select non-music channels, direct sales of our radios and accessories, and other ancillary services. As of December 31, 2023, our Sirius XM business had approximately 33.9 million subscribers. In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers.
We have agreements with many automakers to deploy our 360L interface in a variety of vehicles. In 2022, our 360L platform was included in approximately 110 vehicle models manufactured for sale in the United States.
We have agreements with many automakers to deploy our 360L interface in a variety of vehicles. In 2023, our 360L platform was included in approximately 129 vehicle models manufactured for sale in the United States.
The royalty rates under many of those direct licenses, which cover a large majority of the sound recordings that we perform on Pandora, are indexed to the statutory rates established by the CRB. Prior to the enactment of the Orrin G.
The royalty rates under many of those direct licenses, which cover a large majority of the sound recordings that we perform on Pandora, are indexed to the statutory rates established by the CRB.
In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alerts” section under the “Shareholder Services” heading at http://investor.siriusxm.com/investor-overview. Information About Our Executive Officers Certain information regarding our executive officers as of January 31, 2023 is provided below: Name Age Position Jennifer C.
In addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the “Email Alerts” section under the “Shareholder Services” heading at http://investor.siriusxm.com/investor-overview. 17 Table of Contents Information About Our Executive Officers Certain information regarding our executive officers as of January 30, 2024 is provided below: Name Age Position Jennifer C.
Holdings has no operations independent of its wholly owned subsidiaries, Sirius XM and Pandora. Relationship with Liberty Media As of December 31, 2022, Liberty Media Corporation (“Liberty Media”) beneficially owned, directly and indirectly, approximately 82% of the outstanding shares of Holdings’ common stock. Liberty Media owns interests in a range of media, communications and entertainment businesses.
Holdings has no operations independent of its wholly owned subsidiaries, Sirius XM and Pandora. Relationship with Liberty Media As of December 31, 2023, Liberty Media Corporation (“Liberty Media”) beneficially owned, directly and indirectly, 83.4% of the outstanding shares of Holdings’ common stock. Liberty Media owns interests in a range of media, communications and entertainment businesses.
We offer real-time weather services in vehicles, boats and planes. Commercial subscribers to the Sirius XM programming service are included in our subscriber count. Commercial subscribers to the Cloud Cover music programming service are not included in our subscriber count.
We offer real-time weather services in vehicles, boats and planes. Commercial subscribers to the Sirius XM and Pandora programming services are included in our subscriber counts, respectively. Commercial subscribers to the Cloud Cover music programming service are not included in our subscriber counts.
Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts and select Sirius XM content as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium).
Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists and podcasts as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported 5 Table of Contents radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium).
Our Sirius XM service also includes a library of podcasts, some of which are exclusive to our service, and other on demand content. Our streaming service is included as part of the vast majority of Sirius XM’s packages, including the Music and Entertainment and Platinum plans.
Our Sirius XM service also includes a library of podcasts, some of which are exclusive to our service, and other on demand content. Our streaming service is included as part of the vast majority of our satellite radio subscription plans, including the Music Showcase, Music and Entertainment, and Platinum plans.
Ad-Supported Radio Service Our Pandora business offers an ad-supported radio service which allows listeners to access our catalog of music, comedy, live streams and podcasts through personalized stations. This service is free across all platforms and generates stations specific to each listener. Each listener can personalize their stations by adding variety to the content.
Ad-Supported Radio Service Pandora offers an ad-supported radio service which allows listeners to access our catalog of music, comedy, live streams and podcasts through personalized stations. This service is free across all platforms and generates stations specific to each listener. Each listener can personalize their experience by adding selected artists and songs to their stations.
Under the statutory license, we may negotiate royalty arrangements with the owners of sound recordings or, if negotiation is unsuccessful, the royalty rate is established by the CRB. Sound recording rights holders, typically large record companies, are primarily 13 Table of Contents represented by SoundExchange, Inc.
Under the statutory license, we may negotiate royalty arrangements with the owners of sound recordings or, if negotiation is unsuccessful, the royalty rate is established by the Copyright Royalty Board (the “CRB”). Sound recording rights holders, typically large record companies, are primarily represented by SoundExchange, Inc.
Premium Access is also available to Pandora Plus listeners. 9 Table of Contents On-Demand Subscription Service (Pandora Premium) Our Pandora business offers Pandora Premium – an on-demand subscription service that combines the radio features of Pandora Plus with an on-demand experience.
Premium Access is also available to Pandora Plus listeners. On-Demand Subscription Service (Pandora Premium) Pandora offers Pandora Premium – an on-demand subscription service that combines the radio features of Pandora Plus with an on-demand experience.
Two of these satellites, FM-5 and FM-6, transmit our service on frequencies originally licensed by the Federal Communications Commission (the “FCC”) to Sirius, and two of these satellites, XM-5 and SXM-8, transmit our service on frequencies originally licensed by the FCC to XM. Our XM-3 and XM-4 satellites serve as spares for the XM system.
Two of these satellites, FM-5 and FM-6, transmit our service on frequencies originally licensed by the Federal Communications Commission (the “FCC”) to Sirius, and two of these satellites, XM-5 and SXM-8, transmit our service on frequencies originally licensed by the FCC to XM. Our XM-3 satellite serves as a spare for the XM system.
As of December 31, 2022, Pandora had approximately 6.2 million subscribers. The majority of revenue from our Pandora and Off-platform business is generated from advertising on our Pandora ad-supported radio service. We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers.
As of December 31, 2023, Pandora had approximately 6.0 million subscribers. The majority of revenue from our Pandora service is generated from advertising on our Pandora ad-supported radio service. We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers.
Over the past three years, SiriusXM Cares contributed to a variety of organizations which promote social equality, education, hiring, or combat racial injustice, including The Apollo Theater, The Smithsonian Institute’s National Museum of African American History and Culture, Save The Music, Huston-Tillotson University, Asian Americans Advancing Justice, South Asian Americans Leading Together, the Alliance for Women in Media, the Human Rights Campaign, TASH (an international advocacy association of people with disabilities, their family members, other advocates, and people who work in the disability field), the League of United Latin American Citizens, the Native American Rights Fund, The Warrior Alliance, the AutoNation Foundation, the St.
These organizations, which combat racial injustice, promote social equality, provide education, or facilitate hiring of underrepresented individuals, include The Apollo Theater, The Smithsonian Institute’s National Museum of African American History and Culture, Save The Music, Huston-Tillotson University, Asian Americans Advancing Justice, South Asian Americans Leading Together, the Alliance for Women in Media, the Human Rights Campaign, TASH (an international advocacy association of people with disabilities, their family members, other advocates, and people who work in the disability field), the League of United Latin American Citizens, the Native American Rights Fund, The Warrior Alliance, the AutoNation Foundation, the St.
Our Pandora business maintains a portfolio of proprietary advertising technologies which include order management, advertising serving and timing, native advertising formats, targeting and reporting. Pandora provides advertisers with the ability to target and connect with listeners based on various criteria including age, gender, geographic location and content preferences. Stitcher Stitcher licenses original podcasts from their creators and operates content networks.
Our Pandora and Off-platform business maintains a portfolio of proprietary advertising technologies which include order management, advertising serving and timing, native advertising formats, targeting and reporting. Pandora provides advertisers with the ability to target and connect with listeners based on various criteria including age, gender, geographic location and content preferences.
We have implemented a broad set of anti-harassment and discrimination policies designed to protect against discrimination based upon sex, gender, race, color, religion/religious creed, national origin, ancestry, physical or mental disability, genetic information, age, marital status, pregnancy, sexual orientation, gender identity, gender expression, sex stereotype, transgender, immigration status, military and protected veteran status, medical condition, or any basis prohibited 15 Table of Contents under federal, state or local law.
Our policies are designed to protect against discrimination based upon sex, gender, race, color, religion and religious creed, national origin, ancestry, physical or mental disability, genetic information, age, marital status, pregnancy, sexual orientation, gender identity, gender expression, sex stereotype, transgender, immigration status, military and protected veteran status, medical condition, or any basis prohibited under federal, state or local law.
Certain of these services include advanced functionality, such as personalization and customization and allow the user to access large libraries of content. These services, in some instances, are also offered through devices sold by the service providers including Apple, Google and Amazon.
Certain of these services include advanced functionality, such as personalization and customization and allow the user to access large libraries of content. These services, in some instances, are also offered through devices sold by the service providers including Apple, Google and Amazon. These services compete with our services, at home, in vehicles, and wherever audio entertainment is consumed.
Pandora Premium also includes a “share” feature where consumers can share their stations, songs, albums, podcasts or playlists through social media, messaging applications and email. SXM Media SXM Media is a combined sales group spanning our Sirius XM, Pandora, and Stitcher audio entertainment platforms and services.
Pandora Premium also includes a “share” feature where consumers can share their stations, songs, albums, podcasts or playlists through social media, messaging applications and email. 10 Table of Contents SiriusXM Media SiriusXM Media is an advertising sales group spanning our Sirius XM and Pandora audio entertainment services.
Any assignment or transfer of control of our FCC licenses must be approved by the FCC. The FCC's order approving our merger with XM Satellite Radio Holdings Inc. in July 2008 requires us to comply with certain voluntary commitments we made as part of the FCC merger proceeding. We believe we comply with those commitments.
The FCC's order approving our merger with XM Satellite Radio Holdings Inc. in July 2008 requires us to comply with certain voluntary commitments we made as part of the FCC merger proceeding. We believe we comply with those commitments.
We also offer a suite of data services that includes graphical weather, fuel prices, sports schedules and scores and movie listings, a traffic information service that includes information as to road closings, traffic flow and incident data to consumers with compatible in-vehicle navigation systems, and real-time weather services in vehicles, boats and planes. 4 Table of Contents Sirius XM also holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc.
We also offer a suite of data services that includes graphical weather, fuel prices, sports schedules and scores and movie listings, a traffic information service that includes information as to road closings, traffic flow and incident data to consumers with compatible in-vehicle navigation systems, and real-time weather services in vehicles, boats and planes.
We believe we reach a combined monthly audience of approximately 150 million listeners. We continue to expand the range of choices for our listeners – both in terms of compelling content and the array of ways in which it can be consumed.
We continue to expand the range of choices for our listeners – both in terms of compelling content and the array of ways in which it can be consumed.
In addition, our Pandora service is integrated into consumer electronic, voice-based devices and smart speakers. The Pandora service is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). Local and national advertisers deliver targeted messages to our Pandora listeners on the ad-supported service.
The Pandora service is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium). Local and national advertisers deliver targeted messages to our Pandora listeners on the ad-supported service.
From June 1997 to May 1998, he was Vice President and Deputy General Counsel of ITT Corporation, a hotel, gaming and entertainment company that was acquired by Starwood Hotels & Resorts Worldwide, Inc. in February 1998. From October 1995 to June 1997, he was assistant general counsel of ITT Corporation. Prior to October 1995, Mr.
Donnelly has served as our Executive Vice President, General Counsel and Secretary, since May 1998. From June 1997 to May 1998, he was Vice President and Deputy General Counsel of ITT Corporation, a hotel, gaming and entertainment company that was acquired by Starwood Hotels & Resorts Worldwide, Inc. in February 1998.
(“Sirius XM Canada”). Pandora and Off-platform Our Pandora and Off-platform business operates a music, comedy and podcast streaming platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through mobile devices, car speakers or connected devices.
Sirius XM also holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”). Pandora and Off-platform Our Pandora service operates a music, comedy and podcast streaming platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through mobile devices, car speakers or connected devices.
In 2022, we paid a per performance rate for the streaming of certain sound recordings of $0.0028 on our Sirius XM streaming service which increased from $0.0026 in 2021. Pandora Business.
In 2023, we paid a per performance rate for the streaming of certain sound recordings of $0.0030 on our Sirius XM streaming service which increased from $0.0028 in 2022. In 2024, we expect to pay a per performance rate for the streaming of certain sound recordings of $0.0031 on our Sirius XM streaming service. Pandora Services.
Our streaming product currently features: the broad range of music, sports, talk, news and entertainment channels available on satellite radio; access to over 200 additional music channels, which we refer to as Xtra Music Channels; and video content, including video from The Howard Stern Show and performances and interviews from Sirius XM’s archives, including in-studio performances and behind-the-scenes moments with artists, personalities and newsmakers.
Our streaming service currently features: the broad range of music, sports, talk, news and entertainment channels available on satellite radio; access to over 200 additional music channels; on-demand new and archive episodes of SiriusXM shows and specials, and video content, including video from The Howard Stern Show, encompassing in-studio performances, interviews and behind-the-scenes moments with artists, personalities and newsmakers.
In 1997, we were the winning bidders for FCC licenses to operate a satellite digital audio radio service and provide other ancillary services. Our FCC licenses for our Sirius satellites expire in 2025 and 2030. Our FCC licenses for our XM satellites expire in 2023, 2026 and 2029.
In 1997, we were the winning bidders for FCC licenses to operate a satellite digital audio radio service and provide other ancillary services.
Our Pandora business also offered a portal, “Pandora For Podcasters,” for podcasters to share their podcast with new audiences and gather data about their show. In 2022, Pandora for Podcasters migrated to a new podcaster portal, Simplecast Creator Connect. Podcasts submitted through this portal are offered to subscribers of Pandora’s ad-supported service as an additional benefit.
We also offer a portal, “Simplecast Creator Connect,” for podcasters to share their podcasts with new audiences and gather data about their shows. Podcasts submitted through this portal are offered to subscribers of Pandora’s ad-supported service as an additional benefit.
Sirius XM’s premier content bundles include live, curated and certain exclusive and on demand programming. The Sirius XM service is distributed through our two proprietary satellite radio systems and streamed via the SXM App for mobile devices, home devices and other consumer electronic equipment. Radios are primarily distributed through automakers, retailers and our website.
The Sirius XM service is distributed through our two proprietary satellite radio systems and streamed via applications for mobile devices, home devices and other consumer electronic equipment. Radios are primarily distributed through automakers, retailers and our website.
AdsWizz’s third party customers include well-known music platforms, podcasts and broadcasting groups worldwide. Simplecast Pandora, through its Simplecast business, also offers a podcast management and analytics platform.
AdsWizz’s third party customers include well-known music platforms, podcasts and broadcasting groups worldwide. Simplecast Pandora, through its Simplecast business, also offers a podcast management and analytics platform. Simplecast complements AdsWizz’s advertising technology platform, allowing the company to offer podcasters a solution for management, hosting, analytics and advertising sales.
Witz 54 Chief Executive Officer Scott A. Greenstein 63 President, Chief Content Officer Patrick L. Donnelly 61 Executive Vice President, General Counsel and Secretary Joseph Inzerillo 50 Chief Product and Technology Officer Sean S. Sullivan 55 Executive Vice President and Chief Financial Officer Joseph A. Verbrugge 53 Chief Commercial Officer Jennifer C.
Witz 55 Chief Executive Officer Scott A. Greenstein 64 President, Chief Content Officer Thomas D. Barry 57 Executive Vice President and Chief Financial Officer Patrick L. Donnelly 62 Executive Vice President, General Counsel and Secretary Joseph Inzerillo 51 Chief Product and Technology Officer Joseph A. Verbrugge 54 Chief Commercial Officer Jennifer C.
Inzerillo was the Chief Technology Officer of Major League Baseball Advanced Media, LP from 2014 through 2015, and the Senior Vice President of Multimedia Distribution of that entity from 2006 to 2014. During his tenure at Major League Baseball Advanced Media, LP, Mr. Inzerillo also served as Chief Technology Officer for Major League Baseball. Mr.
Inzerillo served as Executive Vice President & Chief Technology Officer of BAMTech Media, a distributor of direct-to-consumer video and a provider of video streaming solutions. Mr. Inzerillo was the Chief Technology Officer of Major League Baseball Advanced Media, LP from 2014 through 2015, and the Senior Vice President of Multimedia Distribution of that entity from 2006 to 2014.
In many of these areas, we have deployed terrestrial repeaters to supplement and enhance our signal coverage and, in other areas, we may deploy additional repeaters to mitigate interference. We operate over 1,000 terrestrial repeaters across the United States as part of our systems. Other Satellite Facilities. We control and communicate with our satellites from facilities in North America.
We operate over 1,000 terrestrial repeaters across the United States as part of our systems. Other Satellite Facilities. We control and communicate with our satellites from facilities in North America.
Donnelly was an attorney at the law firm of Simpson Thacher & Bartlett LLP. Joseph Inzerillo has served as our Chief Product and Technology Officer since January 2022. Prior to that, Mr. Inzerillo was the Executive Vice President & Chief Technology Officer – Disney Streaming since 2017. Prior to that, Mr.
From October 1995 to June 1997, he was assistant general counsel of ITT Corporation. Prior to October 1995, Mr. Donnelly was an attorney at the law firm of Simpson Thacher & Bartlett LLP. Joseph Inzerillo has served as our Chief Product and Technology Officer since January 2022. Prior to that, Mr.
SXM Media has a reach of more than 150 million monthly listeners, and gives brands, creators, and publishers access to the largest digital audio advertising platform in North America.
SiriusXM Media has a reach of more than 150 million monthly listeners, and gives brands, creators, and publishers access to the largest digital audio advertising platform in North America. SiriusXM Media offers advertisers the ability to execute campaigns in the United States across various platforms, including Pandora and SoundCloud.
These systems combine control of audio entertainment from a variety of sources, including AM/FM/HD radio broadcasts, satellite radio, streaming radio, smartphone applications and stored audio, with navigation and other advanced applications.
Advanced In-Dash Infotainment Systems Nearly all automakers have deployed integrated multimedia systems in dashboards, including Apple CarPlay and Android Auto. These systems combine control of audio entertainment from a variety of sources, including AM/FM/HD radio broadcasts, satellite radio, streaming radio, smartphone applications and stored audio, with other advanced applications.
See “Item 3. Legal Proceedings” of this Annual Report on Form 10-K for information on this action. Trademarks Sirius XM Business We have registered, and intend to maintain, the trademarks “Sirius”, “XM”, “SiriusXM” and “SXM” with the United States Patent and Trademark Office in connection with the services we offer.
Trademarks Sirius XM Business We have registered, and intend to maintain, the trademarks “Sirius”, “XM”, “SiriusXM” and “SXM” with the United States Patent and Trademark Office in connection with the services we offer.
Inzerillo held a variety of senior technology positions at Major League Baseball and its subsidiaries. From 2015 to 2017, Mr. Inzerillo served as Executive Vice President & Chief Technology Officer of BAMTech Media, a distributor of direct-to-consumer video and a provider of video streaming solutions. Mr.
Inzerillo was the Executive Vice President & Chief Technology Officer – Disney Streaming since 2017. Prior to that, Mr. Inzerillo held a variety of senior technology positions at Major League Baseball and its subsidiaries. From 2015 to 2017, Mr.
Subscribers to the DISH Network satellite television service are not included in our subscriber count and subscribers to our Travel Link, real-time traffic services and real-time weather services are not included in our subscriber count, unless the applicable service is purchased by the subscriber separately and not as part of a radio subscription to our service. 8 Table of Contents Sirius XM Canada Sirius XM holds a 70% equity interest and 33% voting interest in Sirius XM Canada, with the remainder of Sirius XM Canada's voting and equity interests held by two shareholders.
Subscribers to the DISH Network satellite television service are not included in our subscriber counts and subscribers to our Travel Link, real-time traffic services and real-time weather services are not included in our subscriber counts, unless the applicable service is purchased by the subscriber separately and not as part of a radio subscription to our service.
SXM Media also sells advertising on audio platforms and in podcasts unaffiliated with us and serves as the exclusive advertising representative for other third party platforms and podcasters, including such major entities as SoundCloud and NBCUniversal. SXM Media offers advertisers the ability to execute campaigns in the United States across various platforms, including Pandora and SoundCloud.
SiriusXM Media SiriusXM Media is an advertising sales group spanning our SiriusXM and Pandora audio entertainment services. SiriusXM Media also sells advertising on audio platforms and in podcasts unaffiliated with us and serves as the exclusive advertising representative for other third party platforms and podcasters, including such major entities as SoundCloud and NBCUniversal.
Changes in law or regulations relating to communications policy or to matters affecting our services could adversely affect our ability to retain our FCC licenses or the manner in which we operate. 12 Table of Contents Copyrights to Programming In connection with our businesses, we must enter into royalty arrangements with two sets of rights holders: holders of musical compositions copyrights (that is, the music and lyrics) and holders of sound recordings copyrights (that is, the actual recording of a work).
Copyrights to Programming In connection with our businesses, we must enter into royalty arrangements with two sets of rights holders: holders of musical compositions copyrights (that is, the music and lyrics) and holders of sound recordings copyrights (that is, the actual recording of a work).
Greenstein was Senior Vice President of Motion Pictures, Music, New Media and Publishing at Miramax Films, and held senior positions at Viacom Inc. Patrick L. Donnelly has served as our Executive Vice President, General Counsel and Secretary, since May 1998.
Greenstein was Senior Vice President of Motion Pictures, Music, New Media and Publishing at Miramax Films, and held senior positions at Viacom Inc. Thomas D. Barry has served as our Executive Vice President and Chief Financial Officer since April 2023 and also serves as our Chief Accounting Officer .
Stitcher earns revenue by distributing advertising on certain owned and operated podcasts as well as those created by third parties, including placement based on an advertiser’s desired target audience, and from the sale of advertising on its licensed podcasts and podcasts offered within the Stitcher App.
We earn revenue by distributing advertising on certain owned and operated podcasts as well as those created by third parties, including placement based on an advertiser’s desired target audience and from the sale of advertising on licensed podcasts. AdsWizz Through its AdsWizz subsidiary, our Pandora and Off-platform business is a leader in digital audio advertising technology.
The Pandora service utilizes content programming algorithms, data collected from listeners, and attributes of the music to predict user music preferences, play content suited to the tastes of each listener, and introduce each listener to music consistent with the consumer's preferences. The Pandora service is available on iOS and Android mobile devices, web browsers, and other internet connected devices.
Users are able to create personalized stations and playlists and search and play songs and albums on-demand. The Pandora service utilizes content programming algorithms, data collected from listeners, and attributes of the music to predict user music preferences, play content suited to the tastes of each listener, and introduce each listener to music consistent with the consumer's preferences.
In 2022, an estimated 109 million Americans listened to a podcast at least monthly. Sirius XM Our Sirius XM business features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription basis.
Sirius XM Our Sirius XM business features music, sports, entertainment, comedy, talk, news, traffic and weather channels and other content, as well as podcasts and infotainment services, in the United States on a subscription fee basis. Sirius XM’s premier content bundles include live, curated and certain exclusive and on demand programming.
That settlement set the rates at the greater of 15.1% of revenues or 26.2% of record label payments for 2023, rising over the five-year period to 15.35% of revenues or 26.2% of record label payments by 2027. That settlement was adopted by the CRB on December 30, 2022, and became effective on January 1, 2023.
For the five-year period commencing January 1, 2023 and ending December 31, 2027 Pandora agreed to pay the greater of 15.1% of revenues or 26.2% of record label payments in 2023, rising over the five-year period to 15.35% of revenues or 26.2% of record label payments by 2027.
Verbrugge has served in many senior positions during his 19-year career with us . Mr.
Verbrugge has served as our Chief Commercial Officer since June 2022 and has served in many senior positions during his 20-year career with us . Mr.
There are approximately 152 million vehicles in operation with Sirius XM radios, and the proliferation of smart speakers and other connected devices has increased the range of options consumers have for engaging with and consuming our content. We also are focused on rapidly growing content categories, such as our continued interest in podcasting.
There are approximately 160 million vehicles in operation with Sirius XM radios, and the proliferation of smart speakers and other connected devices, including our webplayer and the SiriusXM App, has increased the range of options consumers have for engaging with and consuming our content. In 2023, we began an extensive project to update our digital infrastructure.
The Pandora application is free to download and use. Our Pandora service is also available in vehicles in the United States with smartphone connectivity. Certain automakers now provide embedded streaming connectivity that supports and makes available the Pandora service in vehicles without the need for smartphone connectivity.
Certain automakers now provide embedded streaming connectivity that supports and makes available the Pandora service in vehicles without the need for smartphone connectivity. In addition, our Pandora service is integrated into consumer electronic, voice-based devices and smart speakers.
As of December 31, 2022, Sirius XM Canada had approximately 2.6 million subscribers. Sirius XM Canada’s subscribers are not included in our subscriber count or subscriber-based operating metrics. Our Pandora and Off-platform Business Pandora Media, LLC, which owns and operates our Pandora business, is a wholly owned subsidiary of Sirius XM.
Sirius XM Canada’s subscribers are not included in our subscriber count or subscriber-based operating metrics. 9 Table of Contents Our Pandora and Off-platform Business Pandora Media, LLC, which owns and operates our Pandora and Off-Platform business, is a wholly owned subsidiary of Sirius XM. Streaming Radio and On-Demand Music Services Pandora offers a personalized audio entertainment platform for each listener.
We also have registered the trademark “Pandora” in Australia, Canada, Chile, the European Union, India, Israel, Mexico, New Zealand, Switzerland, Taiwan and other countries, and the trademark “Music Genome Project” in Australia, Canada, China and New Zealand. 14 Table of Contents Human Capital Resources General As of December 31, 2022, we had 5,869 full-time and part-time employees, the overwhelming majority of which were full-time employees.
We also have registered the trademark “Pandora” in Australia, Canada, Chile, the European Union, India, Israel, Mexico, New Zealand, Switzerland, Taiwan and other countries, and the trademark “Music Genome Project” in Australia, Canada, China and New Zealand.
Construction of our SXM-9 and SXM-10 satellites is underway and those satellites are expected to be launched into geostationary orbits in 2024 and 2025, respectively. Construction of our SXM-11 and SXM-12 satellites is expected to begin shortly and those satellites are anticipated to be launched into geostationary orbits in 2026 and 2027, respectively. 7 Table of Contents Satellite Insurance.
Construction of these satellites is underway, and those satellites are expected to be launched into geostationary orbits in 2024, 2025, 2026 and 2027, respectively. Satellite Insurance. We have procured insurance for SXM-9, SXM-10, SXM-11 and SXM-12 to cover the risks associated with each satellite's launch and first year of in-orbit operation.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changePayment terms for certain podcast content typically requires more upfront cash payments, including minimum guarantees to the owner or creator of the podcast, than other content licenses or arrangements. 20 Table of Contents Given the multiple-year duration and largely fixed-cost nature of such commitments, if the attractiveness of such podcast content to our listeners and subscribers do not meet our expectations, our margins could be adversely impacted.
Biggest changeGiven the multiple-year duration and largely fixed-cost nature of such commitments, if the attractiveness of such podcast content to our listeners and subscribers do not meet our expectations, our margins could be adversely impacted. In addition, the advertising market for podcasts is still developing, including the advertising technology necessary to efficiently sell audio advertising within podcasts at scale.
Our ability to increase the number of subscribers and listeners to our services, retain our subscribers and listeners or convert listeners into subscribers, is uncertain and subject to many factors, including: • the price of our service; • the ease of use of our service; • the effectiveness of our marketing programs; • with respect to our Sirius XM service, the sale or lease rate of new vehicles in the United States; • the rate at which our self-pay subscribers to our Sirius XM service buy and sell new and used vehicles in the United States; • our ability to convince owners and lessees of new and used vehicles that include satellite radios to purchase subscriptions to our Sirius XM service; • the perceived value of our programming and the packages and services we offer; • our ability to introduce features in a manner that is favorably received by consumers; • our ability to keep up with rapidly evolving technology and features in audio entertainment; • our ability to respond to evolving consumer tastes; and 19 Table of Contents • actions by our competitors, such as Spotify, Apple, Google, Amazon and other audio entertainment and information providers.
Our ability to increase the number of subscribers and listeners to our services, retain our subscribers and listeners or convert listeners into subscribers, is uncertain and subject to many factors, including: • the price of our services; • the ease of use of our services; • the effectiveness of our marketing programs; 19 Table of Contents • with respect to our Sirius XM service, the sale or lease rate of new vehicles in the United States; • the rate at which our self-pay subscribers to our Sirius XM service buy and sell new and used vehicles in the United States; • our ability to convince owners and lessees of new and used vehicles that include satellite radios to purchase subscriptions to our Sirius XM service; • the perceived value of our programming and the packages and services we offer; • our ability to introduce features in a manner that is favorably received by consumers; • our ability to keep up with rapidly evolving technology and features in audio entertainment; • our ability to respond to evolving consumer tastes; and • actions by our competitors, such as Spotify, Apple, Google, Amazon and other audio entertainment and information providers.
Consumers purchasing or leasing used vehicles may be more price sensitive than consumers purchasing or leasing new vehicles, may convert from trial subscribers to self-paying subscribers at a lower rate, and may cancel their subscriptions more frequently than consumers purchasing or leasing new vehicles.
Consumers purchasing or leasing used vehicles may be more price sensitive than consumers purchasing or leasing new vehicles, convert from trial subscribers to self-paying subscribers at a lower rate, and cancel their subscriptions more frequently than consumers purchasing or leasing new vehicles.
Damage or interruption to our data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.
Damage or interruption to data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.
These provisions have caused, and may in the future cause, our payments under those agreements to escalate substantially. In addition, many record labels, music publishers and performing rights organizations have the right to audit our royalty payments, and these audits often result in disputes over whether we have paid the proper amounts.
These provisions have caused, and may in the future cause, our payments under those agreements to escalate substantially. In addition, SoundExchange, many record labels, music publishers and performing rights organizations have the right to audit our royalty payments, and these audits often result in disputes over whether we have paid the proper amounts.
The operation of our apps and service offerings could be impaired if errors occur in the third party software that supports our apps and services. It is difficult for us to correct any defects in third party software because the development and maintenance of the software is not within our control.
The operation of our apps and service offerings could be impaired if errors occur in the third party software that supports our apps and services. It may be difficult for us to correct any defects in third party software because the development and maintenance of the software is not within our control.
Our ability to attract and retain advertisers, and ultimately to sell our advertising inventory, depends on a number of factors, including: • the number of listener hours on the Pandora ad-supported service, particularly the number of listener hours attributable to high-value demographics; • keeping pace with changes in technology and our competitors, some of which have significant influence over the distribution of our Pandora app; • competing effectively for advertising with other dominant online services, such as Spotify, Google and Facebook, as well as other marketing and media outlets; • successfully competing for local radio advertising; 23 Table of Contents • demonstrating the ability of advertisements to reach targeted audiences, including the value of mobile digital advertising; • ensuring that new ad formats and ad product offerings are attractive to advertisers and that inventory management decisions (such as changes to ad load, frequency, prominence and quality of ads that we serve listeners) do not have a negative impact on listener hours; and • adapting to technologies designed to block the display of our ads.
Our ability to attract and retain advertisers, and ultimately to sell our advertising inventory, depends on a number of factors, including: • the number of listener hours on the Pandora ad-supported service, particularly the number of listener hours attributable to high-value demographics; • keeping pace with changes in technology and our competitors, some of which have significant influence over the distribution of our Pandora app; • competing effectively for advertising with other dominant online services, such as Spotify, Google, Facebook and YouTube, as well as other marketing and media outlets; • successfully competing for local radio advertising; • demonstrating the ability of advertisements to reach targeted audiences, including the value of mobile digital advertising; • ensuring that new ad formats and ad product offerings are attractive to advertisers and that inventory management decisions (such as changes to ad load, frequency, prominence and quality of ads that we serve listeners) do not have a negative impact on listener hours; and • adapting to technologies designed to block the display of our ads.
Natural disasters and adverse weather conditions can be caused or exacerbated by climate change. Any damage to the satellites that transmit to our terrestrial repeater networks would likely result in degradation of the affected service for some Sirius XM subscribers and could result in complete loss of Sirius XM satellite service in certain or all areas.
Natural disasters and extreme weather conditions can be caused or exacerbated by climate change. Any damage to the satellites that transmit to our terrestrial repeater networks would likely result in degradation of the affected service for some Sirius XM subscribers and could result in complete loss of Sirius XM satellite service in certain or all areas.
Our discounted pricing strategy is widely known, and this may interfere with our ability to collect our ordinary subscription prices. In addition, a substantial number of those subscribers periodically cancel their subscriptions when offered a subscription at a higher price. Our ability to profitably attract and retain subscribers to our Sirius XM service is uncertain.
Our promotional pricing strategy is widely known, and this may interfere with our ability to collect our ordinary subscription prices. In addition, a substantial number of those subscribers periodically cancel their subscriptions when offered a subscription at a higher price. Our ability to profitably attract and retain subscribers to our Sirius XM service is uncertain.
As is common in the audio entertainment industry, Pandora’s advertisers do not have long-term advertising commitments with us and can terminate their contracts at any time. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns.
As is common in the audio entertainment industry, these advertisers do not have long-term advertising commitments with us and can terminate their contracts at any time. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns.
Adverse macroeconomic conditions have affected, and may in the future affect, the demand for audio advertising, resulting in fluctuations in the amounts advertisers spend on advertising, which could harm our financial condition and operating results. Our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business.
Adverse macroeconomic conditions have affected, and may continue to affect, the demand for audio advertising, resulting in fluctuations in the amounts advertisers spend on advertising, which could harm our financial condition and operating results. Our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business.
Our subscribers and listeners can obtain similar content for free through terrestrial radio stations, YouTube and other internet services.
Our subscribers and listeners can obtain similar content for free through terrestrial radio stations, Spotify, YouTube and other internet services.
The nature of our business involves the receipt and storage of personal information about our subscribers and listeners including, in many cases, credit and debit card information. We have a program in place to detect and respond to data security incidents.
The nature of our business involves the receipt and storage of personal information about our subscribers and listeners including credit and debit card information. We have a program in place to detect and respond to data security incidents.
We are engaged in efforts to continue to convince advertisers of the capabilities and value of mobile digital advertising and to direct an increasing portion of their advertising spend to our ad-supported Pandora service. We are continuing to build our sales capability to penetrate local advertising markets, which places us in competition with terrestrial radio.
We are engaged in efforts to continue to convince advertisers of the capabilities and value of mobile digital advertising and to direct an increasing portion of their advertising spend to our ad-supported Pandora service. 24 Table of Contents We are continuing to build our sales capability to penetrate local advertising markets, which places us in competition with terrestrial radio.
Under the terms of the Copyright Royalty Board’s existing decision governing sound recording royalties for satellite radio, we are required to pay a royalty based on our gross revenues associated with our satellite radio service, subject to certain exclusions, of 15.5% per year through December 31, 2027.
Under the terms of the Copyright Royalty Board’s existing decision governing 28 Table of Contents sound recording royalties for satellite radio, we are required to pay a royalty based on our gross revenues associated with our satellite radio service, subject to certain exclusions, of 15.5% per year through December 31, 2027.
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements, except as required by law. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 31 Table of Contents
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements, except as required by law. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our business depends, in part, on various third parties, including: • manufacturers that build and distribute satellite radios; • companies that manufacture and sell integrated circuits for satellite radios; • third-party software that supports our apps and services; • programming providers, including agreements with owners of various copyrights in music, and on-air talent; • vendors that operate our call centers; • vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites and cloud-based systems we use; • Apple, who distributes our apps through its App Store and who, in the case of our Pandora service, we rely on to collect fees and approve the terms of our consumer offers; and • Google, who distributes our apps through its App Store and who, in the case of our Pandora service, we rely on to collect fees and approve the terms of our consumer offers, and who plays an important role in the fulfillment of the ads we sell on our Pandora platform.
Our business depends, in part, on various third parties, including: • creators and licensors of software that support our apps and services; • programming providers, including agreements with owners of various copyrights in music, and on-air talent; • manufacturers that build and distribute satellite radios; • companies that manufacture and sell integrated circuits for satellite radios; • vendors that operate our call centers; • vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites and the cloud-based systems we use; • Apple, who distributes our apps through its App Store and who we rely on to collect fees and approve the terms of our consumer offers; and • Google, who distributes our apps through its App Store and who we rely on to collect fees and approve the terms of our consumer offers, and who plays an important role in the fulfillment of the ads we sell on our Pandora platform.
An earthquake, hurricane, tornado, flood, cyber-attack, terrorist attack, civil unrest or other catastrophic event could damage our data centers, studios, terrestrial repeater networks or satellite uplink facilities, interrupt our services and harm our business. We also have significant operations in the San Francisco Bay Area, a region known for seismic activity.
An earthquake, hurricane, tornado, flood, cyber-attack, terrorist attack, civil unrest or other catastrophic event could damage our data centers, studios, terrestrial repeater networks or satellite uplink facilities, interrupt our services and harm our 31 Table of Contents business. We also have significant operations in the San Francisco Bay Area, a region known for seismic activity.
Products using new technologies could make our services less competitive in the marketplace. Risks Related to our Capital and Ownership Structure We have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations. As of December 31, 2022, we had an aggregate principal amount of approximately $9.5 billion of indebtedness outstanding.
Products using new technologies could make our services less competitive in the marketplace. Risks Related to our Capital and Ownership Structure We have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations. As of December 31, 2023, we had an aggregate principal amount of approximately $9.3 billion of indebtedness outstanding.
Some of our services and technologies may use “open source” software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses. 28 Table of Contents We may incorporate in some products software licensed under “open source” licenses.
Some of our services and technologies may use “open source” software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses. We may incorporate in some products software licensed under “open source” licenses.
Our ability to reach consumers with radio and television advertising, direct mail materials, email solicitations and telephone calls is an important part of our efforts and a significant factor in the effectiveness of our marketing.
Our ability to reach consumers with radio and television advertising, performance and digital media, direct mail materials, email solicitations and telephone calls is an important part of our efforts and a significant factor in the effectiveness of our marketing.
We rely on systems housed at our own premises and at those of third party vendors to enable subscribers and listeners to access our Pandora and Sirius XM services in a dependable and efficient manner. Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brands.
We rely on our own systems and systems of third party vendors to enable subscribers and listeners to access our Pandora and Sirius XM services in a dependable and efficient manner. Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brands.
Our board of directors is responsible for, among other things, the appointment of executive management, future issuances of common stock or other securities, the payment of dividends, if any, the incurrence of debt, and the approval of various transactions.
Our board of directors is responsible for, among other things, the appointment of executive management, future issuances of 30 Table of Contents common stock or other securities, the payment of dividends, if any, the incurrence of debt, and the approval of various transactions.
In addition, our AdsWizz subsidiary is headquartered in Romania and we rely on other contractors 18 Table of Contents in Eastern European countries, such as Poland. An expansion of the war in Ukraine to other countries, particularly Romania, could materially affect our ability to deliver advertisements on our Pandora services and for third parties.
Our AdsWizz subsidiary is headquartered in Romania and we rely on other contractors in Eastern European countries, such as Poland. An expansion of the war in Ukraine to other countries, particularly Romania, could materially affect our ability to deliver advertisements on our Pandora services and for third parties.
Our XM network of terrestrial repeaters communicates with a single XM satellite. If the satellites 22 Table of Contents communicating with the applicable repeater network fail unexpectedly, the services would be disrupted for several hours or longer.
Our XM network of terrestrial repeaters communicates with a single XM satellite. If the satellites communicating with the applicable repeater network fail unexpectedly, the services would be disrupted for several hours or longer.
However, the techniques used to gain unauthorized access to data systems are constantly evolving and may be difficult to detect for long periods of time. We may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information.
However, the techniques used to gain unauthorized access to data systems are constantly evolving and may not be detected for long periods of time. We may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information.
Any such litigation could be costly, divert our efforts from our business, subject us to significant liabilities to third parties, require us to seek licenses from third parties, block our ability to operate our services or license our technology, or otherwise adversely affect our ability to successfully develop and market our services.
Any such litigation could be costly, divert our efforts from our business, subject us to significant liabilities to third parties, require us to seek licenses from third parties, block our ability to 29 Table of Contents operate our services or license our technology, or otherwise adversely affect our ability to successfully develop and market our services.
We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our Sirius XM service. A substantial percentage of our Sirius XM subscribers are on discounted pricing plans 21 Table of Contents and our ability to retain these subscribers or migrate them to higher priced plans is uncertain.
We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our Sirius XM service. A substantial percentage of our Sirius XM subscribers are on promotional pricing plans and our ability to retain these subscribers or migrate them to higher priced plans is uncertain.
While we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time. 29 Table of Contents We currently pay a quarterly cash dividend to holders of our common stock, although we have no obligation to do so, and our dividend policy may change at any time without notice to our stockholders.
We currently pay a quarterly cash dividend to holders of our common stock, although we have no obligation to do so, and our dividend policy may change at any time without notice to our stockholders.
A number of factors may affect our ability to attract and retain subscribers to our Sirius XM service. Over time the changing demographics of our subscriber base, such as the increase in “Millennial generation customers,” may increase the number of subscribers accustomed to consuming entertainment through ad-supported products.
A number of factors may affect our ability to attract and retain subscribers to our Sirius XM service. The changing demographics of trialers to our service, such as the increase in “Millennial generation customers,” may increase the number of subscribers accustomed to consuming entertainment through ad-supported products.
Although we have implemented practices designed to maintain the availability of the information technology systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities. We occasionally experience unplanned outages or 26 Table of Contents technical difficulties.
Although we have implemented practices designed to maintain the availability of the information technology and service delivery systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities. We occasionally experience unplanned outages or technical difficulties.
Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business. Our Pandora business currently generates a majority of its revenues from third parties advertising on its ad-supported service.
Our Pandora and Off-platform business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business. Our Pandora and Off-platform business currently generates a majority of its revenues from third parties advertising on the Pandora ad-supported service and other platforms.
Our third party licensors may not continue to make their software available to us on acceptable terms, invest the appropriate levels of resources in their software to maintain and enhance its capabilities, or remain in business. Failure of these third party licensors could harm our streaming services.
Our third party licensors may not continue to make their software available to us on acceptable terms, invest the appropriate levels of resources in their software to maintain and enhance its capabilities, or remain in business.
The development of applications and services in spectrum adjacent to the frequencies licensed to us, as well as the combination of signals in other frequencies, may cause harmful interference to our satellite radio service in certain areas of the United States.
The development of applications and services in spectrum adjacent to the frequencies licensed to us, as well as the combination of signals in other frequencies, may cause harmful interference to our satellite radio service in certain areas of the United States. Elimination of this interference may not be possible in all cases.
These failures and anomalies are expected to continue in the ordinary course, and we cannot predict if any of these possible future events will have a material adverse effect on our operations or the life of our existing in-orbit satellites. In addition, our Sirius network of terrestrial repeaters communicates with a single third party satellite.
These failures and anomalies are expected to continue in the ordinary course, and we cannot predict if any of these possible future events will have a material adverse effect on our operations or the life of our existing in-orbit satellites.
Our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock. As of December 31, 2022, Liberty Media beneficially owned approximately 82% of Holdings’ common stock and has the ability to influence our affairs, policies and operations.
See “Business - Liberty Media Split-Off Transaction.” Our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock. As of December 31, 2023, Liberty Media beneficially owned 83.4% of Holdings’ common stock and has the ability to influence our affairs, policies and operations.
Development of our systems has depended upon the intellectual property that we have developed, as well as intellectual property licensed from third parties. If the intellectual property that we have developed or use is not adequately protected, others will be permitted to and may duplicate portions of our systems or services without liability.
If the intellectual property that we have developed or use is not adequately protected, others will be permitted to and may duplicate portions of our systems or services without liability.
We may not realize the benefits of acquisitions or other strategic investments and initiatives. Our strategy includes selective acquisitions, other strategic investments and initiatives in an effort to expand our business.
We may not realize the benefits of acquisitions or other strategic investments and initiatives. Our strategy has included and may include selective acquisitions, other strategic investments and initiatives to expand our business.
Alleged violations of laws and regulations relating to privacy and personal data may expose us to potential liability, may require us to expend significant resources in responding to and defending such allegations and claims and could in the future result in negative publicity and a loss of confidence in us by our subscribers, listeners, advertisers and other third parties with whom we do business.
Alleged violations of laws and regulations relating to privacy and personal data may expose us to potential liability, may require us to expend significant resources in responding to and defending such allegations and claims and could in the future result in negative publicity and a loss of confidence in us by our subscribers, listeners, advertisers and other third parties with whom we do business. 25 Table of Contents Privacy-related laws and regulations, such as the California Consumer Privacy Act and the European General Data Protection Regulation, are evolving and subject to potentially differing interpretations.
The size of our ad-supported listener base is an important element of our Pandora business. The decline in our listener base has resulted in fewer listener hours and available advertising spots on our Pandora service, which ultimately may result in declines in our advertising revenue, and adversely affect our Pandora business.
The decline in our listener base has resulted in fewer listener hours and available advertising spots on our Pandora service, which ultimately may result in declines in our advertising revenue, and adversely affect our Pandora and Off-platform business.
Similarly, many of these licenses provide that if the licensor loses rights in a portion of the content licensed under the agreement, that content may be removed from the license going-forward. 27 Table of Contents If Pandora fails to maintain these direct licenses, or if rights to certain music were no longer available under these licenses, then we may have to remove the affected music from Pandora’s services, or discontinue certain interactive features for such music, and it might become commercially impractical for us to operate Pandora Premium, Pandora Plus or certain features of our advertising supported service.
If Pandora fails to maintain these direct licenses, or if rights to certain music were no longer available under these licenses, then we may have to remove the affected music from Pandora’s services, or discontinue certain interactive features for such music, and it might become commercially impractical for us to operate Pandora Premium, Pandora Plus or certain features of our advertising supported service.
Such third parties may not be able to perform their obligations to us in a timely manner, if at all, as a result of their financial condition or may be relieved of their obligations to us as part of seeking bankruptcy protection.
Such third parties may not be able to perform their obligations to us in a timely manner, if at all, as a result of their financial condition or may be relieved of their obligations to us as part of seeking bankruptcy protection. We are migrating our billing system and payment processing functions to a new service provider.
Our ability to predict and select music, comedy, podcasts and other content that our listeners enjoy is important to the perceived value of our Pandora service to consumers and the failure to make accurate predictions would adversely affect our ability to attract and retain subscribers and listeners, increase listener hours and sell advertising. 24 Table of Contents Risks Relating to Laws and Governmental Regulations Privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities.
Our ability to predict and select music, comedy, podcasts and other content that our listeners enjoy is important to the perceived value of our Pandora service to consumers and the failure to make accurate predictions would adversely affect our ability to attract and retain subscribers and listeners, increase listener hours and sell advertising.
In addition, a number of third parties on which we depend have experienced, and may in the future experience, financial difficulties or file for bankruptcy protection.
Failure of these third party licensors could harm our streaming services. 20 Table of Contents In addition, a number of third parties on which we depend have experienced, and may in the future experience, financial difficulties or file for bankruptcy protection.
The integration process could distract our management, disrupt our ongoing business or result in inconsistencies in our services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the acquisition. The ongoing COVID-19 pandemic has introduced significant uncertainty to our business.
The integration process could distract our management, disrupt our ongoing business or result in inconsistencies in our services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the acquisition. 21 Table of Contents The impact of economic conditions may adversely affect our business, operating results, and financial condition.
Neither the Sirius XM App nor the Pandora App has been significantly updated in several years.
The Pandora App has not been significantly updated in several years.
Some of the factors that may influence consumer spending on entertainment include general economic conditions, the availability of discretionary income, consumer confidence, interest rates, inflationary pressure, and general uncertainty regarding the overall economic environment. The demand for entertainment generally is sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending.
Our success depends to a significant extent on discretionary consumer spending. Some of the factors that may influence consumer spending on entertainment include general economic conditions, the availability of discretionary income, consumer confidence, interest rates, inflationary pressure, and general uncertainty regarding the overall economic environment.
We have agreements with auto dealers and companies operating in the used vehicle market to provide us with data on sales of used satellite radio enabled vehicles, including in many cases the consumer’s name and address. The continuing availability of this data is important, and the loss of such data may harm our revenue and business.
Sales of used vehicles represent a significant source of new subscribers for our satellite radio service. We have agreements with auto dealers and companies operating in the used vehicle market to provide us with data on sales of used satellite radio enabled vehicles, including in many cases the consumer’s name and address.
Owners of copyrights in sound recordings have created SoundExchange, a collective organization, to collect and distribute royalties. SoundExchange is exempt by statute from certain U.S. antitrust laws and exercises significant market power in the licensing of sound recordings.
Owners of copyrights in sound recordings have created SoundExchange, an organization which negotiates licenses and collects and distributes royalties on behalf of record companies and performing artists. SoundExchange is exempt by statute from certain U.S. antitrust laws and exercises significant market power in the licensing of sound recordings.
If we are unable to reach consumers through email solicitations or telemarketing, including as a result of “spam” and email filters, call blocking technologies, consumer privacy regulations or "do-not-call" or other marketing regulations, our marketing efforts will be adversely affected. A decline in the effectiveness of our marketing efforts could have an adverse impact on our operations and financial condition.
If we are unable to reach consumers through email solicitations or telemarketing, including as a result of “spam” and email filters, call blocking technologies, restriction in digital media on identifying users, such as limits on “cookies,” consumer privacy regulations or “do-not-call” or other marketing regulations, our marketing efforts will be adversely affected.
As part of our business, we experience, and expect to experience in the future, subscriber turnover (i.e., churn). If we are unable to retain current subscribers at expected rates, or the costs of retaining subscribers are higher than expected, our financial performance and operating results could be adversely affected.
The number of subscribers to our Sirius XM service declined in 2023 and may further contract in the future. If we are unable to retain current subscribers at expected rates, or the costs of retaining subscribers are higher than expected, our financial performance and operating results could be adversely affected.
The operation of our satellite radio systems is subject to significant regulation by the FCC under authority granted through the Communications Act of 1934 and related federal law.
The transactions described under the heading “Business - Liberty Media Split-Off Transaction” involve a transfer of our FCC licenses and must be approved by the FCC. The operation of our satellite radio systems is subject to significant regulation by the FCC under authority granted through the Communications Act of 1934 and related federal law.
We are required, among other things, to operate only within specified frequencies; to coordinate our satellite radio services with radio systems operating in the same range of frequencies in neighboring countries; and to coordinate our communications links to our satellites with other systems that operate in the same frequency band. 25 Table of Contents Noncompliance by us with these requirements or other conditions or with other applicable FCC rules and regulations could result in fines, additional license conditions, license revocation or other detrimental FCC actions.
We are required, among other things, to operate only within specified frequencies; to coordinate our satellite radio services with radio systems operating in the same range of frequencies in neighboring countries; and to coordinate our communications links to our satellites with other systems that operate in the same frequency band.
We rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business.
A decline in the effectiveness of our marketing efforts could have an adverse impact on our operations and financial condition. We rely on third parties for the operation of our business, and the failure of third parties to perform could adversely affect our business.
Privacy-related laws and regulations, such as the California Consumer Privacy Act and the European General Data Protection Regulation, are evolving and subject to potentially differing interpretations. Various federal and state legislative and regulatory bodies as well as foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security-related matters.
Various federal and state legislative and regulatory bodies as well as foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security-related matters.
Any actual or perceived deterioration or weakness in general, regional or local economic conditions, as well as other adverse economic or market conditions due to COVID-19 or otherwise, could reduce our subscribers’ or potential subscribers’ discretionary income.
The demand for entertainment generally is sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending. Any actual or perceived deterioration or weakness in general, regional or local economic conditions, as well as other adverse economic or market conditions, could reduce our subscribers’ or potential subscribers’ discretionary income.
These efforts may not be successful, and we may have to expend even greater resources in our compliance efforts. Modifications to consumer protection laws, including decisions by courts and administrative agencies interpreting these laws, could have an adverse impact on our ability to attract and retain subscribers and listeners to our services.
Modifications to consumer protection laws, including laws regarding the pricing of our services and the manner in which consumers can cancel our services as well as decisions by courts and administrative agencies interpreting these laws, could have an adverse impact on our ability to attract and retain subscribers and listeners to our services.
The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our borrowings under the Credit Facility. In addition, we may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products.
In addition, our borrowings under our Senior Secured Revolving Credit Facility carry a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”). We may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products.
We may be exposed to liabilities that other entertainment service providers would not customarily be subject to. 30 Table of Contents We design, establish specifications, source or specify parts and components, and manage various aspects of the logistics of the production of satellite radios and our apps.
We design, establish specifications, source or specify parts and components, and manage various aspects of the logistics of the production of satellite radios and our apps.
A number of governmental authorities have commenced investigations into our consumer practices, including the manner in which we allow consumers to cancel subscriptions to our services. The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with consumer protection laws, including laws relating to telemarketing activities and privacy.
The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with consumer protection laws, including laws relating to telemarketing activities and privacy. These efforts may not be successful, and we may have to expend even greater resources in our compliance efforts.
Risks Relating to our Pandora Business Our Pandora ad-supported business has suffered a substantial and consistent loss of monthly active users, which may adversely affect our Pandora business. The number of monthly active users to our ad-supported Pandora business has declined consistently for several years, including in 2022, and is likely to further contract in the future.
The number of monthly active users to our ad-supported Pandora service has declined consistently for several years, including in 2023, and is likely to further contract in the future. The size of our ad-supported listener base is an important element of our Pandora service.
Our business could be adversely affected if automakers do not continue to include our Sirius XM service in their products or provide us with such data. Automotive production and sales are dependent on many factors, including the availability of vehicle components, consumer credit, general economic conditions, consumer confidence and fuel costs.
Many of these agreements also require automakers to provide us data on sales of satellite radio enabled vehicles, including in many cases the consumer’s name and address. Our business could be adversely affected if automakers do not continue to include our Sirius XM service in their products or provide us with such data.
Our business depends in part upon the auto industry. A substantial portion of the subscription growth for our satellite radio service has come from purchasers and lessees of new and used automobiles in the United States, and we expect this to be an important source of subscribers for our satellite radio service in the future.
A substantial portion of the subscription growth for our satellite radio service has come from purchasers and lessees of new and used automobiles in the United States, and we expect this to be an important source of subscribers for our satellite radio service in the future. 22 Table of Contents We have agreements with major automakers to include satellite radios in new vehicles, although these agreements do not require automakers to install specific or minimum quantities of radios in any given period.
Further, we and third parties use tracking technologies, including “cookies” and related technologies, to help us manage and track our listeners’ interactions with our services and deliver relevant advertising. Various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the collection, use, retention, sharing and security of the personal data we receive.
Various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the collection, use, retention, sharing and security of the personal data we receive.
See “ Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business . ” Risks Relating to our Sirius XM Business A substantial number of our Sirius XM service subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers.
Risks Relating to our Sirius XM Business A substantial number of our Sirius XM service subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers. As part of our business, we experience, and expect to experience in the future, subscriber turnover (i.e., churn).
Further, the development and maintenance of these measures are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. Interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business.
Further, the development and maintenance of these measures are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated. We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.
Growing our podcasting business may require additional changes to our business model and cost structure, modifications to our infrastructure, and could expose us to new regulatory, legal and reputational risks, including infringement liability. There is no guarantee that we will be able to generate sufficient revenue from podcasts to offset the costs of creating or acquiring this content.
There is no guarantee that we will be able to generate sufficient revenue from podcasts to offset the costs of creating or acquiring this content.
The war in Ukraine, and any expansion of the war in Ukraine to surrounding areas, could adversely affect our business and operations.
See “ Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business . ” We may be adversely affected by the war in Ukraine. The war in Ukraine, and any expansion of the war in Ukraine to surrounding areas, could adversely affect our business and operations.
To the extent vehicle sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, subscriber growth for our satellite radio service may be adversely impacted. Sales of used vehicles represent a significant source of new subscribers for our satellite radio service.
Automotive production and sales are dependent on many factors, including labor relations matters, the availability of vehicle components, consumer credit, general economic conditions, consumer confidence and fuel costs. To the extent vehicle sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, our satellite radio service may be adversely impacted.
We are parties to several legal proceedings arising out of various aspects of our business, including possible class actions arising out of our marketing practices. The outcome of these proceedings may not be favorable, and one or more unfavorable outcomes could have an adverse impact on our financial condition.
We are parties to several legal proceedings arising out of various aspects of our business, including possible class actions arising out of our marketing practices and governmental actions and possible class actions and mass arbitrations arising from our pricing and cancellation practices.
We receive a substantial amount of personal data on purchasers and lessees of new and used vehicles from third parties. We use this personal data to market our services. We collect and use demographic, service usage, purchase history and other information, including location information, from and about our listeners through the internet.
Risks Relating to Laws and Governmental Regulations Privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities. We receive a substantial amount of personal data on purchasers and lessees of new and used vehicles from third parties. We use this personal data to market our services.
Failure to successfully monetize and generate revenues from podcasts and other non-music content could adversely affect our business, operating results, and financial condition. Delivering podcasts and other non-music content involves risks and challenges, including increased competition and the need to develop new relationships with creators.
If our new payment processing and commerce solution does not function as provided in our agreement or access to these new systems are disrupted, our business could be adversely affected. Failure to successfully monetize and generate revenues from podcasts and other non-music content could adversely affect our business, operating results, and financial condition.
We have entered into multi-year commitments for original podcast content that is produced by third parties. These agreements generally provide us the right to distribute the content and act as the exclusive agent for the sale of advertising in the podcasts.
Delivering podcasts and other non-music content involves risks and challenges, including increased competition and the need to develop new relationships with creators. We have entered into multi-year commitments for original podcast content that is produced by third parties.
For additional information on these mechanical royalty rates, See “Business – Copyrights to Programming – Sound Recordings – Pandora Business.” Failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results.
Failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results. Development of our systems has depended upon the intellectual property that we have developed, as well as intellectual property licensed from third parties.
We face substantial competition and that competition is likely to increase over time.
See “Special Note About Forward-Looking Statements” following this Item 1A. Risk Factors. Risks Relating to our Business and Operations We face substantial competition and that competition is likely to increase over time.
Failure of our satellites would significantly damage our business.
The continuing availability of this data is important, and the loss of such data may harm our revenue and business. Failure of our satellites would significantly damage our business.
Removed
See “Special Note About Forward-Looking Statements” following this Item 1A. Risk Factors. Risks Relating to our Business and Operations We have been, and may continue to be, adversely affected by supply chain issues. The issues associated with the global supply chain for parts and components is having wide-ranging effects across multiple industries, including direct and indirect effects on our business.
Added
We are migrating our payment processing and related billing functions from a large multinational bank to a private company that offers online payment processing and commerce solutions for digital and internet businesses. Our new vendor is not a bank, bank holding company or affiliated with a large multinational bank.
Removed
Automakers are experiencing, and may continue to experience, delays in securing certain components that are essential to the production of new vehicles for a variety of reasons, including due to the global semiconductor supply shortage and the war in Ukraine. These affected automakers manufacture and sell vehicles that include our satellite radios.
Added
In addition, financial statements for our new payment processor are not publicly available and nationally recognized statistical rating organizations (such as Standard & Poor’s) have not issued ratings evaluating its creditworthiness and ability to pay.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Below is a list of the principal properties that we own or lease: Sirius XM Location Purpose Own/Lease New York, NY Corporate headquarters, office facilities and studio/production facilities Lease Washington, DC Office and studio/production facilities Own Lawrenceville, NJ Office and technical/engineering facilities Lease Deerfield Beach, FL Office and technical/engineering facilities Lease Farmington Hills, MI Office and technical/engineering facilities Lease Nashville, TN Studio/production facilities Lease Vernon, NJ Technical/engineering facilities Own Ellenwood, GA Technical/engineering facilities Lease Fredericksburg, VA Warehouse and technical/engineering facilities Lease Los Angeles, CA Office and studio/production facilities Lease Irving, TX Office and engineering facilities/call center Lease San Francisco, CA Office and engineering facilities Lease Ashburn, VA Data center Lease Miami Beach, FL Office and studio/production facilities Lease We also lease other small facilities that we use as offices for our advertising sales personnel, studios and warehouse and maintenance space.
Biggest changePROPERTIES Below is a list of the principal properties that we own or lease: Sirius XM Location Purpose Own/Lease New York, NY Corporate headquarters, office facilities and studio/production facilities Lease Washington, DC Office and studio/production facilities Own Miami Beach, FL Office and studio/production facilities Lease Los Angeles, CA Office and studio/production facilities Lease Nashville, TN Studio/production facilities Lease Lawrenceville, NJ Office and technical/engineering facilities Lease Deerfield Beach, FL Office and technical/engineering facilities Lease Farmington Hills, MI Office and technical/engineering facilities Lease Irving, TX Office and engineering facilities/call center Lease Vernon, NJ Technical/engineering facilities Own Ellenwood, GA Technical/engineering facilities Lease Fredericksburg, VA Warehouse and technical/engineering facilities Lease Ashburn, VA Data center Lease We also lease other small facilities that we use as offices for our advertising sales personnel, studios and warehouse and maintenance space.
These facilities are not material to our business or operations. ITEM 3. LEGAL PROCEEDINGS For a discussion of our “Legal Proceedings,” refer to Note 16 in the notes to our audited consolidated financial statements in this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 32 Table of Contents PART II
These facilities are not material to our business or operations. ITEM 3. LEGAL PROCEEDINGS For a discussion of our “Legal Proceedings,” refer to Note 16 in the notes to our audited consolidated financial statements in this Annual Report on Form 10-K. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 35 Table of Contents PART II
These facilities are not material to our business or operations. In addition, we lease or license space at approximately 540 locations for use in connection with the terrestrial repeater networks that support our satellite radio services. In general, these leases and licenses are for space on building rooftops and communications towers.
These facilities are not material to our business or operations. In addition, we lease or license space at approximately 530 locations for use in connection with the terrestrial repeater networks that support our satellite radio services. In general, these leases and licenses are for space on building rooftops and communications towers.
Pandora Location Purpose Own/Lease Oakland, CA Office and technical/engineering facilities Lease New York, NY Office, sales and studio/production facilities Lease Atlanta, GA Office, sales and technical/engineering facilities Lease Santa Monica, CA Office and sales facilities Lease We also lease other small facilities that we use as offices for our sales and office personnel.
Pandora and Off-platform Location Purpose Own/Lease Oakland, CA Office and technical/engineering facilities Lease New York, NY Office, sales and studio/production facilities Lease Atlanta, GA Office, sales and technical/engineering facilities Lease Santa Monica, CA Office and sales facilities Lease We also lease other small facilities that we use as offices for our sales and office personnel.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDecember 31, 2017 $ 100.00 $ 100.00 $ 100.00 $ 100.00 December 31, 2018 $ 103.03 $ 93.76 $ 89.12 $ 106.53 December 31, 2019 $ 114.76 $ 120.84 $ 119.08 $ 133.40 December 31, 2020 $ 140.05 $ 140.49 $ 156.20 $ 118.84 December 31, 2021 $ 146.74 $ 178.27 $ 197.87 $ 118.47 December 31, 2022 $ 109.72 $ 143.61 $ 110.68 $ 108.96 We determined to change the published industry index used for the required performance graph as the S&P 500 Media and Entertainment Index more appropriately reflects the companies with which we compete, including for talent. 34 Table of Contents Equity Compensation Plan Information The following table provides information about our common stock that may be issued upon exercise of options, warrants and rights under our equity compensation plans.
Biggest changeDecember 31, 2018 $ 100.00 $ 100.00 $ 100.00 December 31, 2019 $ 128.88 $ 133.63 $ 126.36 December 31, 2020 $ 149.83 $ 175.28 $ 113.57 December 31, 2021 $ 190.13 $ 222.03 $ 114.34 December 31, 2022 $ 153.16 $ 124.20 $ 110.66 December 31, 2023 $ 190.27 $ 205.63 $ 106.01 37 Table of Contents Equity Compensation Plan Information The following table provides information about our common stock that may be issued upon exercise of options, warrants and rights under our equity compensation plans.
Issuer Purchases of Equity Securities As of December 31, 2022, our board of directors had authorized us to repurchase an aggregate of $18.0 billion of our common stock and have not establish an end date for this stock repurchase program.
Issuer Purchases of Equity Securities As of December 31, 2023, our board of directors had authorized us to repurchase an aggregate of $18.0 billion of our common stock and have not establish an end date for this stock repurchase program.
(2) The weighted-average exercise price of outstanding options, warrants and rights relates solely to stock options, which are the only currently outstanding exercisable security. 35 Table of Contents ITEM 6. [RESERVED]
(2) The weighted-average exercise price of outstanding options, warrants and rights relates solely to stock options, which are the only currently outstanding exercisable security. 38 Table of Contents ITEM 6. [RESERVED]
The graph assumes that $100 was invested on December 31, 2017 in each of our common stock, the S&P 500, the NASDAQ Telecommunications Index and the S&P 500 Media & Entertainment Index . In November 2016, we paid our first quarterly dividend. Our board of directors expects to declare regular quarterly dividends.
The graph assumes that $100 was invested on December 31, 2018 in each of our common stock, the S&P 500 and the S&P 500 Media & Entertainment Index . In November 2016, we paid our first quarterly dividend. Our board of directors expects to declare regular quarterly dividends.
As of December 31, 2022, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3.7 billion shares for approximately $16.6 billion, and approximately $1.4 billion remained available under our existing $18.0 billion stock repurchase program. The size and timing of our repurchases will be based on a number of factors, including price and business and market conditions.
As of December 31, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3.7 billion shares for approximately $16.8 billion, and approximately $1.2 billion remained available under our existing $18.0 billion stock repurchase program. The size and timing of our repurchases will be based on a number of factors, including price and business and market conditions.
Stockholder Return Performance Table NASDAQ Telecommunications Index S&P 500 Index S&P 500 Media & Entertainment Index Sirius XM Holdings Inc.
Stockholder Return Performance Table S&P 500 Index S&P 500 Media & Entertainment Index Sirius XM Holdings Inc.
Plan Category (shares in millions) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans Equity compensation plans approved by security holders 219 $ 5.55 122 Equity compensation plans not approved by security holders — — — Total 219 $ 5.55 122 __________ (1) In addition to shares issuable upon exercise of stock options, amount also includes approximately 85 shares underlying restricted stock units, including performance-based restricted stock units (“PRSUs”) and dividend equivalents thereon.
Plan Category (shares in millions) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans Equity compensation plans approved by security holders 211 $ 5.60 106 Equity compensation plans not approved by security holders — — — Total 211 $ 5.60 106 __________ (1) In addition to shares issuable upon exercise of stock options, amount also includes approximately 89 shares underlying restricted stock units, including performance-based restricted stock units (“PRSUs”) and dividend equivalents thereon.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NASDAQ Global Select Market under the symbol “SIRI.” On January 31, 2023, there were approximately 6,309 record holders of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NASDAQ Global Select Market under the symbol “SIRI.” On January 30, 2024, there were approximately 6,100 record holders of our common stock.
All of these repurchases were made pursuant to our share repurchase program. 33 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURNS Set forth below is a graph comparing the cumulative performance of our common stock with the Standard & Poor's Composite-500 Stock Index, or the S&P 500, the NASDAQ Telecommunications Index, the published industry index we previously used for the purposes of the SEC rules, and the S&P 500 Media & Entertainment Index, the new published industry index we have selected to use, from December 31, 2017 to December 31, 2022.
There were no purchases of equity securities registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2023. 36 Table of Contents COMPARISON OF CUMULATIVE TOTAL RETURNS Set forth below is a graph comparing the cumulative performance of our common stock with the Standard & Poor's Composite-500 Stock Index, or the S&P 500, and the S&P 500 Media & Entertainment Index, the published industry index we use, from December 31, 2018 to December 31, 2023.
Removed
The following table provides information about our purchases of equity securities registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share (a) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a) October 1, 2022 - October 31, 2022 6,300,000 $ 6.08 6,300,000 $ 1,448,119,446 November 1, 2022 - November 30, 2022 1,200,000 $ 6.13 1,200,000 $ 1,440,768,426 December 1, 2022 - December 31, 2022 — $ — — $ 1,440,768,426 Total 7,500,000 $ 6.09 7,500,000 (a) These amounts include fees and commissions associated with the shares repurchased.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFor the Years Ended December 31, 2022 vs 2021 Change 2022 2021 Amount % Revenue Sirius XM: Subscriber revenue $ 6,370 $ 6,084 $ 286 5 % Advertising revenue 196 188 8 4 % Equipment revenue 189 201 (12) (6) % Other revenue 150 151 (1) (1) % Total Sirius XM revenue 6,905 6,624 281 4 % Pandora and Off-platform: Subscriber revenue 522 530 (8) (2) % Advertising revenue 1,576 1,542 34 2 % Total Pandora and Off-platform revenue 2,098 2,072 26 1 % Total consolidated revenue 9,003 8,696 307 4 % Cost of services Sirius XM: Revenue share and royalties 1,552 1,532 20 1 % Programming and content 546 511 35 7 % Customer service and billing 415 415 — — % Transmission 158 159 (1) (1) % Cost of equipment 13 18 (5) (28) % Total Sirius XM cost of services 2,684 2,635 49 2 % Pandora and Off-platform: Revenue share and royalties 1,250 1,140 110 10 % Programming and content 58 48 10 21 % Customer service and billing 82 86 (4) (5) % Transmission 56 59 (3) (5) % Total Pandora and Off-platform cost of services 1,446 1,333 113 8 % Total consolidated cost of services 4,130 3,968 162 4 % Subscriber acquisition costs 352 325 27 8 % Sales and marketing 1,075 1,056 19 2 % Engineering, design and development 285 265 20 8 % General and administrative 525 514 11 2 % Depreciation and amortization 536 533 3 1 % Impairment, restructuring and acquisition costs 64 20 44 nm Total operating expenses 6,967 6,681 286 4 % Income from operations 2,036 2,015 21 1 % Other (expense) income: Interest expense (422) (415) (7) (2) % Loss on extinguishment of debt — (83) 83 nm Other (expense) income (9) 9 (18) nm Total other expense (431) (489) 58 12 % Income before income taxes 1,605 1,526 79 5 % Income tax expense (392) (212) (180) (85) % Net income $ 1,213 $ 1,314 $ (101) (8) % nm - not meaningful 38 Table of Contents Sirius XM Revenue Sirius XM Subscriber Revenue includes fees charged for self-pay and paid promotional subscriptions, U.S.
Biggest changeFor the Years Ended December 31, 2023 vs 2022 Change 2023 2022 Amount % Revenue Sirius XM: Subscriber revenue $ 6,342 $ 6,370 $ (28) — % Advertising revenue 169 196 (27) (14) % Equipment revenue 193 189 4 2 % Other revenue 136 150 (14) (9) % Total Sirius XM revenue 6,840 6,905 (65) (1) % Pandora and Off-platform: Subscriber revenue 524 522 2 — % Advertising revenue 1,589 1,576 13 1 % Total Pandora and Off-platform revenue 2,113 2,098 15 1 % Total consolidated revenue 8,953 9,003 (50) (1) % Cost of services Sirius XM: Revenue share and royalties 1,603 1,552 51 3 % Programming and content 549 546 3 1 % Customer service and billing 393 415 (22) (5) % Transmission 171 158 13 8 % Cost of equipment 14 13 1 8 % Total Sirius XM cost of services 2,730 2,684 46 2 % Pandora and Off-platform: Revenue share and royalties 1,292 1,250 42 3 % Programming and content 69 58 11 19 % Customer service and billing 83 82 1 1 % Transmission 35 56 (21) (38) % Total Pandora and Off-platform cost of services 1,479 1,446 33 2 % Total consolidated cost of services 4,209 4,130 79 2 % Subscriber acquisition costs 359 352 7 2 % Sales and marketing 931 1,075 (144) (13) % Engineering, design and development 322 285 37 13 % General and administrative 550 525 25 5 % Depreciation and amortization 554 536 18 3 % Impairment, restructuring and acquisition costs 82 64 18 28 % Total operating expenses 7,007 6,967 40 1 % Income from operations 1,946 2,036 (90) (4) % Other (expense) income: Interest expense (423) (422) 1 — % Other (expense) income (5) (9) (4) (44) % Total other expense (428) (431) (3) (1) % Income before income taxes 1,518 1,605 (87) (5) % Income tax expense (260) (392) (132) (34) % Net income $ 1,258 $ 1,213 $ 45 4 % 41 Table of Contents Sirius XM Revenue Sirius XM Subscriber Revenue includes fees charged for self-pay and paid promotional subscriptions, U.S.
We expect our Pandora and Off-platform revenue share and royalties to increase based on a variety of music-related factors, including higher royalty rates under the statutory webcasting license, and additional costs associated with our podcast distribution agreements. Pandora and Off-platform Programming and Content includes costs to produce live listener events and promote content.
We expect our Pandora and Off-platform revenue share and royalties to increase based on a variety of music-related factors, including higher royalty rates under the statutory webcasting license, and additional costs associated with our podcast distribution agreements. Pandora and Off-platform Programming and Content includes costs to produce, license and promote podcast content and live listener events.
Cash Flows Used in Investing Activities Cash flows used in investing activities in the year ended December 31, 2022 were primarily due to spending for capitalized software and hardware, to construct satellites, and acquisitions for total cash consideration of $136.
Cash flows used in investing activities in the year ended December 31, 2022 were primarily due to spending for capitalized software and hardware, to construct satellites, and acquisitions for total cash consideration of $136.
We expect our Pandora and Off-platform customer service and billing costs to decrease with declines in our subscriber base. Pandora and Off-platform Transmission includes costs associated with content streaming, maintaining our streaming radio and on-demand subscription services and creating and serving advertisements through third-party ad servers.
We expect our Pandora and Off-platform customer service and billing costs to decrease with declines in the Pandora subscriber base. Pandora and Off-platform Transmission includes costs associated with content streaming, maintaining our streaming radio and on-demand subscription services and creating and serving advertisements through third-party ad servers.
Our largest source of cash provided by operating activities is cash generated by subscription and subscription-related revenues. We also generate cash from the sale of advertising through our Pandora business, advertising on certain non-music channels on Sirius XM and the sale of satellite radios, components and accessories.
Our largest source of cash provided by operating activities is cash generated by subscription and subscription-related revenues. We also generate cash from the sale of advertising through our Pandora and Off-platform business, advertising on certain non-music channels on Sirius XM and the sale of satellite radios, components and accessories.
As of December 31, 2022, the intangible assets not subject to amortization for each of our consolidated reportable segments were as follows (amounts in millions): Goodwill FCC Licenses Trademarks Total Sirius XM $ 2,290 $ 2,084 $ 250 $ 4,624 Pandora and Off-platform 959 — 312 1,271 Consolidated $ 3,249 $ 2,084 $ 562 $ 5,895 49 Table of Contents We perform our annual assessment of the recoverability of our goodwill and other nonamortizable intangible assets in the fourth quarter each year, or more frequently if events and circumstances indicate impairment may have occurred.
As of December 31, 2023, the intangible assets not subject to amortization for each of our consolidated reportable segments were as follows (amounts in millions): 52 Table of Contents Goodwill FCC Licenses Trademarks Total Sirius XM $ 2,290 $ 2,084 $ 250 $ 4,624 Pandora and Off-platform 959 — 312 1,271 Consolidated $ 3,249 $ 2,084 $ 562 $ 5,895 We perform our annual assessment of the recoverability of our goodwill and other nonamortizable intangible assets in the fourth quarter each year, or more frequently if events and circumstances indicate impairment may have occurred.
We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers. 36 Table of Contents We also sell advertising on other audio platforms and in widely distributed podcasts, which we consider to be off-platform services.
We also derive subscription revenue from our Pandora Plus and Pandora Premium subscribers. 39 Table of Contents We also sell advertising on other audio platforms and in widely distributed podcasts, which we consider to be off-platform services.
If the tax position is not more likely than not to be sustained, the gross amount of the unrecognized tax 50 Table of Contents position will not be recorded in the financial statements but will be shown in tabular format within the uncertain income tax positions.
If the tax position is not more likely than not to be sustained, the gross amount of the unrecognized tax 53 Table of Contents position will not be recorded in the financial statements but will be shown in tabular format within the uncertain income tax positions.
Shares of common stock may be purchased from time to time on the open market and in privately negotiated transactions, including in accelerated stock repurchase transactions and transactions with Liberty Media and its affiliates. We intend to fund the additional repurchases through a combination of cash on hand, cash generated by operations and future borrowings.
Shares of common stock may be purchased from time to time on the open market and in privately negotiated transactions, including in accelerated stock repurchase transactions and transactions with Liberty Media and its affiliates. We intend to fund the additional repurchases through a combination of cash on hand, cash generated by operations and future 51 Table of Contents borrowings.
Adjusted EBITDA is a Non-GAAP financial measure that excludes or adjusts for the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable).
Adjusted EBITDA is a Non-GAAP financial measure that excludes or adjusts for the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, costs associated with the Transactions, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable).
Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts and select Sirius XM content as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium).
Pandora enables listeners to create personalized stations and playlists, discover new content, hear artist- and expert-curated playlists, podcasts as well as search and play songs and albums on-demand. Pandora is available as (1) an ad-supported radio service, (2) a radio subscription service (Pandora Plus) and (3) an on-demand subscription service (Pandora Premium).
RPM - is calculated by dividing advertising revenue, excluding AdsWizz and other off-platform revenue, by the number of thousands of listener hours on our Pandora advertising-based service. 54 Table of Contents
RPM - is calculated by dividing advertising revenue, excluding AdsWizz and other off-platform revenue, by the number of thousands of listener hours on our Pandora advertising-based service. 57 Table of Contents
Cash flows used in financing activities in the year ended December 31, 2022 were primarily due to the payment of cash dividends of $1,339, the purchase and retirement of shares of our common stock under our repurchase program for $647, and payment of $114 for taxes in lieu of shares issued for share-based compensation, partially offset by net borrowings under our Credit Facility of $80 and an amendment to our Credit Facility to incorporate an Incremental Term Loan borrowing of $500 ($499 net of costs) which matures on April 11, 2024.
Cash flows used in financing activities in the year ended December 31, 2022 were primarily due to repayments under our Credit Facility of $2,220, the payment of cash dividends of $1,339, the purchase and retirement of shares of our common stock under our repurchase program for $647, and payment of $114 for taxes in lieu of shares issued for share-based compensation, partially offset by borrowings under our Credit Facility of $2,300 and an amendment to our Credit Facility to incorporate an Incremental Term Loan borrowing of $500 ($499 net of costs) which matures on April 11, 2024.
We operate two in-orbit Sirius satellites, FM-5 and FM-6, which launched in 2009 and 2013, respectively, and estimate they will operate effectively through the end of their depreciable lives in 2024 and 2028, respectively. We currently operate four in-orbit XM satellites, XM-3, XM-4, XM-5 and SXM-8.
We operate two in-orbit Sirius satellites, FM-5 and FM-6, which launched in 2009 and 2013, respectively, and estimate they will operate effectively through the end of their depreciable lives in 2024 and 2028, respectively. We currently operate three in-orbit XM satellites, XM-3, XM-5 and SXM-8.
The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods.
We consider whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods.
As of December 31, 2022, the gross liability for income taxes associated with uncertain tax positions was $198. Glossary Monthly active users - the number of distinct registered users on the Pandora services, including subscribers, which have consumed content within the trailing 30 days to the end of the final calendar month of the period.
As of December 31, 2023, the gross liability for income taxes associated with uncertain tax positions was $171. Glossary Monthly active users - the number of distinct registered users on the Pandora services, including subscribers, which have consumed content within the trailing 30 days to the end of the final calendar month of the period.
We also believe the exclusion of the legal settlements and reserves, impairment, restructuring and acquisition related costs, and loss on extinguishment of debt, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of our normal operations for the period. 51 Table of Contents Adjusted EBITDA has certain limitations in that it does not take into account the impact to our consolidated statements of comprehensive income of certain expenses, including share-based payment expense.
We also believe the exclusion of the legal settlements and reserves, impairment, restructuring and acquisition related costs, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of our normal operations for the period. 54 Table of Contents Adjusted EBITDA has certain limitations in that it does not take into account the impact to our consolidated statements of comprehensive income of certain expenses, including share-based payment expense.
We intend to continue to offer subsidies and other incentives to induce OEMs to include our technology in their vehicles. 41 Table of Contents Sales and Marketing includes costs for marketing, advertising, media and production, including promotional events and sponsorships; cooperative and artist marketing; and personnel related costs including salaries, commissions, and sales support.
We intend to continue to offer subsidies and other incentives to induce OEMs to include our technology in their vehicles. Sales and Marketing includes costs for marketing, advertising, media and production, including promotional events and sponsorships; cooperative and artist marketing; and personnel related costs including salaries, commissions, and sales support.
As of December 31, 2022, we had a valuation allowance of $113 relating to deferred tax assets that are not more likely than not to be realized due to the timing of certain state net operating loss limitations and acquired net operating losses that were not likely to be utilized.
As of December 31, 2023, we had a valuation allowance of $88 relating to deferred tax assets that are not more likely than not to be realized due to the timing of certain state net operating loss limitations and acquired net operating losses that were not likely to be utilized.
We expect engineering, design and development expenses to increase in future periods as we continue to develop our infrastructure, products and services. General and Administrative primarily consists of compensation and related costs for personnel and facilities, and include costs related to our finance, legal, human resources and information technologies departments.
We expect engineering, design and development expenses to decrease in future periods as we capitalize more investments as we continue to develop our infrastructure, products and services. General and Administrative primarily consists of compensation and related costs for personnel and facilities, and include costs related to our finance, legal, human resources and information technologies departments.
We spent $247 and $238 on capitalized software and hardware as well as $122 and $93 to construct satellites during the years ended December 31, 2022 and 2021, respectively. 47 Table of Contents Cash Flows Used in Financing Activities Cash flows used in financing activities consists of the issuance and repayment of long-term debt, the purchase of common stock under our share repurchase program, the payment of cash dividends and taxes paid in lieu of shares issued for stock-based compensation.
We spent $297 and $247 on capitalized software and hardware as well as $285 and $122 to construct satellites during the years ended December 31, 2023 and 2022, respectively. 50 Table of Contents Cash Flows Used in Financing Activities Cash flows used in financing activities consists of the issuance and repayment of long-term debt, the purchase of common stock under our share repurchase program, the payment of cash dividends and taxes paid in lieu of shares issued for stock-based compensation.
Refer to our Form 10-K for the year ended December 31, 2021 filed with the SEC on February 1, 2022 for our Non-GAAP financial and operating performance measures for the year ended December 31, 2021 compared with the year ended December 31, 2020.
Refer to our Form 10-K for the year ended December 31, 2022 filed with the SEC on February 2, 2023 for our Non GAAP financial and operating performance measures for the year ended December 31, 2022 compared with the year ended December 31, 2021.
In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units.
In evaluating goodwill on a qualitative basis, we review the business performance of each reporting unit and evaluate other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units.
Debt Covenants The indentures governing Sirius XM's senior notes and Pandora's convertible notes and the agreement governing the Sirius XM Credit Facility include restrictive covenants. As of December 31, 2022, we were in compliance with such covenants.
Debt Covenants The indentures governing Sirius XM's senior notes and the agreement governing the Sirius XM Credit Facility include restrictive covenants. As of December 31, 2023, we were in compliance with such covenants.
We also derive revenue from advertising on select non-music channels, which is sold under the SXM Media brand, direct sales of our satellite radios and accessories, and other ancillary services. As of December 31, 2022, our Sirius XM business had approximately 34.3 million subscribers. In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers.
We also derive revenue from advertising on select non-music channels, which is sold under the SiriusXM Media brand, direct sales of our satellite radios and accessories, and other ancillary services. As of December 31, 2023, our Sirius XM business had approximately 33.9 million subscribers. In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers.
As part of the analysis, the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative impairment test. Useful Life of Broadcast/Transmission System.
As part of the analysis, we also consider fair value determinations for our reporting units that have been made at various points throughout the current and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, we perform the quantitative impairment test. Useful Life of Broadcast/Transmission System.
Refer to our Form 10-K for the year ended December 31, 2021 filed with the SEC on February 1, 2022 for our cash flows for the year ended December 31, 2021 compared with the year ended December 31, 2020.
Refer to our Form 10-K for the year ended December 31, 2022 filed with the SEC on February 2, 2023 for our cash flows for the year ended December 31, 2022 compared with the year ended December 31, 2021.
Pandora and Off-platform Revenue Share and Royalties includes licensing fees paid for streaming music or other content to our subscribers and listeners as well as revenue share paid to third party ad servers.
Pandora and Off-platform Revenue Share and Royalties includes licensing fees paid for streaming music or other content related to podcasts as well as revenue share paid to third party ad servers.
During 2022, we recorded an impairment of $43 associated with terminated software projects, $16 related to certain vacated office spaces, $5 in connection with furniture and equipment located at the impaired office spaces, and $6 related to personnel severance as well as acquisition related costs of $2; partially offset by $8 from the gain on sale of real estate.
During 2022, we recorded an impairment of $43 associated with terminated software projects, $16 related to certain vacated office spaces, $5 in connection with furniture and equipment located at the impaired office spaces, and $6 related to personnel severance as well as acquisition related costs of $2; partially offset by $8 from the gain on the sale of real estate. 45 Table of Contents Other Income (Expense) Interest Expense includes interest on outstanding debt.
Impairment, Restructuring and Acquisition Costs represents impairment charges, net of insurance recoveries, associated with the carrying amount of an asset exceeding the asset's fair value, restructuring expenses associated with the abandonment of certain leased office spaces and acquisition costs. For the years ended December 31, 2022 and 2021, impairment, restructuring, and acquisition costs were $64 and $20, respectively.
Impairment, Restructuring and Acquisition Costs represents impairment charges, associated with the carrying amount of an asset exceeding the asset's fair value, restructuring expenses associated with the abandonment of certain leased office spaces, acquisition costs and costs associated with the Transactions. For the years ended December 31, 2023 and 2022, impairment, restructuring, and acquisition costs were $82 and $64, respectively.
For the years ended December 31, 2022 and 2021, other (expense) income was $(9) and $9, respectively. Other expense for the year ended December 31, 2022, was primarily driven by trading losses associated with the investments held for our Deferred Compensation Plan.
For the years ended December 31, 2023 and 2022, other (expense) income was $(5) and $(9), respectively. Other expense for the year ended December 31, 2023, was primarily driven by losses associated with certain investments, partially offset by trading gains associated with the investments held for our Deferred Compensation Plan.
Our effective tax rate of 13.9% for the year ended December 31, 2021 was primarily impacted by federal and state income tax expense, partially offset by settlements with various states as well as a benefit related to research and development and certain other credits. 43 Table of Contents Key Financial and Operating Performance Metrics In this section, we present certain financial performance measures, some of which are presented as Non-GAAP items, which include free cash flow and adjusted EBITDA.
Our effective tax rate of 24.4% for the year ended December 31, 2022 was primarily impacted by federal and state income tax expense as well as changes in state valuation allowance, partially offset by a benefit related to research and development and certain other credits. 46 Table of Contents Key Financial and Operating Performance Metrics In this section, we present certain financial performance measures, some of which are presented as Non-GAAP items, which include free cash flow and adjusted EBITDA.
For the years ended December 31, 2022 and 2021, engineering, design and development expenses were $285 and $265, respectively, an increase of 8%, or $20, and increased as a percentage of total revenue. The increase was driven primarily by higher cloud hosting costs as well as higher personnel-related costs.
For the years ended December 31, 2023 and 2022, engineering, design and development expenses were $322 and $285, respectively, an increase of 13%, or $37, and increased as a percentage of total revenue. The increase was driven primarily by higher cloud hosting and personnel-related costs.
Refer to our Form 10-K for the year ended December 31, 2021 filed with the SEC on February 1, 2022 for our results of operations for the year ended December 31, 2021 compared with the year ended December 31, 2020.
Refer to our Form 10-K for the year ended December 31, 2022 filed with the SEC on February 2, 2023 for our results of operation for the year ended December 31, 2022 compared with the year ended December 31, 2021.
We monitor the operating condition of our in-orbit satellites and if events or circumstances indicate that the depreciable lives of our in-orbit satellites have changed, we will modify the depreciable life accordingly. If we were to revise our estimates, our depreciation expense would change. Income Taxes.
Our in-orbit satellites may experience component failures which could adversely affect their useful lives. We monitor the operating condition of our in-orbit satellites and if events or circumstances indicate that the depreciable lives of our in-orbit satellites have changed, we will modify the depreciable life accordingly. If we were to revise our estimates, our depreciation expense would change. Income Taxes.
We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash flows related to acquisitions, strategic and short-term investments, net loan activity with related parties and other equity investees, and proceeds from the sale of real estate.
We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash flows related to acquisitions, strategic and short-term investments, including tax efficient investments in clean energy as well as net loan activity with related parties and other equity investees.
We expect our Sirius XM customer service and billing expenses to remain relatively flat. Sirius XM Transmission consists of costs associated with the operation and maintenance of our terrestrial repeater networks; satellites; satellite telemetry, tracking and control systems; satellite uplink facilities; studios; and delivery of our Internet and 360L streaming and connected vehicle services.
Sirius XM Transmission consists of costs associated with the operation and maintenance of our terrestrial repeater networks; satellites; satellite telemetry, tracking and control systems; satellite uplink facilities; studios; and delivery of our Internet and 360L streaming and connected vehicle services.
EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA excludes or adjusts for the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable).
Adjusted EBITDA excludes or adjusts for the impact of other expense (income), loss on extinguishment of debt, impairment, restructuring and acquisition costs, costs associated with the Transactions, other non-cash charges such as share-based payment expense, and legal settlements and reserves (if applicable).
Marketing costs include expenses related to direct mail, outbound telemarketing, email communications, social media, television and performance media. For the years ended December 31, 2022 and 2021, sales and marketing expenses were $1,075 and $1,056, respectively, an increase of 2%, or $19, but decreased as a percentage of total revenue.
Marketing costs include expenses related to direct mail, outbound telemarketing, email communications, social media, television and performance media. For the years ended December 31, 2023 and 2022, sales and marketing expenses were $931 and $1,075, respectively, a decrease of 13%, or $144, and decreased as a percentage of total revenue.
We expect our Pandora and Off-platform programming and content costs to increase as we offer additional programming and produce live listener events and promotions. Pandora and Off-platform Customer Service and Billing includes transaction fees on subscription purchases through mobile app stores and bad debt expense.
We expect our Pandora and Off-platform programming and content costs to remain flat as lower personnel-related costs are offset by additional programming and live listener events and promotions. Pandora and Off-platform Customer Service and Billing includes transaction fees on subscription purchases through mobile app stores and bad debt expense.
Free cash flow is calculated as follows: For the Years Ended December 31, 2022 2021 Cash Flow information Net cash provided by operating activities $ 1,976 $ 1,998 Net cash used in investing activities (548) (200) Net cash used in financing activities (1,562) (1,682) Free Cash Flow Net cash provided by operating activities 1,976 1,998 Additions to property and equipment (426) (388) Sale (purchases) of other investments 1 (4) Satellite insurance recoveries — 225 Free cash flow $ 1,551 $ 1,831 ARPU - Sirius XM ARPU is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services) and advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.
Free cash flow is calculated as follows: For the Years Ended December 31, 2023 2022 Cash Flow information Net cash provided by operating activities $ 1,850 $ 1,976 Net cash used in investing activities (686) (548) Net cash used in financing activities (1,005) (1,562) Free Cash Flow Net cash provided by operating activities 1,850 1,976 Additions to property and equipment (650) (426) Sales of other investments 3 1 Free cash flow $ 1,203 $ 1,551 ARPU - Sirius XM ARPU is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services) and advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.
Our effective tax rate of 24.4% for the year ended December 31, 2022 was primarily impacted by federal and state income tax expense as well as changes in state valuation allowance, partially offset by a benefit related to research and development and certain other credits.
Our effective tax rate of 17.1% for the year ended December 31, 2023 was primarily driven by federal and state income tax expense, partially offset by the benefits related to research and development and certain other credits, as well as a release in state valuation allowance.
We expect our general and administrative expenses to remain relatively flat. Depreciation and Amortization represents the recognition in earnings of the cost of assets used in operations, including our satellite constellations, property, equipment and intangible assets, over their estimated service lives.
Depreciation and Amortization represents the recognition in earnings of the cost of assets used in operations, including our satellite constellations, property, equipment and intangible assets, over their estimated service lives.
We expect our Sirius XM cost of equipment to remain relatively flat. 40 Table of Contents Pandora and Off-platform Cost of Services Pandora and Off-platform Cost of Services includes revenue share and royalties, programming and content, customer service and billing, and transmission expenses.
We expect our Sirius XM cost of equipment to decrease as aftermarket sales decline. 43 Table of Contents Pandora and Off-platform Cost of Services Pandora and Off-platform Cost of Services includes revenue share and royalties, programming and content, customer service and billing, and transmission expenses.
Our XM-3 satellite launched in 2005 and our XM-4 satellite launched in 2006 are used as in-orbit spares and reached the end of their depreciable lives in 2020 and 2021, respectively. Our XM-5 satellite was launched in 2010 and is expected to reach the end of its depreciable life in 2025.
Our XM-3 satellite was launched in 2005 and is used as an in-orbit spare and reached the end of its depreciable life in 2020. Our XM-5 satellite was launched in 2010 and is expected to reach the end of its depreciable life in 2025.
ARPU is derived from total earned subscriber revenue (excluding revenue derived from our connected vehicle services) and net advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.
The increase was driven by higher vehicle related churn, partially offset by lower non-pay churn. ARPU is derived from total earned subscriber revenue (excluding revenue derived from our connected vehicle services) and net advertising revenue, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period.
As of December 31, 2022, Pandora had approximately 6.2 million subscribers. The majority of revenue from Pandora is generated from advertising on our Pandora ad-supported radio service which is sold under the SXM Media brand.
As of December 31, 2023, Pandora had approximately 46.0 million monthly active users and 6.0 million subscribers. The majority of revenue from Pandora is generated from advertising on our Pandora ad-supported radio service which is sold under the SiriusXM Media brand.
At December 31, 2022, Pandora had approximately 47,638 monthly active users, a decrease of 4,637 monthly active users, or 9%, from the 52,275 monthly active users as of December 31, 2021. The decrease in monthly active users was driven by an increase in ad-supported listener churn and a decrease in the number of new users. Subscribers.
At December 31, 2023, Pandora had approximately 46,026 monthly active users, a decrease of 1,612 monthly active users, or 3%, from the 47,638 monthly active users as of December 31, 2022. The decrease in monthly active users was driven by an increase in ad-supported listener churn and a decline in the number of new users. Subscribers.
For the years ended December 31, 2022 and 2021, income tax expense was $392 and $212, respectively, and our effective tax rate was 24.4% and 13.9%, respectively.
For the years ended December 31, 2023 and 2022, income tax expense was $260 and $392, respectively, and our effective tax rate was 17.1% and 24.4%, respectively.
As of December 31, 2022, $80 was outstanding under our Credit Facility and $1,670 was available for future borrowing under our Credit Facility.
As of December 31, 2023, no amount was outstanding under our Credit Facility and $1,750 was available for future borrowing under our Credit Facility.
The reconciliation of net income to the adjusted EBITDA is calculated as follows: For the Years Ended December 31, 2022 2021 Net income: $ 1,213 $ 1,314 Add back items excluded from Adjusted EBITDA: Impairment, restructuring and acquisition costs 64 20 Share-based payment expense (1) 197 202 Depreciation and amortization 536 533 Interest expense 422 415 Loss on extinguishment of debt — 83 Other expense (income) 9 (9) Income tax expense 392 212 Adjusted EBITDA $ 2,833 $ 2,770 (1) Allocation of share-based payment expense: For the Years Ended December 31, 2022 2021 Programming and content $ 34 $ 33 Customer service and billing 6 6 Transmission 6 6 Sales and marketing 52 58 Engineering, design and development 39 36 General and administrative 60 63 Total share-based payment expense $ 197 $ 202 52 Table of Contents Free cash flow - is derived from cash flow provided by operating activities plus insurance recoveries on our satellites, net of additions to property and equipment and purchases of other investments.
The reconciliation of net income to the adjusted EBITDA is calculated as follows: For the Years Ended December 31, 2023 2022 Net income: $ 1,258 $ 1,213 Add back items excluded from Adjusted EBITDA: Legal settlements and reserves 24 — Impairment, restructuring and acquisition costs 82 64 Share-based payment expense (1) 184 197 Depreciation and amortization 554 536 Interest expense 423 422 Other expense 5 9 Income tax expense 260 392 Adjusted EBITDA $ 2,790 $ 2,833 (1) Allocation of share-based payment expense: For the Years Ended December 31, 2023 2022 Programming and content $ 34 $ 34 Customer service and billing 5 6 Transmission 6 6 Sales and marketing 45 52 Engineering, design and development 46 39 General and administrative 48 60 Total share-based payment expense $ 184 $ 197 55 Table of Contents Free cash flow - is derived from cash flow provided by operating activities, net of additions to property and equipment and purchases of other investments.
We expect Pandora and Off-platform subscriber revenues to decline slightly. Pandora and Off-platform Advertising Revenue is generated primarily from audio, display and video advertising from on-platform and off-platform advertising. For the years ended December 31, 2022 and 2021, Pandora and Off-platform advertising revenue was $1,576 and $1,542, respectively, an increase of 2%, or $34.
Pandora and Off-platform Advertising Revenue is generated primarily from audio, display and video advertising from on-platform and off-platform advertising. For the years ended December 31, 2023 and 2022, Pandora and Off-platform advertising revenue was $1,589 and $1,576, respectively, an increase of 1%, or $13.
The increase was primarily due to additional investments in advertising and marketing to support our brands and streaming marketing expenditures. We anticipate that sales and marketing expenses will decline slightly based on current levels of direct marketing, performance media, and brand marketing spend associated with acquiring and retaining listeners and subscribers.
The decrease was primarily due to a decrease in streaming marketing and marketing to support our brands as well as lower personnel-related costs. We anticipate that sales and marketing expenses will remain flat based on current levels of direct marketing, performance media, and brand marketing spend associated with acquiring and retaining listeners and subscribers.
For the Years Ended December 31, 2022 2021 2022 vs 2021 Net cash provided by operating activities $ 1,976 $ 1,998 $ (22) Net cash used in investing activities (548) (200) (348) Net cash used in financing activities (1,562) (1,682) 120 Net (decrease) increase in cash, cash equivalents and restricted cash (134) 116 (250) Cash, cash equivalents and restricted cash at beginning of period 199 83 116 Cash, cash equivalents and restricted cash at end of period $ 65 $ 199 $ (134) Cash Flows Provided by Operating Activities Cash flows provided by operating activities decreased by $22 to $1,976 for the year ended December 31, 2022 from $1,998 for the year ended December 31, 2021.
For the Years Ended December 31, 2023 2022 2023 vs 2022 Net cash provided by operating activities $ 1,850 $ 1,976 $ (126) Net cash used in investing activities (686) (548) (138) Net cash used in financing activities (1,005) (1,562) 557 Net increase (decrease) in cash, cash equivalents and restricted cash 159 (134) 293 Cash, cash equivalents and restricted cash at beginning of period 65 199 (134) Cash, cash equivalents and restricted cash at end of period $ 224 $ 65 $ 159 Cash Flows Provided by Operating Activities Cash flows provided by operating activities decreased by $126 to $1,850 for the year ended December 31, 2023 from $1,976 for the year ended December 31, 2022.
For the years ended December 31, 2022 and 2021, programming and content expenses were $58 and $48, respectively, an increase of 21%, or $10, and increased as a percentage of total Pandora revenue. The increase was primarily attributable to higher personnel-related costs.
For the years ended December 31, 2023 and 2022, programming and content expenses were $69 and $58, respectively, an increase of 19%, or $11, and increased as a percentage of total Pandora revenue. The increase was primarily attributable to higher podcast license fees and live event costs, partially offset by lower personnel-related costs.
For the years ended December 31, 2022 and 2021, interest expense was $422 and $415, respectively, an increase of 2%, or $7. The increase was primarily driven by a higher average outstanding debt balance as well as lower capitalized interest, partially offset by lower interest rates.
For the years ended December 31, 2023 and 2022, interest expense was $423 and $422, respectively, an increase of less than 1%, or $1. The increase was primarily driven by higher rates driven by the Credit Facility and Incremental Term Loan, partially offset by a lower average outstanding debt balance.
At December 31, 2022, Pandora had approximately 6,215 subscribers, a decrease of 178, or 3%, from the approximately 6,393 subscribers as of December 31, 2021. For the years ended December 31, 2022 and 2021, net subscriber additions were (178) and 52, respectively, a decrease of 442%, or 230. Net additions decreased as a result of a decline in trial starts.
At December 31, 2023, Pandora had approximately 6,008 subscribers, a decrease of 207, or 3%, from the approximately 6,215 subscribers as of December 31, 2022. For the years ended December 31, 2023 and 2022, net subscriber additions were (207) and (178), respectively, a decrease of 16%, or 29.
Pandora and Off-platform Pandora operates a music and podcast streaming discovery platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through computers, tablets, mobile devices, vehicle speakers or connected devices.
Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics. Pandora and Off-platform Our Pandora and Off-platform business operates a music, comedy and podcast streaming discovery platform, offering a personalized experience for each listener wherever and whenever they want to listen, whether through mobile devices, vehicle speakers or connected devices.
For the years ended December 31, 2022 and 2021, customer service and billing expenses were $82 and $86, respectively, a decrease of 5%, or $4, and decreased as a percentage of total Pandora revenue. The decrease was primarily driven by lower transaction fees.
For the years ended December 31, 2023 and 2022, customer service and billing expenses were $83 and $82, respectively, an increase of 1%, or $1, and increased as a percentage of total Pandora revenue. The increase was primarily driven by higher bad debt expense, partially offset by lower transaction fees.
Other income for the year ended December 31, 2021, was primarily driven by interest earned on our loan to Sirius XM Canada. Income Taxes Income Tax Expense includes the change in our deferred tax assets, current federal and state tax expenses, and foreign withholding taxes.
Other expense for the year ended December 31, 2022, was primarily driven by losses associated with the investments held for our Deferred Compensation Plan. Income Taxes Income Tax Expense includes the change in our deferred tax assets, current federal and state tax expenses, and foreign withholding taxes.
As of December 31, 2022 vs 2021 Change (subscribers in thousands) 2022 2021 Amount % Sirius XM Self-pay subscribers 32,387 32,039 348 1 % Paid promotional subscribers 1,918 1,994 (76) (4) % Ending subscribers 34,305 34,033 272 1 % Sirius XM Canada subscribers 2,567 2,517 50 2 % Pandora and Off-platform Monthly active users - all services 47,638 52,275 (4,637) (9) % Self-pay subscribers 6,215 6,324 (109) (2) % Paid promotional subscribers — 69 (69) (100) % Ending subscribers 6,215 6,393 (178) (3) % The following table contains our Non-GAAP financial and operating performance measures which are based on our adjusted results of operations for the years ended December 31, 2022 and 2021.
As of December 31, 2023 vs 2022 Change (subscribers in thousands) 2023 2022 Amount % Sirius XM Self-pay subscribers 31,942 32,387 (445) (1) % Paid promotional subscribers 1,933 1,918 15 1 % Ending subscribers 33,875 34,305 (430) (1) % Sirius XM Canada subscribers 2,629 2,567 62 2 % Pandora and Off-platform Monthly active users - all services 46,026 47,638 (1,612) (3) % Self-pay subscribers 6,008 6,215 (207) (3) % Paid promotional subscribers — — — nm Ending subscribers 6,008 6,215 (207) (3) % nm - not meaningful The following table contains our Non-GAAP financial and operating performance measures which are based on our adjusted results of operations for the years ended December 31, 2023 and 2022.
(See accompanying Glossary for more details.) For the years ended December 31, 2022 and 2021, our average self-pay monthly churn rate was 1.5% and 1.6%, respectively. The decrease was driven by lower voluntary and vehicle related churn.
Average Self-pay Monthly Churn is derived by dividing the monthly average of self-pay deactivations for the period by the average number of self-pay subscribers for the period. (See accompanying Glossary for more details.) For the years ended December 31, 2023 and 2022, our average self-pay monthly churn rate was 1.6% and 1.5%, respectively.
For the years ended December 31, 2022 and 2021, transmission expenses were $158 and $159, respectively, a decrease of 1%, or $1, and decreased as a percentage of total Sirius XM revenue. The decrease was primarily driven by lower wireless costs, partially offset by costs associated with consumers using our 360L platform.
For the years ended December 31, 2023 and 2022, transmission expenses were $171 and $158, respectively, an increase of 8%, or $13, and increased as a percentage of total Sirius XM revenue. The increase was primarily driven by higher costs associated with our 360L platform and streaming.
(See the accompanying Glossary for more details.) For the years ended December 31, 2022 and 2021, SAC, per installation, was $14.32 and $12.58, respectively. The increase was driven by higher OEM hardware subsidy rates combined with a change in the mix of OEMs and higher chipset costs due to the semiconductor supply shortages. Pandora and Off-platform Monthly Active Users.
(See the accompanying Glossary for more details.) For the years ended December 31, 2023 and 2022, SAC, per installation, was $13.18 and $14.32, respectively. The decrease was driven by a change in the mix of OEMs. Pandora and Off-platform Monthly Active Users.
For the years ended December 31, 2022 and 2021, transmission expenses were $56 and $59, respectively, a decrease of 5%, or $3, and decreased as a percentage of total Pandora revenue. The decrease was primarily driven by lower personnel-related costs. We expect our Pandora and Off-platform transmission costs to decrease as a result of lower listener hours.
For the years ended December 31, 2023 and 2022, transmission expenses were $35 and $56, respectively, a decrease of 38%, or $21, and decreased as a percentage of total Pandora revenue. The decrease was primarily driven by lower colocation and personnel-related costs as well as lower streaming costs resulting from a decline in listener hours.
We expect Pandora and Off-platform advertising revenue to remain relatively flat given macroeconomic trends as growth in our Off-platform and podcast businesses is offset by a decline in on-platform revenue. 39 Table of Contents Total Consolidated Revenue Total Consolidated Revenue for the years ended December 31, 2022 and 2021, was $9,003 and $8,696, respectively, an increase of 4%, or $307.
We expect Pandora and Off-platform advertising revenue to increase driven by growth in our Off-platform and podcast businesses. 42 Table of Contents Total Consolidated Revenue Total Consolidated Revenue for the years ended December 31, 2023 and 2022, was $8,953 and $9,003, respectively, a decrease of 1%, or $50.
For the years ended December 31, 2022 and 2021, depreciation and amortization expense was $536 and $533, respectively, an increase of 1%, or $3, and decreased as a percentage of total revenue. The increase was driven by the addition of software that was developed and placed in service.
For the years ended December 31, 2023 and 2022, depreciation and amortization expense was $554 and $536, respectively, an increase of 3%, or $18, and increased as a percentage of total revenue.
For the Years Ended December 31, 2022 vs 2021 Change (subscribers in thousands) 2022 2021 Amount % Sirius XM Self-pay subscribers 348 1,152 (804) (70) % Paid promotional subscribers (76) (1,833) 1,757 96 % Net additions 272 (681) 953 140 % Weighted average number of subscribers 34,039 34,345 (306) (1) % Average self-pay monthly churn 1.5 % 1.6 % (0.1) % (6) % ARPU (1) $ 15.63 $ 14.76 $ 0.87 6 % SAC, per installation $ 14.32 $ 12.58 $ 1.74 14 % Pandora and Off-platform Self-pay subscribers (109) 45 (154) (342) % Paid promotional subscribers (69) 7 (76) nm Net additions (178) 52 (230) (442) % Weighted average number of subscribers 6,308 6,487 (179) (3) % Ad supported listener hours (in billions) 10.88 11.55 (0.67) (6) % Advertising revenue per thousand listener hours (RPM) $ 101.19 $ 102.74 $ (1.55) (2) % Total Company Adjusted EBITDA $ 2,833 $ 2,770 $ 63 2 % Free cash flow $ 1,551 $ 1,831 $ (280) (15) % nm - not meaningful (1) ARPU for Sirius XM excludes subscriber revenue from our connected vehicle services of $182 and $190 for the years ended December 31, 2022 and 2021, respectively. 45 Table of Contents Sirius XM Subscribers.
For the Years Ended December 31, 2023 vs 2022 Change (subscribers in thousands) 2023 2022 Amount % Sirius XM Self-pay subscribers (445) 348 (793) nm Paid promotional subscribers 15 (76) 91 nm Net additions (430) 272 (702) nm Weighted average number of subscribers 33,993 34,039 (46) — % Average self-pay monthly churn 1.6 % 1.5 % 0.1 % 7 % ARPU (1) $ 15.56 $ 15.63 $ (0.07) — % SAC, per installation $ 13.18 $ 14.32 $ (1.14) (8) % Pandora and Off-platform Self-pay subscribers (207) (109) (98) (90) % Paid promotional subscribers — (69) 69 nm Net additions (207) (178) (29) (16) % Weighted average number of subscribers 6,169 6,308 (139) (2) % Ad supported listener hours (in billions) 10.48 10.88 (0.40) (4) % Advertising revenue per thousand listener hours (RPM) $ 99.39 $ 101.19 $ (1.80) (2) % Total Company Adjusted EBITDA $ 2,790 $ 2,833 $ (43) (2) % Free cash flow $ 1,203 $ 1,551 $ (348) (22) % nm - not meaningful (1) ARPU for Sirius XM excludes subscriber revenue from our connected vehicle services of $161 and $182 for the years ended December 31, 2023 and 2022, respectively. 48 Table of Contents Sirius XM Subscribers.
Capital Return Program As of December 31, 2022, our board of directors had authorized for repurchase an aggregate of $18,000 of our common stock. As of December 31, 2022, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3,662 shares for $16,558, and $1,442 remained available for additional repurchases under our existing stock repurchase program authorization.
As of December 31, 2023, our cumulative repurchases since December 2012 under our stock repurchase program totaled 3,731 shares for $16,834, and $1,166 remained available for additional repurchases under our existing stock repurchase program authorization.
For both the years ended December 31, 2022 and 2021, customer service and billing expenses were $415 and decreased as a percentage of total Sirius XM revenue. Higher transaction costs and bad debt expense resulting from a higher self-pay subscriber base were offset by lower call center costs.
For the years ended December 31, 2023 and 2022, customer service and billing expenses were $393 and $415, respectively, a decrease of 5%, or $22, and decreased as a percentage of total Sirius XM revenue. The decrease was primarily driven by lower call center and personnel-related costs, partially offset by higher transaction costs.
Sirius XM Other Revenue includes service and advisory revenue from Sirius XM Canada, revenue from our connected vehicle services, and ancillary revenues. For the years ended December 31, 2022 and 2021, other revenue was $150 and $151, respectively, a decrease of 1%, or $1.
For the years ended December 31, 2023 and 2022, other revenue was $136 and $150, respectively, a decrease of 9%, or $14. The decrease was primarily driven by lower royalty revenue generated by Sirius XM Canada and our connected vehicle services.
The size and timing of any purchases will be based on a number of factors, including price and business and market conditions. 48 Table of Contents On January 25, 2023, our board of directors declared a quarterly dividend on our common stock in the amount of $0.0242 per share of common stock payable on February 24, 2023 to stockholders of record as of the close of business on February 9, 2023.
On January 24, 2024, our board of directors declared a quarterly dividend on our common stock in the amount of $0.0266 per share of common stock payable on February 23, 2024 to stockholders of record as of the close of business on February 9, 2024.
Liquidity and Capital Resources The following table presents a summary of our cash flow activity for the year ended December 31, 2022 compared with the year ended December 31, 2021.
The decrease was driven by higher capital expenditures driven by satellite construction and investments in our products and technology platform as well as higher cash taxes paid. Liquidity and Capital Resources The following table presents a summary of our cash flow activity for the year ended December 31, 2023 compared with the year ended December 31, 2022.
We expect our Sirius XM advertising revenue to grow as we improve monetization opportunities through SXM Media, our advertising sales group. Sirius XM Equipment Revenue includes revenue and royalties from the sale of satellite radios, components and accessories. For the years ended December 31, 2022 and 2021, equipment revenue was $189 and $201, respectively, a decrease of 6%, or $12.
The decrease was due to a decline in the number of spots sold and aired, primarily on news and entertainment channels. We expect our Sirius XM advertising revenue to grow as we improve monetization opportunities through SiriusXM Media, our advertising sales group. Sirius XM Equipment Revenue includes revenue and royalties from the sale of satellite radios, components and accessories.
(See the accompanying Glossary for a reconciliation to GAAP and for more details.) For the years ended December 31, 2022 and 2021, free cash flow was $1,551 and $1,831, respectively, a decrease of $280, or 15%. The decrease was driven by satellite insurance recoveries in 2021 and higher income tax payments; partially offset by cash received from customers.
(See the accompanying Glossary for a reconciliation to GAAP and for more details.) For the years ended December 31, 2023 and 2022, free cash flow was $1,203 and $1,551, respectively, a decrease of $348, or 22%.
(See the accompanying Glossary for a reconciliation to GAAP and for more details.) For the years ended December 31, 2022 and 2021, adjusted EBITDA was $2,833 and $2,770, respectively, an increase of 2%, or $63. The increase was due to higher subscriber and advertising revenue, partially offset by higher revenue share and royalties, programming, and subscriber acquisition costs.
(See the accompanying Glossary for a reconciliation to GAAP and for more details.) For the years ended December 31, 2023 and 2022, adjusted EBITDA was $2,790 and $2,833, respectively, a decrease of 2%, or $43.
Cash flows used in financing activities in the year ended December 31, 2021 were primarily due to the redemptions of Sirius XM's 3.875% Senior Notes due 2022 for $1,019, 4.625% Senior Notes due 2024 for $1,541 and 5.375% Senior Notes due 2026 for $1,034, the purchase and retirement of shares of our common stock under our repurchase program for $1,523, the payment of cash dividends of $268, payment of $103 for taxes in lieu of shares issued for share-based compensation, and the repayment of borrowings under our Credit Facility of $653; partially offset by the issuance of $2,000 in aggregate principal amount of Sirius XM's 4.00% Senior Notes due 2028, $1,000 in aggregate principal amount of Sirius XM's 3.125% Senior Notes due 2026, and $1,500 in aggregate principal amount of Sirius XM's 3.875% Senior Notes due 2031.
Cash flows used in financing activities in the year ended December 31, 2023 were primarily due to repayments under our Credit Facility of $1,750, the payment of cash dividends of $383, the repurchase of $193 in principal amount of Pandora's 1.75% Convertible Senior Notes due 2023, the purchase and retirement of shares of our common stock under our repurchase program for $274 and payment of $63 for taxes in lieu of shares issued for share-based compensation, partially offset by borrowings under our Credit Facility of $1,670.
For the years ended December 31, 2022 and 2021, programming and content expenses were $546 and $511, respectively, an increase of 7%, or $35, and increased as a percentage of total Sirius XM revenue. The increase was driven by higher content licensing costs.
For the years ended December 31, 2023 and 2022, subscriber acquisition costs were $359 and $352, respectively, an increase of 2%, or $7, and increased as a percentage of total revenue.
For the years ended December 31, 2022 and 2021, revenue share and royalties were $1,250 and $1,140, respectively, an increase of 10%, or $110, and increased as a percentage of total Pandora revenue. The increase was primarily due to costs related to the acquisition of rights to sell advertising in certain podcasts.
For the years ended December 31, 2023 and 2022, revenue share and royalties were $1,292 and $1,250, respectively, an increase of 3%, or $42, and increased as a percentage of total Pandora and Off-platform revenue.
Ad RPM is calculated by dividing advertising revenue by the number of thousands of listener hours to our Pandora advertising-based service. 46 Table of Contents For the years ended December 31, 2022 and 2021, RPM was $101.19 and $102.74, respectively. The decrease was a result of a decline in sell-through. Total Company Adjusted EBITDA.
RPM is a key indicator of our ability to monetize advertising inventory created by our listener hours on the Pandora services. RPM is calculated by dividing advertising revenue by the number of thousands of listener hours to our Pandora advertising-based service. For the years ended December 31, 2023 and 2022, RPM was $99.39 and $101.19, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−2 removed0 unchanged
Biggest changeThe loan is denominated in Canadian dollars and it is subject to changes in foreign currency. Had the Canadian to U.S. dollar exchange rate been 10% lower as of December 31, 2022, the value of this loan would have been approximately $0.8 million lower.
Biggest changeHad the Canadian to U.S. dollar exchange rate been 10% lower as of December 31, 2023, the value of this loan would have been approximately $0.8 million lower. Our debt includes fixed rate instruments and the fair market value of our debt is sensitive to changes in interest rates.
The basic objectives of our investment policy are the preservation of capital, maintaining sufficient liquidity to meet operating requirements and maximizing yield. As of December 31, 2022, we also held the following investment: In connection with the recapitalization of Sirius XM Canada on May 25, 2017, we loaned Sirius XM Canada $130.8 million.
The basic objectives of our investment policy are the preservation of capital, maintaining sufficient liquidity to meet operating requirements and maximizing yield. As of December 31, 2023, we also held the following investment: In connection with the recapitalization of Sirius XM Canada on May 25, 2017, we loaned Sirius XM Canada $130.8 million.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK As of December 31, 2022, we did not hold or issue any derivatives. We hold investments in money market funds and certificates of deposit. These securities are consistent with the objectives contained within our investment policy.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK As of December 31, 2023, we did not hold or issue any derivatives. We hold investments in money market funds and certificates of deposit. These securities are consistent with the objectives contained within our investment policy.
The loan has a term of fifteen years, bears interest at a rate of 7.62% per annum and includes customary covenants and events of default, including an event of default relating to Sirius XM Canada’s failure to maintain specified leverage ratios. The carrying value of the loan as of December 31, 2022 was $8.0 million and approximated its fair value.
The loan has a term of fifteen years, bears interest at a rate of 7.62% per annum and includes customary covenants and events of default, including an event of default relating to Sirius XM Canada’s failure to maintain specified leverage ratios.
Sirius XM's borrowings under the Credit Facility carry a variable interest rate, which is currently based on LIBOR (except for the Incremental Term Loan which carries a variable interest rate based on SOFR), plus an applicable rate based on its debt to operating cash flow ratio.
Sirius XM's borrowings under the Credit Facility carry a variable interest rate, which is currently based on SOFR, plus an applicable rate based on its debt to operating cash flow ratio. We currently do not use interest rate derivative instruments to manage our exposure to interest rate fluctuations. ITEM 8.
We currently do not use interest rate derivative instruments to manage our exposure to interest rate fluctuations. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements and financial statements and financial statement schedule contained in Part IV, Item 15, herein, which are incorporated herein by reference. ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA See the Index to Consolidated Financial Statements and financial statements and financial statement schedule contained in Part IV, Item 15, herein, which are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
The loan is considered a long-term investment with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income.
The carrying value of the loan as of December 31, 2023 was $8.0 million and approximated its fair value. The loan is denominated in Canadian dollars and it is subject to changes in foreign currency. The loan is considered a long-term investment with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income.
Removed
Our debt includes fixed rate instruments and the fair market value of our debt is sensitive to changes in interest rates.
Removed
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.

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