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Tag: Sirius XM

  • SiriusXM Hits Record 26 Million Subscribers As Profit Declines

    Sirius XM released its earnings report for the second quarter. Profit was down 4.4%. While the company managed to add significantly to its revenue and subscriber count, these just weren’t enough to offset operating expenses.

    These expenses grew by 12% to $750 million due to revenue share and royalties as well as customer service and billing expenses. Profit was down to $120 million from $125.5 million for the same period last year.

    Still, SiriusXM hit a record 26 million subscribers.

    CEO Jim Meyer had this to say: “SiriusXM once again posted outstanding results in the second quarter by adding 475,000 total net new subscribers, including 380,000 net new self-pay subscribers. We set new records for trial conversions to self-pay, adjusted EBITDA and adjusted EBITDA margin in the quarter, and we are raising our 2014 guidance for revenue, adjusted EBITDA, and free cash flow.”

    The company upped its guidance for the year to $4.1 billion from $4 billion.

    Here’s the release in its entirety:

    NEW YORK, July 29, 2014 /PRNewswire/ —

    • Revenue Exceeds $1.0 Billion, Up 10% From Second Quarter of 2013
    • Net Income of $120 Million
    • Adjusted EBITDA Grows 31% to a Record $370 Million
    • Free Cash Flow Increases 42% to a Record $335 Million
    • Share Repurchases Exceed $1.6 Billion in 2014
    • 2014 Financial Guidance Raised

    SiriusXM announced second quarter 2014 financial and operating results, including revenue of $1.035 billion, up 10% from the second quarter 2013.  Net income was $120 million, or $0.02 per diluted share, in the second quarter of 2014.

    Adjusted net income climbed 60% to $131 million in the second quarter of 2014 from $82 million in the second quarter of 2013.  Adjusted EBITDA for the second quarter of 2014 reached a record $370 million, up 31% from $283 million in the second quarter of 2013.

    “SiriusXM once again posted outstanding results in the second quarter by adding 475,000 total net new subscribers, including 380,000 net new self-pay subscribers.  We set new records for trial conversions to self-pay, adjusted EBITDA and adjusted EBITDA margin in the quarter, and we are raising our 2014 guidance for revenue, adjusted EBITDA, and free cash flow,” stated Jim Meyer, Chief Executive Officer, SiriusXM.

    “Our extraordinary operating performance supported the buyback of over 350 million shares in the quarter, or approximately 6% of our outstanding stock.  Perhaps more importantly, we improved our superior content by adding even more channels and shows created with major brands and personalities, such as Joel Osteen, NBC’s TODAY Show, and YouTube, and we expanded the range and depth of our commercial-free music programming with the introduction of three new channels in the categories of country, women’s pop, and dance,” added Meyer. “As the leader in audio entertainment, we never rest in searching for new content that our subscribers will love.”

    Additional financial and operating highlights of the second quarter include:

    • Subscribers Exceed 26.3 Million.  Net subscriber additions in the second quarter of 2014 were 475,472.  The total paid subscriber base reached a record 26.3 million, up 5% from a year earlier.  Self-pay net subscriber additions were 379,711, and the self-pay subscriber base reached a record high of 21.6 million, up 7% from the second quarter of 2013. Paid and unpaid trials combined to produce a total trial funnel of 7.3 million at the end of the second quarter of 2014, the largest in our history.
    • Adjusted EBITDA and Adjusted EBITDA Margin Highest Ever.  Adjusted EBITDA climbed 31% from the second quarter of 2013 to a record quarterly amount of $370 million.  The Company’s adjusted EBITDA margin reached a record 35.7% in the second quarter of 2014, up approximately 570 basis points from the second quarter of 2013.
    • Free Cash Flow Per Share Climbs 47%.  Free cash flow in the second quarter of 2014 was $335 million, up 42% from $237 million in the second quarter of 2013.  Free cash flow per diluted share was 5.4 cents in the second quarter of 2014, up 47% from 3.7 cents in the second quarter of 2013.

    “Since we launched our capital return program in late 2012, we have returned approximately $3.75 billion to stockholders in less than two years,” noted David Frear, Chief Financial Officer, SiriusXM.

    “On July 15th, our Board of Directors increased our cumulative share repurchase authorization to $6 billion.  Total debt-to-adjusted EBITDA at the end of the second quarter 2014 was 3.5 times, and our $1.25 billion revolving credit was undrawn, leaving us ample liquidity to return capital to shareholders and pursue strategic opportunities as they arise,” added Frear.

    2014 GUIDANCE

    SiriusXM reaffirmed its previously issued 2014 guidance for net subscriber additions and increased its guidance for revenue, adjusted EBITDA, and free cash flow:

    • Net subscriber additions of approximately 1.25 million,
    • Revenue of approximately $4.1 billion,
    • Adjusted EBITDA of approximately $1.425 billion, and
    • Free cash flow of approximately $1.1 billion.

    SECOND QUARTER 2014 RESULTS

     

    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (UNAUDITED)
    For the Three Months Ended June 30, For the Six Months Ended June 30,
    (in thousands, except per share data) 2014 2013 2014 2013
    Revenue:
    Subscriber revenue $             878,160 $             814,718 $          1,729,596 $          1,598,060
    Advertising revenue 25,498 21,757 47,712 41,968
    Equipment revenue 27,616 18,443 51,594 36,599
    Other revenue 104,071 85,192 204,154 160,881
    Total revenue 1,035,345 940,110 2,033,056 1,837,508
    Operating expenses:
    Cost of services:
    Revenue share and royalties 200,221 155,859 395,632 304,390
    Programming and content 69,570 70,381 144,440 144,991
    Customer service and billing 90,092 80,290 181,161 160,684
    Satellite and transmission 21,272 19,493 42,651 39,188
    Cost of equipment 12,030 5,442 19,834 12,469
    Subscriber acquisition costs 124,407 129,992 247,429 246,103
    Sales and marketing 77,759 68,058 154,086 133,956
    Engineering, design and development 15,630 15,052 31,541 29,894
    General and administrative 72,582 60,392 148,825 116,732
    Depreciation and amortization 67,204 67,415 135,471 134,433
    Total operating expenses 750,767 672,374 1,501,070 1,322,840
    Income from operations 284,578 267,736 531,986 514,668
    Other income (expense):
    Interest expense, net of amounts capitalized (67,521) (49,728) (121,613) (95,902)
    Loss on extinguishment of debt and credit facilities, net – (16,377) – (16,377)
    Interest and investment (loss) income (1,066) 294 3,283 1,932
    Loss on change in value of derivatives (7,463) – (34,485) –
    Other (loss) income (1,745) 256 (1,652) 502
    Total other expense (77,795) (65,555) (154,467) (109,845)
    Income before income taxes 206,783 202,181 377,519 404,823
    Income tax expense (86,822) (76,659) (163,570) (155,699)
    Net income $             119,961 $             125,522 $             213,949 $             249,124
    Foreign currency translation adjustment, net of tax (40) (109) 78 (281)
    Total comprehensive income $             119,921 $             125,413 $             214,027 $             248,843
    Net income per common share:
    Basic $                   0.02 $                   0.02 $                   0.04 $                   0.04
    Diluted $                   0.02 $                   0.02 $                   0.04 $                   0.04
    Weighted average common shares outstanding:
    Basic 5,865,032 6,354,755 5,979,273 6,307,541
    Diluted 6,210,078 6,447,517 6,054,771 6,526,698

     

    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS
    As of June 30, As of December 31,
    2014 2013
    (in thousands, except share and per share data) (Unaudited)
    ASSETS
    Current assets:
    Cash and cash equivalents $                       169,980 $                       134,805
    Accounts receivable, net 109,117 103,937
    Receivables from distributors 93,159 88,975
    Inventory, net 21,555 13,863
    Prepaid expenses 110,994 110,530
    Related party current assets 4,937 9,145
    Deferred tax asset 846,612 937,598
    Other current assets 13,764 20,160
    Total current assets 1,370,118 1,419,013
    Property and equipment, net 1,549,881 1,594,574
    Long-term restricted investments 5,718 5,718
    Deferred financing fees, net 13,334 12,604
    Intangible assets, net 2,672,118 2,700,062
    Goodwill 2,203,409 2,204,553
    Related party long-term assets 108 30,164
    Long-term deferred tax asset 801,079 868,057
    Other long-term assets 8,769 10,035
    Total assets $                    8,624,534 $                    8,844,780
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
    Accounts payable and accrued expenses $                       560,591 $                       578,333
    Accrued interest 55,028 42,085
    Current portion of deferred revenue 1,635,901 1,586,611
    Current portion of deferred credit on executory contracts 3,285 3,781
    Current maturities of long-term debt 497,884 496,815
    Current maturities of long-term related party debt 10,981 10,959
    Related party current liabilities 4,961 20,320
    Total current liabilities 2,768,631 2,738,904
    Deferred revenue 144,717 149,026
    Deferred credit on executory contracts – 1,394
    Long-term debt 4,115,429 3,093,821
    Related party long-term liabilities 15,055 16,337
    Other long-term liabilities 94,813 99,556
    Total liabilities 7,138,645 6,099,038
    Stockholders’ equity:
    Preferred stock, undesignated, par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 shares authorized and 0 shares issued and outstanding at June 30, 2014 and December 31, 2013 – –
    Common stock, par value $0.001; 9,000,000,000 shares authorized; 5,712,347,567 and 6,096,220,526 shares issued; 5,706,347,567 and 6,096,220,526 outstanding atJune 30, 2014 and December 31, 2013, respectively 5,712 6,096
    Accumulated other comprehensive loss, net of tax (230) (308)
    Additional paid-in capital 7,221,372 8,674,129
    Treasury stock, at cost; 6,000,000 and 0 shares of common stock at June 30, 2014and December 31, 2013, respectively (20,739) –
    Accumulated deficit (5,720,226) (5,934,175)
    Total stockholders’ equity 1,485,889 2,745,742
    Total liabilities and stockholders’ equity $                    8,624,534 $                    8,844,780

     

    SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)
    For the Six Months Ended June 30,
    (in thousands) 2014 2013
    Cash flows from operating activities:
    Net income $                      213,949 $                      249,124
    Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization 135,471 134,433
    Non-cash interest expense, net of amortization of premium 10,779 10,932
    Provision for doubtful accounts 21,287 20,153
    Amortization of deferred income related to equity method investment (1,388) (1,388)
    Loss on extinguishment of debt and credit facilities, net – 16,377
    Gain on unconsolidated entity investments, net (966) (1,382)
    Dividend received from unconsolidated entity investment 8,554 13,217
    Loss on disposal of assets – 126
    Loss on change in value of derivatives 34,485 –
    Share-based payment expense 36,027 30,012
    Deferred income taxes 157,965 159,191
    Other non-cash purchase price adjustments (1,890) (137,889)
    Changes in operating assets and liabilities:
    Accounts receivable (26,467) (15,214)
    Receivables from distributors (4,184) (6,863)
    Inventory (7,692) 8,649
    Related party assets 2,388 205
    Prepaid expenses and other current assets (1,057) (28,317)
    Other long-term assets 1,238 1,353
    Accounts payable and accrued expenses (40,098) (69,310)
    Accrued interest 12,943 3,868
    Deferred revenue 44,981 59,116
    Related party liabilities 449 1,171
    Other long-term liabilities (4,702) (5,543)
    Net cash provided by operating activities 592,072 442,021
    Cash flows from investing activities:
    Additions to property and equipment (58,417) (62,980)
    Acquisition of business, net of cash acquired 1,144 –
    Return of capital from investment in unconsolidated entity 24,178 –
    Net cash used in investing activities (33,095) (62,980)
    Cash flows from financing activities:
    Proceeds from exercise of stock options 260 21,658
    Taxes paid in lieu of shares issued for stock-based compensation (7,313) –
    Proceeds from long-term borrowings and revolving credit facility, net of costs 1,921,230 1,136,640
    Payment of premiums on redemption of debt – (14,719)
    Repayment of long-term borrowings and revolving credit facility (905,815) (283,180)
    Common stock repurchased and retired (1,532,164) (1,108,616)
    Net cash used in financing activities (523,802) (248,217)
    Net increase in cash and cash equivalents 35,175 130,824
    Cash and cash equivalents at beginning of period 134,805 520,945
    Cash and cash equivalents at end of period $                      169,980 $                      651,769

     

    Key Operating Metrics

    The following table contains our key operating metrics for the three and six months ended June 30, 2014 and 2013, respectively. Subscribers to our connected vehicle services are not included in our subscriber count:

     

    Unaudited
    (in thousands, except subscriber, per subscriber and per installation amounts) For the Three Months Ended June 30, For the Six Months Ended June 30,
    2014 2013 2014 2013
    Self-pay subscribers 21,635,008 20,297,736 21,635,008 20,297,736
    Paid promotional subscribers 4,666,573 4,771,252 4,666,573 4,771,252
    Ending subscribers 26,301,581 25,068,988 26,301,581 25,068,988
    Self-pay subscribers 379,711 423,076 553,191 727,462
    Paid promotional subscribers 95,761 292,686 189,080 441,190
    Net additions 475,472 715,762 742,271 1,168,652
    Daily weighted average number of subscribers 26,005,691 24,651,268 25,805,030 24,331,646
    Average self-pay monthly churn 1.8% 1.7% 1.9% 1.8%
    New vehicle consumer conversion rate 42% 45% 42% 44%
    ARPU $                        12.36 $                        12.28 $                        12.27 $                        12.16
    SAC, per installation $                             33 $                             47 $                             34 $                             47
    Customer service and billing expenses, per average subscriber $                          1.05 $                          1.08 $                          1.07 $                          1.09
    Free cash flow $                    335,044 $                    236,560 $                    557,833 $                    379,041
    Adjusted EBITDA $                    370,437 $                    282,979 $                    705,220 $                    544,850

     

    Glossary

    Adjusted EBITDA – EBITDA is defined as net income before interest and investment income (loss); interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. We adjust EBITDA to exclude the impact of other income and expense, loss on extinguishment of debt, loss on change in value of derivatives as well as certain other charges discussed below. This measure is one of the primary Non-GAAP financial measures on which we (i) evaluate the performance of our businesses, (ii) base our internal budgets and (iii) compensate management. Adjusted EBITDA is a Non-GAAP financial performance measure that excludes (if applicable):  (i) certain adjustments as a result of the purchase price accounting for the merger of Sirius and XM, (ii) depreciation and amortization and (iii) share-based payment expense. The purchase price accounting adjustments include: (i) the elimination of deferred revenue associated with the investment in XM Canada, (ii) recognition of deferred subscriber revenues not recognized in purchase price accounting, and (iii) elimination of the benefit of deferred credits on executory contracts, which are primarily attributable to third party arrangements with an OEM and programming providers.  We believe adjusted EBITDA is a useful measure of the underlying trend of our operating performance, which provides useful information about our business apart from the costs associated with our physical plant, capital structure and purchase price accounting. We believe investors find this Non-GAAP financial measure useful when analyzing our results and comparing our operating performance to the performance of other communications, entertainment and media companies. We believe investors use current and projected adjusted EBITDA to estimate our current and prospective enterprise value and to make investment decisions. Because we fund and build-out our satellite radio system through the periodic raising and expenditure of large amounts of capital, our results of operations reflect significant charges for depreciation expense. The exclusion of depreciation and amortization expense is useful given significant variation in depreciation and amortization expense that can result from the potential variations in estimated useful lives, all of which can vary widely across different industries or among companies within the same industry. We also believe the exclusion of share-based payment expense is useful given the significant variation in expense that can result from changes in the fair value as determined using the Black-Scholes-Merton model which varies based on assumptions used for the expected life, expected stock price volatility and risk-free interest rates.

    Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. We endeavor to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure.  Investors that wish to compare and evaluate our operating results after giving effect for these costs, should refer to net income as disclosed in our unaudited consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, our calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows (in thousands):

     

    Unaudited
    For the Three Months Ended June 30, For the Six Months Ended June 30,
    2014 2013 2014 2013
    Net income (GAAP): $             119,961 $             125,522 $           213,949 $           249,124
    Add back items excluded from Adjusted EBITDA:
    Purchase price accounting adjustments:
    Revenues 1,813 1,813 3,626 3,626
    Operating expenses (945) (69,479) (1,890) (137,889)
    Share-based payment expense (GAAP) 17,787 15,494 36,027 30,012
    Depreciation and amortization (GAAP) 67,204 67,415 135,471 134,433
    Interest expense, net of amounts capitalized (GAAP) 67,521 49,728 121,613 95,902
    Loss on extinguishment of debt and credit facilities, net (GAAP) – 16,377 – 16,377
    Interest and investment loss (income) (GAAP) 1,066 (294) (3,283) (1,932)
    Loss on change in value of derivatives (GAAP) 7,463 – 34,485 –
    Other loss (income) (GAAP) 1,745 (256) 1,652 (502)
    Income tax expense (GAAP) 86,822 76,659 163,570 155,699
    Adjusted EBITDA $             370,437 $             282,979 $           705,220 $           544,850

     

    Adjusted Net Income – We define this Non-GAAP financial measure as our actual net income adjusted to exclude the impact of certain purchase price accounting adjustments and the loss on change in value of derivatives, net of income tax expense. The following table reconciles our actual income before income taxes to our adjusted net income for the three and six months ended June 30, 2014 and 2013 (in thousands):

     

    Unaudited
    For the Three Months Ended June 30, For the Six Months Ended June 30,
    2014 2013 2014 2013
    Income before income taxes (GAAP): $             206,783 $             202,181 $             377,519 $             404,823
    Add back items excluded from adjusted net income:
    Purchase price accounting adjustments:
    Revenues 1,813 1,813 3,626 3,626
    Operating expenses (945) (69,479) (1,890) (137,889)
    Loss on change in value of derivatives (GAAP) 7,463 – 34,485 –
    Adjusted income before income taxes $             215,114 $             134,515 $             413,740 $             270,560
    Allocable income tax expense (83,679) (52,461) (160,945) (105,518)
    Adjusted net income $             131,435 $               82,054 $             252,795 $             165,042

     

    Adjusted Revenues and Operating Expenses – We define this Non-GAAP financial measure as our actual revenues and operating expenses adjusted to exclude the impact of certain purchase price accounting adjustments from the merger of Sirius and XM and share-based payment expense. We use this Non-GAAP financial measure to manage our business, to set operational goals and as a basis for determining performance-based compensation for our employees. The following tables reconcile our actual revenues and operating expenses to our adjusted revenues and operating expenses for the three and six months ended June 30, 2014 and 2013:

     

    Unaudited For the Three Months Ended June 30, 2014
    (in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
    Revenue:
    Subscriber revenue $ 878,160 $ – $ – $ 878,160
    Advertising revenue 25,498 – – 25,498
    Equipment revenue 27,616 – – 27,616
    Other revenue 104,071 1,813 – 105,884
    Total revenue $ 1,035,345 $ 1,813 $ – $ 1,037,158
    Operating expenses
    Cost of services:
    Revenue share and royalties $ 200,221 $ – $ – $ 200,221
    Programming and content 69,570 945 (2,254) 68,261
    Customer service and billing 90,092 – (587) 89,505
    Satellite and transmission 21,272 – (956) 20,316
    Cost of equipment 12,030 – – 12,030
    Subscriber acquisition costs 124,407 – – 124,407
    Sales and marketing 77,759 – (3,407) 74,352
    Engineering, design and development 15,630 – (1,937) 13,693
    General and administrative 72,582 – (8,646) 63,936
    Depreciation and amortization (a) 67,204 – – 67,204
    Share-based payment expense – – 17,787 17,787
    Total operating expenses $ 750,767 $ 945 $ – $ 751,712
    (a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the$785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended June 30, 2014 was $10,000.

     

    Unaudited For the Three Months Ended June 30, 2013
    (in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
    Revenue:
    Subscriber revenue $               814,718 $                         – $                         – $               814,718
    Advertising revenue 21,757 – – 21,757
    Equipment revenue 18,443 – – 18,443
    Other revenue 85,192 1,813 – 87,005
    Total revenue $               940,110 $                   1,813 $                         – $               941,923
    Operating expenses
    Cost of services:
    Revenue share and royalties $               155,859 $                 40,831 $                         – $               196,690
    Programming and content 70,381 2,478 (1,639) 71,220
    Customer service and billing 80,290 – (511) 79,779
    Satellite and transmission 19,493 – (827) 18,666
    Cost of equipment 5,442 – – 5,442
    Subscriber acquisition costs 129,992 22,017 – 152,009
    Sales and marketing 68,058 4,153 (3,182) 69,029
    Engineering, design and development 15,052 – (1,634) 13,418
    General and administrative 60,392 – (7,701) 52,691
    Depreciation and amortization (a) 67,415 – – 67,415
    Share-based payment expense – – 15,494 15,494
    Total operating expenses $               672,374 $                 69,479 $                         – $               741,853
    (a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the$785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the three months ended June 30, 2013 was $12,000.

     

    Unaudited For the Six Months Ended June 30, 2014
    (in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
    Revenue:
    Subscriber revenue $ 1,729,596 $ – $ – $ 1,729,596
    Advertising revenue 47,712 – – 47,712
    Equipment revenue 51,594 – – 51,594
    Other revenue 204,154 3,626 – 207,780
    Total revenue $ 2,033,056 $ 3,626 $ – $ 2,036,682
    Operating expenses
    Cost of services:
    Revenue share and royalties $ 395,632 $ – $ – $ 395,632
    Programming and content 144,440 1,890 (4,469) 141,861
    Customer service and billing 181,161 – (1,164) 179,997
    Satellite and transmission 42,651 – (1,902) 40,749
    Cost of equipment 19,834 – – 19,834
    Subscriber acquisition costs 247,429 – – 247,429
    Sales and marketing 154,086 – (6,973) 147,113
    Engineering, design and development 31,541 – (3,863) 27,678
    General and administrative 148,825 – (17,656) 131,169
    Depreciation and amortization (a) 135,471 – – 135,471
    Share-based payment expense – – 36,027 36,027
    Total operating expenses $ 1,501,070 $ 1,890 $ – $ 1,502,960
    (a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the$785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the six months ended June 30, 2014 was $20,000.

     

    Unaudited For the Six Months Ended June 30, 2013
    (in thousands) As Reported Purchase Price Accounting Adjustments Allocation of Share-based Payment Expense Adjusted
    Revenue:
    Subscriber revenue $ 1,598,060 $ – $ – $ 1,598,060
    Advertising revenue 41,968 – – 41,968
    Equipment revenue 36,599 – – 36,599
    Other revenue 160,881 3,626 – 164,507
    Total revenue $ 1,837,508 $ 3,626 $ – $ 1,841,134
    Operating expenses
    Cost of services:
    Revenue share and royalties $ 304,390 $ 80,592 $ – $ 384,982
    Programming and content 144,991 4,956 (3,281) 146,666
    Customer service and billing 160,684 – (981) 159,703
    Satellite and transmission 39,188 – (1,677) 37,511
    Cost of equipment 12,469 – – 12,469
    Subscriber acquisition costs 246,103 44,022 – 290,125
    Sales and marketing 133,956 8,319 (6,243) 136,032
    Engineering, design and development 29,894 – (3,281) 26,613
    General and administrative 116,732 – (14,549) 102,183
    Depreciation and amortization (a) 134,433 – – 134,433
    Share-based payment expense – – 30,012 30,012
    Total operating expenses $ 1,322,840 $ 137,889 $ – $ 1,460,729
    (a) Purchase price accounting adjustments included above exclude the incremental depreciation and amortization associated with the$785,000 stepped up basis in property, equipment and intangible assets as a result of the merger of Sirius and XM. The increased depreciation and amortization for the six months ended June 30, 2013 was $25,000.

     

    ARPU – is derived from total earned subscriber revenue, advertising revenue and other subscription-related revenue, excluding revenue associated with our connected vehicle business, net of purchase price accounting adjustments, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. Other subscription-related revenue includes the U.S. Music Royalty Fee.  ARPU is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

     

    Unaudited
    For the Three Months Ended June 30, For the Six Months Ended

    June 30,
    2014 2013 2014 2013
    Subscriber revenue, excluding connected vehicle (GAAP) $        855,846 $        814,718 $     1,688,649 $     1,598,060
    Add: advertising revenue (GAAP) 25,498 21,757 47,712 41,968
    Add: other subscription-related revenue (GAAP) 82,990 71,648 163,758 135,785
    $        964,334 $        908,123 $     1,900,119 $     1,775,813
    Daily weighted average number of subscribers 26,005,691 24,651,268 25,805,030 24,331,646
    ARPU $            12.36 $            12.28 $            12.27 $            12.16

     

    Average self-pay monthly churn – is defined as the monthly average of self-pay deactivations for the period divided by the average number of self-pay subscribers for the period.

    Customer service and billing expenses, per average subscriber – is derived from total customer service and billing expenses, excluding connected vehicle customer service and billing expenses and share-based payment expense, divided by the number of months in the period, divided by the daily weighted average number of subscribers for the period. We believe the exclusion of share-based payment expense in our calculation of customer service and billing expenses, per average subscriber, is useful given the significant variation in expense that can result from changes in the fair market value of our common stock, the effect of which is unrelated to the operational conditions that give rise to variations in the components of our customer service and billing expenses. Customer service and billing expenses, per average subscriber, is calculated as follows (in thousands, except for subscriber and per subscriber amounts):

     

    Unaudited
    For the Three Months Ended

    June 30,

    		 For the Six Months Ended

    June 30,
    2014 2013 2014 2013
    Customer service and billing expenses, excluding connected vehicle (GAAP) $          82,705 $          80,290 $        166,809 $        160,684
    Less: share-based payment expense (GAAP) (587) (511) (1,164) (981)
    $          82,118 $          79,779 $        165,645 $        159,703
    Daily weighted average number of subscribers 26,005,691 24,651,268 25,805,030 24,331,646
    Customer service and billing expenses, per average subscriber $              1.05 $              1.08 $              1.07 $              1.09

     

    Free cash flow – is derived from cash flow provided by operating activities, capital expenditures and restricted and other investment activity.  The calculation for free cash flow and free cash flow per diluted share are as follows (in thousands, except per share data):

     

    Unaudited
    For the Three Months Ended June 30, For the Six Months Ended June 30,
    2014 2013 2014 2013
    Cash Flow information
    Net cash provided by operating activities $             340,682 $             273,106 $             592,072 $             442,021
    Net cash used in investing activities $               (5,638) $             (36,546) $             (33,095) $             (62,980)
    Net cash used in financing activities $           (286,235) $             208,482 $           (523,802) $           (248,217)
    Free Cash Flow
    Net cash provided by operating activities $             340,682 $             273,106 $             592,072 $             442,021
    Additions to property and equipment (29,816) (36,546) (58,417) (62,980)
    Return of capital from investment in unconsolidated entity 24,178 – 24,178 –
    Free cash flow $             335,044 $             236,560 $             557,833 $             379,041
    Diluted weighted average common shares outstanding 6,210,078 6,447,517 6,054,771 6,526,698
    Free cash flow per diluted share $                   0.05 $                   0.04 $                   0.09 $                   0.06

     

    New vehicle consumer conversion rate – is defined as the percentage of owners and lessees of new vehicles that receive our satellite radio service and convert to become self-paying subscribers after the initial promotion period. At the time satellite radio enabled vehicles are sold or leased, the owners or lessees generally receive trial subscriptions ranging from three to twelve months. We measure conversion rate three months after the period in which the trial service ends. The metric excludes rental and fleet vehicles.

    Subscriber acquisition cost, per installation – or SAC, per installation, is derived from subscriber acquisition costs and margins from the sale of radios and accessories, excluding purchase price accounting adjustments, divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. Purchase price accounting adjustments associated with the merger of Sirius and XM include the elimination of the benefit of amortization of deferred credits on executory contracts recognized at the merger date attributable to an OEM. SAC, per installation, is calculated as follows (in thousands, except for installation amounts):

     

    Unaudited
    For the Three Months Ended June 30, For the Six Months Ended June 30,
    2014 2013 2014 2013
    Subscriber acquisition costs (GAAP) $             124,407 $             129,992 $             247,429 $             246,103
    Less: margin from direct sales of radios and accessories (GAAP) (15,586) (13,001) (31,760) (24,130)
    Add: purchase price accounting adjustments – 22,017 – 44,022
    $             108,821 $             139,008 $             215,669 $             265,995
    Installations 3,279,564 2,973,267 6,358,074 5,684,160
    SAC, per installation $                      33 $                      47 $                      34 $                      47

     

    Second quarter 2014 financial information about Sirius XM Radio Inc. will be posted to our website at investor.siriusxm.com.  Sirius XM Radio Inc. is furnishing this information in order to comply with the reporting obligations in the indentures governing its outstanding notes.

    About SiriusXM

    Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world’s largest radio broadcaster measured by revenue and has 26.3 million subscribers.  SiriusXM creates and broadcasts commercial-free music; premier sports talk and live events; comedy; news; exclusive talk and entertainment; and the most comprehensive Latin music, sports and talk programming in radio. SiriusXM is available in vehicles from every major car company in the U.S. and from retailers nationwide as well as at shop.siriusxm.com. SiriusXM programming is available through the SiriusXM Internet RadioApp for smartphones and other connected devices as well as online at siriusxm.com. SiriusXM also provides premium traffic, weather, data and information services for subscribers in cars, trucks, RVs, boats and aircraft through SiriusXM Traffic™, SiriusXM Travel Link, NavTraffic®, NavWeather™, SiriusXM Aviation, SiriusXM Marine™, Sirius Marine Weather, XMWX Aviation™, and XMWX Marine™.  SiriusXM holds a minority interest in SiriusXM Canada which has more than 2 million subscribers.

    On social media, join the SiriusXM community on Facebook, Twitter, Instagram, and YouTube.

    This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning.  Such forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control.  Actual results may differ materially from the results anticipated in these forward-looking statements. 

    The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:  our competitive position versus other radio and audio entertainment providers; our ability to attract and retain subscribers, which is uncertain; our dependence upon the auto industry; general economic conditions; failure of our satellites, which, in most cases, are not insured; the interruption or failure of our information and communications systems; the security of the personal information about our customers; royalties we pay for music rights, which increase over time; the unfavorable outcome of pending or future litigation; our failure to realize benefits of acquisitions; rapid technological and industry change; failure of third parties to perform; changes in consumer protection laws and their enforcement; failure to comply with FCC requirements and other government regulations; and our indebtedness.  Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Annual Report on Form 10-K for the year ended December 31, 2013, which is filed with the Securities and Exchange Commission (the “SEC”) and available at the SEC’sInternet site (http://www.sec.gov).  The information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. 

    Image via Facebook

  • Cee Lo Green Originally Recorded ‘Happy,’ Pharrell Williams Shares The Details

    Cee Lo Green originally recorded Pharrell Williams’ hit single “Happy.” Sound surprising? Well, its actually not.

    It happens more times than not. One singer may write and/or record a cover version only to have it placed and released by another artist. However, what is surprising is that Green and his executive production team actually turned the song down!

    According to Press Association, Williams recently shared details about the ever-popular, Academy Award-nominated record. On Tuesday, April 29, Williams spoke about the record during an interview on Sirius XM with Howard Stern.

    When Stern asked if Williams had ever considered placing the song with another artist, he opened up about the history of the famous record. Williams revealed that it was intended for Cee Lo Green.

    “[Cee Lo Green] wanted to do it… and he did do it,” said Williams, who also penned and produced Robin Thicke’s 2013 hit single, “Blurred Lines”. “But… how do I say this diplomatically? The powers that be, at the time, did not see it fit for him,” he said of Green’s decision not to take the song.

    “He wanted to do it. Some folks on his team just felt that the priority should be on [his] album at the time, so they elected not to do that song,” the Grammy Award-winning producer added. “He was one of the most gracious people about it when [Happy] came out he congratulated me. It’s not his fault – he was totally down with it. He sounded amazing on it, he burns my version!”

    Its quite easy to see why Williams had chosen that particular song as a suitable record for Green. Back in 2006, Green released a popular record entitled “Smiley Faces” with famed producer, Danger Mouse. The song, which is quite similar to “Happy,” was released as the second single on Gnarls Barkley’s debut album, St. Elsewhere. The highly lauded, platinum-selling album received five Grammy nominations.

    The song’s eclectic, “mockumentary-style” music video brought the record to life. The video, which was based in the 1920s and 30s insinuated that Gnarls Barkley had been around since the beginning of time, serving as pioneers of sound and music. The “Smiley Faces” video went on to win the 2007 MTV Video Music Award for Best Editing.

    Image via Cee Lo Green, Facebook

  • David Lee Roth Says Van Halen Working on Record

    David Lee Roth Says Van Halen Working on Record

    Grammy award winning American hard rock band Van Halen is working on new music, and a new album is likely a year and a half away.

    Singer David Lee Roth revealed in an interview with SiriusXM’s Jim Florentine that new music is on deck.

    “I was up at Edward’s house, maybe three days ago, and we’re starting to put music together,” Roth said, adding, “We start way, way, way in advance, ’cause we are eminently art-centric, which is a really fancy way of saying we really do generate all the artwork, the graphics, etc. Same thing with the merchandise: If you buy a t-shirt, that was designed, literally, in my living room.”

    Roth, who joined Van Halen in 1974, before being replaced by Sammy Hagar in 1985, and then Gary Cherone in 1996, says the band presently practices together about 3 times per week. The current lineup includes Roth, Eddie Van Halen, Alex Van Halen and Wolfgang Van Halen.

    Here is a copy of the full interview audio:

    https://www.youtube.com/watch?v=VxrigqRihag

    “Oh, yeah, we’re writing,” Roth said “I write lyrics routinely. It’s a perishable skill. And the band plays together routinely, at least three times a week. They’re up at Ed’s place, routinely.”

    Diamond Dave, who has been repeatedly kicked out of Van Halen, was kicked out of Van Halen shortly after the filming of the clip below, at the 1996 MTV Video Music Awards:

    http://www.youtube.com/watch?v=-agRcJ0vz7I

    Van Halen is still at its finest with Roth at the Helm.

    Van Halen’s “Hot For Teacher” (1984) from the album “1984”:

    http://www.youtube.com/watch?v=-4GZFbCqx18

    “Ain’t Talkin’ ‘Bout Love” (1978) from the album “Van Halen”:

    Image via Wikimedia Commons.

  • Howard Stern and Oprah are Headed For Google TV

    Reuters is reporting today that Sirius XM and Google have teamed up to bring all of Sirius XM’s content to Google TV. Sirius XM is the satellite radio company that hosts content such as The Howard Stern Show, Oprah Radio, and Martha Stewart Living Radio. The official announcement of the Sirius XM app for Google TV is set to be made at this week’s Google I/O conference. There had already been rumors this week that a “big” Google TV announcement was incoming at the conference, and it seems that the Sirius XM deal is at least part of that announcement.

    According to the Reuters report, the Sirius XM App will only be available for use to subscribers of its satellite radio service. Also, Google TV will host some Sirius XM programming not broadcast over car satellite radios including ESPN SportCenter, Rock and Roll Hall of Fame Radio, and Carlin’s Corner. Sirius XM told Reuters that the Google TV app will be available sometime this summer.

    Google has been working to separate its Google TV platform from other streaming boxes such as the Apple TV an Roku HD. In the past few months Google has added new features, such as Netflix-style recommendations, to Google TV, and has updated the Google TV YouTube app to include recommendations and a channel search. Device manufacturers have also begun to embrace Google TV more recently, with Sony debuting a Google TV Internet Player in the UK next month, and LG launching a TV set with Google TV integration back in May. With events such as the Google TV hackathon, Google is attempting to convince developers that Google TV is to streaming TV what Android is to smartphones: an open environment for creative app development.

  • FCC Blocks Liberty Media From Sirius XM Control

    FCC Blocks Liberty Media From Sirius XM Control

    On saturday the Federal Communications Commission (FCC) blocked 40% Sirius XM shareholder, Liberty Media from taking control of the company’s operating licenses. Liberty took control of the shares in 2009 after investing over $500 million to help the company avoid bankruptcy.

    The FCC claims Liberty does not hold the proper documentation to transfer ownership, but also need to amass at least 50% ownership to gain control of sirius XM. Currently Liberty has five seats out of thirteen on the Sirius XM board of directors.

    Sirius XM CEO Mel Karmazin comments on the recent play for control by Liberty Media:

    “If the time comes that Liberty’s interests are different than the other 60 percent of shareholders, we will do what we have to do to protect the interest of our 60 percent of shareholders,”

    Liberty’s play for control comes just after Sirius XM released their Q1 2012 report where they produced an over 10% increase in revenue year-over-year and an 8% increase in subscriptions. They also experienced a 38% increase in net income to $107.8 million.

    It sounds like this is going to become an ongoing issue for Sirius XM and the other shareholders. We will keep you posted on further attempts from Liberty to gain control over Sirius XM.

  • Sirius Exceeds Revenue Projections

    Sirius Exceeds Revenue Projections

    Satellite broadcast service Sirius XM Radio Inc. has posted a Q1 revenue which exceeds Wall Street expectations, mainly driven by a boost in its subscriber base. Sirius has been in the news lately over the lawsuit Howard Stern had brought against the company regarding 4 stock options worth $75 million a piece, which the DJ contended he was owed for building upon the platform’s user base. A New York judge threw the case out with prejudice, meaning that Stern couldn’t file another similar lawsuit. Stern has filed an appeal of the ruling.

    Sirius XM’s Q1 revenue was $805 million, up from $724 million in Q1, 2011, exceeding analyst estimations of $803.83. Stocks were up $.02 per share, doubling the penny increase of the previous year. Sirius CEO Mel Karmazin states, “Sirius XM is starting the year with tremendous operational momentum. We grew subscribers faster than any first quarter since our 2008 merger of Sirius and XM, and we improved our self-pay monthly churn rate to 1.9% despite implementing a price increase at the beginning of the year.” Sirius predicts sales of $3.3 billion for the fiscal year, while analysts are predicting $3.359 billion.

    Regarding the Sirius user base, there were 299,348 new subscribers in Q1, bringing the total to 22.3 million, an all-time high – regardless of the first price increase in history, earlier in the year. Sirius shares are up 1.55%, presently at $2.29.

    In related news, it was just reported that Sirius employee/claimant Howard Stern will be replacing Piers Morgan for season 7 of America’s Got Talent.

  • Howard Stern Weighs In On The Ted Nugent Scandal

    Ted Nugent has been under fire as of late for some particular comments he made about the 2012 election at a National Rifle Association convention – and that’s putting it mildly. Nugent, who has been an outspoken critic of President Obama for some time, went over the line with his most recent comments in the eyes of many.

    At the convention, Nugent was discussing his disapproval of the current actions of the government. He specifically mentioned the Supreme Court, and his feeling that some of the Justicies fail to understand the constitution. During this discussion, he said this about President Obama:

    “If Barack Obama becomes the president in November, again, I will be either be dead or in jail by this time next year.”

    And that’s what really stirred the pot. Many labeled the comments as “violent rhetoric,” and slammed Nugent for “inappropriate” comments. No matter what side of the aisle to sit on politically, it’s hard to deny that the comments at the least engender some sort of violent imagery.

    Check out the comments in the video below:

    “King of All Media” Howard Stern, no stranger to controversy himself, has weighed in on Ted Nugent. Here’s what the shock jock had to say on his Sirius XM morning show:

    I love that guy. He’s nuts…He’s one of those guys who kills deer, so he thinks he’s like, a tough guy…During the Vietnam War, he admits that he peed his own pants and s**t his pants for a week and went down there and got out of the draft. If he’s so tough, why don’t you go in the f***ing military…He talks about fighting for his freedoms. Who is he fighting,…deer? I mean who is he fighting? As far as I know he’s fighting deer…Why doesn’t he sign up for Afghanistan?…He should be playing Cat Scratch Fever at some fair, which is probably what frustrates him most…Just a big p**sy with a f***ing gun.

    Stern and Nugent aren’t strangers, either. Nugent has appeared on some version of the Howard Stern show numerous times and debated a wide variety of topics:

    Yesterday, we told you that Stern’s $300 million lawsuit against Sirius XM had been dismissed.

    As far as Nugent goes, he has a meeting with the Secret Service on his schedule. He said there’s nothing to worry about. “I’ve never threatened anybody’s life in my life,” he said. “I don’t waste my breath threatening.”

  • SiriusXM Offers Every Game Of The 2012 NCAA Tourney

    Sirius XM Radio will broadcast every game of the 2012 NCAA Men’s Basketball Championship, offering subscribers nationwide uninterrupted access to play-by-play of every match-up through the Final Four and National Championship game in New Orleans on March 31 and April 2.

    All tournament games will be available to SiriusXM listeners in their entirety, with no blackouts. Tournament match-ups and Sirius and XM channel assignments will be available at www.siriusxm.com/collegesports starting Monday, March 12.

    On Selection Sunday, March 11, SiriusXM will offer an evening of selection show specials that will give listeners live updates as tournament teams and match-ups are announced. Chris “Mad Dog” Russo and Steve Torre will host live from 5:00 to 9:00 pm ET on channel 86. Then from 9:00 pm to midnight ET, listeners can tune into continued coverage on SiriusXM College Sports Nation channel 91. The shows will feature interviews with special guests, including team coaches and selection committee chair Jeff Hathaway, and give fans a place to call in and share their reactions and opinions as the field is revealed.

    Mike Krzyzewski, head coach of the Duke Blue Devils, will continue to host his weekly talk show, Basketball and Beyond with Coach K, throughout the tournament. Listeners can hear the show Wednesdays at 7:00 pm ET on Mad Dog Radio with replays on SiriusXM College Sports Nation.

    Fans can also follow everything happening throughout the tournament on SiriusXM College Sports Nation, SiriusXM’s all-college sports channel. Listeners will hear live play-by-play of tournament games plus daily talk and analysis from a roster of hosts that includes former Villanova University and University of Massachusetts coach Steve Lappas, former University of Vermont coach Tom Brennan, 1992 UPI Player of the Year Jimmy Jackson, and college basketball experts Mark Packer, Jeff Goodman, Jon Rothstein, Jason Horowitz and Chris Childers.

    SiriusXM College Sports Nation hosts will be in New Orleans broadcasting live from Friday, March 30, through Tuesday, April 3, delivering fans all the latest news and talk from the Final Four.

    SiriusXM will also offer coverage of the NCAA Division I Women’s Basketball Championship, providing listeners from coast to coast with full coverage of every regional final, the Women’s Final Four and championship game.

  • Howard Stern Sues Sirius XM for Millions

    Howard Stern Sues Sirius XM for Millions

    The self described “King of all Media” wants his royalties.  On Tuesday Stern’s production company One Twelve Inc. and agent Don Buchwald were named plaintiffs in a lawsuit against Stern’s employer, Sirius XM satellite radio.  The lawsuit claims breach of contract and states that Sirius reneged on guaranteed stock bonuses for Stern based on successful performance.  Buchwald is also demanding his guaranteed consulting fee of 10% of One Twelve payments.

    By October 2004, Howard Stern was already in the upper echelon of his profession.  The Howard Stern Show, broadcast in New York City, garnered 20 million listeners at its peak.  Stern was the first radio host to be number one in both NYC and Los Angeles simultaneously.  As the suit takes time to explain, nobody could argue against Howard Stern’s incredible popularity:

    Howard Stern is a world renowned radio and entertainment personality.  Stern is a unique talent who is widely credited with revolutionizing talk radio.  His brand of free-wheeling discourse and reality programming is enormously popular and has made Stern into a household name.

    The suit identifies Stern a a superstar – one who took an enormous risk by agreeing to take his widely popular show to an unproven satellite radio company.  At the time of the contract, Sirius only had 700,000 subscribers, a distant second behind industry leader at the time XM who had upwards of 2.5 million.

    Sirius needed Stern more than Stern needed Sirius. Stern was unsure if he wanted to continue in radio. He was under pressure to perform, keeping a grueling schedule that required getting up at 4 am., and was seriously thinking of retiring. Moving to satellite radio, and especially to Sirius, was a significant risk for Stern. Stern and Buchwald wanted assurances that if Stern made Sirius a success, they would share in that success.

    In order to tempt Stern to come on board, Sirius drew up a plan that involved a series of escalating stock awards, payable to Stern’s production company One Twelve if Stern himself attracted 2 million new subscribers or if Sirius exceeded their own yearly estimates for subscribers by more than 2 million.

    In addition, for each additional 2 million subscribers per year, Stern was to receive stock bonuses.  Those subscribers had to either be directly attributed to Stern or simply be total users above Sirius’ own projections.  The bonuses were to be paid for increases in subscriptions in multiples of 2 million, capping at 10 million.  In lawyer speak:

    Sirius was required to pay One Twelve a second performance-based stock award if the Agreement remained in effect and, on or before December 31, 2010, either (i) Sirius had acquired a total number of 4 million or more HS-Generated Subscribers or (ii) the total number of Sirius subscribers at the end of any calendar year exceeded the “Siri Internal Estimate” year-end subscriber target for such year by more than 4 million subscribers.

    And so on and so forth, up 10 million subscribers each year.  The lawsuit quotes Sirius as justifying the stock bonuses by drawing on the overwhelming good Stern would do for the company.

    Sirius acknowledged that it was “obligated to make substantial stock-based incentive payments under the agreement if [it] significantly exceed[ed] agreed upon year-end subscriber targets during the term of the agreement.” But Sirius stated that any such payments would be more than offset because its “agreement with Stem [would] have material positive benefit to [its] business, including a positive impact on consumer awareness, average revenue per subscriber, churn and partner relations.”

    Well, it seems as though Stern did his part in drumming up subscribers.  Before he even went on the air in 2006, Sirius had nearly 3 million more listeners waiting for his arrival.  By the end of 2006, Sirius had gained nearly another 3 million listeners, having more than 6 million total.  They promptly paid Stern his bonuses.  It wasn’t until Sirius acquired XM in a merger in 2008 that things began to go off the rails a bit.

    The acquisition of XM caused a enormous leap in Sirius’ subscriber numbers. Here are the statistics the lawsuit throws at us:

    By the end of 2008, the total number of Sirius subscribers had reached 19,003,856, exceeding the estimate contained in the Agreement by more than 10 million subscribers. By the end of 2009, the total number of Sirius subscribers had dipped slightly to 18,772,758, exceeding the estimate contained in the Agreement by more than 8 million subscribers. By the end of  2010, the last year of the Agreement, the total number of Sirius subscribers had reached an all-time high of 20, 190,964 total subscribers, exceeding the estimate contained in the Agreement by more than 8 million subscribers.

    According to the agreement quoted previously, it seems as though Stern earned his bonuses, by an incredible margin.  Sirius feels differently, as explained in the suit.  As Stern was re-negotiating his contract in 2010, he was also asking about his bonuses.  When pestered enough about them, Sirius’ lead counsel told Stern that subscribers on the XM platform didn’t count towards that total number of Sirius subscribers mark that he was shooting for.

    The lawsuit argues two major points in the contention of the above claim.  First, it argues that without Stern, Sirius never would have been able to acquire XM.  It was his popularity, they say, that even put Sirius on the map and made them a competitor in the satellite radio world.  The subscriber growth numbers seem to support that conclusion, as they are staggering.  Second, the suit argues that the original agreement differentiates between Howard Stern specific generated subscribers and total subscribers over the yearly projections.  Even if all those subscribers couldn’t be directly attributed to Stern himself, Sirius’ total subscribers obviously beat their yearly projections at least 2 million – 8 million in 2010.

    The suits’ closing argument, per say:

    In 2004, when Sirius desperately needed Stern to make its business viable, it induced him to move to Sirius by offering him a chance to share in the success of the company.  Now that Stern has put the company on the map, brought in millions of subscribers, and helped it conquer its chief rival, Sirius has unilaterally decided that Stern has been paid enough. The amounts owed to One Twelve and Buchwald represent a fraction of the revenues that Stern enabled Sirius to achieve, yet Sirius refuses to honor its commitments to him and Buchwald.

    And so ends a straightforward and quite reader-friendly brief. Howard Stern has been an enormous draw for Sirius XM, however, is he solely responsible for their early success that allowed them to grow and acquire more market share?  That’s debatable.  Stern’s argument looks pretty strong to this writer, however we have yet to hear Sirius’ defense.  All we know is that Sirius says it is “surprised and disappointed” according to Reuters.  Last time Stern had beef with his bosses, he turned it into the film Private Parts and only boosted his notoriety.  Could another ongoing struggle with his employer bring even more listeners to Stern?