SIRIUS XM HOLDINGS INC., 10-K filed on 2/2/2021
Annual Report
v3.20.4
Cover Page - USD ($)
12 Months Ended
Dec. 31, 2020
Jan. 29, 2021
Jun. 30, 2020
Cover [Abstract]      
Document Type 10-K    
Document Annual Report true    
Document Period End Date Dec. 31, 2020    
Current Fiscal Year End Date --12-31    
Document Transition Report false    
Entity File Number 001-34295    
Entity Registrant Name SIRIUS XM HOLDINGS INC.    
Entity Incorporation, State or Country Code DE    
Entity Tax Identification Number 38-3916511    
Entity Address, Address Line One 1221 Avenue of the Americas    
Entity Address, Address Line Two 35th Floor    
Entity Address, City or Town New York    
Entity Address, State or Province NY    
Entity Address, Postal Zip Code 10020    
City Area Code 212    
Local Phone Number 584-5100    
Title of 12(b) Security Common stock, $0.001 par value    
Trading Symbol SIRI    
Security Exchange Name NASDAQ    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Large Accelerated Filer    
Entity Small Business false    
Entity Emerging Growth Company false    
ICFR Auditor Attestation Flag true    
Entity Shell Company false    
Entity Public Float     $ 6,902,732,943
Entity Common Stock, Shares Outstanding   4,139,978,947  
Documents Incorporated by Reference Information included in our definitive proxy statement for our 2021 annual meeting of stockholders scheduled to be held on Thursday, June 3, 2021 is incorporated by reference into Items 10, 11, 12, 13 and 14 of Part III of this report.    
Entity Central Index Key 0000908937    
Document Fiscal Year Focus 2020    
Document Fiscal Period Focus FY    
Amendment Flag false    
v3.20.4
Consolidated Statements of Comprehensive Income - USD ($)
shares in Millions, $ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Revenue:      
Revenue $ 8,040 $ 7,794 $ 5,771
Cost of services:      
Subscriber acquisition costs 362 427 470
Sales and marketing 957 937 484
Engineering, design and development 263 280 123
General and administrative 511 524 354
Depreciation and amortization 506 468 301
Acquisition and restructuring costs 28 84 3
Impairment charges 976 0 0
Total operating expenses 7,182 6,147 4,044
Income from operations 858 1,647 1,727
Other (expense) income:      
Interest expense (394) (390) (350)
Loss on extinguishment of debt (40) (57) 0
Other income (expense) 6 (3) 44
Total other (expense) income (428) (450) (306)
Income before income taxes 430 1,197 1,421
Income tax expense (299) (283) (245)
Net income 131 914 1,176
Foreign currency translation adjustment, net of tax 7 14 (29)
Total comprehensive income $ 138 $ 928 $ 1,147
Net income per common share:      
Basic (in USD per share) $ 0.03 $ 0.20 $ 0.26
Diluted (in USD per share) $ 0.03 $ 0.20 $ 0.26
Weighted average common shares outstanding:      
Basic (in shares) 4,330 4,501 4,462
Diluted (in shares) 4,429 4,616 4,561
Subscriber revenue      
Revenue:      
Revenue $ 6,372 $ 6,120 $ 5,264
Advertising revenue      
Revenue:      
Revenue 1,340 1,336 188
Equipment      
Revenue:      
Revenue 173 173 155
Cost of services:      
Cost of services 19 29 31
Other revenue      
Revenue:      
Revenue 155 165 164
Revenue share and royalties      
Cost of services:      
Cost of services 2,421 2,291 1,394
Programming and content      
Cost of services:      
Cost of services 481 462 406
Customer service and billing      
Cost of services:      
Cost of services 481 475 382
Transmission      
Cost of services:      
Cost of services $ 177 $ 170 $ 96
v3.20.4
Consolidated Balance Sheets - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Current assets:    
Cash and cash equivalents $ 71 $ 106
Receivables, net 672 670
Inventory, net 10 11
Related party current assets 20 22
Prepaid expenses and other current assets 194 194
Total current assets 967 1,003
Property and equipment, net 1,629 1,626
Intangible assets, net 3,340 3,467
Goodwill 3,122 3,843
Related party long-term assets 531 452
Deferred tax assets 111 153
Operating lease right-of-use assets 427 466
Other long-term assets 206 139
Total assets 10,333 11,149
Current liabilities:    
Accounts payable and accrued expenses 1,223 1,151
Accrued interest 174 160
Current portion of deferred revenue 1,721 1,930
Current maturities of debt 1 2
Operating lease current liabilities 48 46
Related party current liabilities 0 4
Total current liabilities 3,167 3,293
Long-term deferred revenue 118 130
Long-term debt 8,499 7,842
Deferred tax liabilities 266 70
Operating lease liabilities 419 456
Other long-term liabilities 149 94
Total liabilities 12,618 11,885
Commitments and contingencies (Note 17)
Stockholders’ equity (deficit):    
Common stock, par value $0.001 per share; 9,000 shares authorized; 4,176 and 4,412 shares issued; 4,173 and 4,412 shares outstanding at December 31, 2020 and December 31, 2019, respectively 4 4
Accumulated other comprehensive income, net of tax 15 8
Additional paid-in capital 0 395
Treasury stock, at cost; 3 and 0 shares of common stock at December 31, 2020 and December 31, 2019, respectively (19) 0
Accumulated deficit (2,285) (1,143)
Total stockholders’ equity (deficit) (2,285) (736)
Total liabilities and stockholders’ equity (deficit) $ 10,333 $ 11,149
v3.20.4
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2020
Dec. 31, 2019
Statement of Financial Position [Abstract]    
Common stock, par value ( in USD per share) $ 0.001 $ 0.001
Common stock authorized (in shares) 9,000,000,000 9,000,000,000
Common stock issued (in shares) 4,176,000,000 4,412,000,000
Common stock outstanding (in shares) 4,173,000,000 4,412,000,000
Treasury stock (in shares) 3,000,000 0
v3.20.4
Consolidated Statement of Stockholders' Equity (Deficit) - USD ($)
shares in Millions, $ in Millions
Total
Cumulative Effect, Adjustment
Common Stock
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss)
Cumulative Effect, Adjustment
Additional Paid-in Capital
Additional Paid-in Capital
Cumulative Effect, Adjustment
Treasury Stock
Accumulated Deficit
Accumulated Deficit
Cumulative Effect, Adjustment
Beginning balance (in shares) at Dec. 31, 2017     4,531         3    
Beginning balance at Dec. 31, 2017 $ (1,522) $ 44 $ 4 $ 19 $ 4 $ 1,715 $ 30 $ (17) $ (3,243) $ 10
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Comprehensive income, net of tax 1,147     (29)         1,176  
Share-based payment expense 133         133        
Exercise of stock options and vesting of restricted stock units (in shares)     27              
Exercise of stock options and vesting of restricted stock units 0                  
Withholding taxes on net share settlement of stock-based compensation (121)         (121)        
Cash dividends paid on common stock (201)         (201)        
Common stock repurchased (in shares)               209    
Common stock repurchased (1,297)             $ (1,297)    
Common stock retired (in shares)     (212)         (212)    
Common stock retired 0         (1,314)   $ 1,314    
Ending balance (in shares) at Dec. 31, 2018     4,346         0    
Ending balance at Dec. 31, 2018 (1,817)   $ 4 (6)   242   $ 0 (2,057)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Comprehensive income, net of tax 928     14         914  
Share-based payment expense 263         263        
Exercise of stock options and vesting of restricted stock units (in shares)     38              
Exercise of stock options and vesting of restricted stock units 8         8        
Withholding taxes on net share settlement of stock-based compensation (150)         (150)        
Cash dividends paid on common stock (226)         (226)        
Issuance of common stock as part of Pandora Acquisition (in shares)     392              
Issuance of common stock as part of Pandora Acquisition 2,355   $ 1     2,354        
Equity component of convertible note 62         62        
Common stock repurchased (in shares)               364    
Common stock repurchased (2,159)             $ (2,159)    
Common stock retired (in shares)     (364)         (364)    
Common stock retired 0   $ (1)     (2,158)   $ 2,159    
Ending balance (in shares) at Dec. 31, 2019     4,412         0    
Ending balance at Dec. 31, 2019 (736)   $ 4 8   395   $ 0 (1,143)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                    
Comprehensive income, net of tax 138     7         131  
Share-based payment expense 239         239        
Exercise of stock options and vesting of restricted stock units (in shares)     28              
Exercise of stock options and vesting of restricted stock units 0                  
Withholding taxes on net share settlement of stock-based compensation (115)         (115)        
Cash dividends paid on common stock (237)         (170)     (67)  
Common stock repurchased (in shares)               267    
Common stock repurchased (1,574)             $ (1,574)    
Common stock retired (in shares)     (264)         (264)    
Common stock retired 0         (349)   $ 1,555 (1,206)  
Ending balance (in shares) at Dec. 31, 2020     4,176         3    
Ending balance at Dec. 31, 2020 $ (2,285)   $ 4 $ 15   $ 0   $ (19) $ (2,285)  
v3.20.4
Consolidated Statement of Stockholders' Equity (Deficit) (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Statement of Stockholders' Equity [Abstract]      
Cash dividend per share of common stock (in USD per share) $ 0.05457 $ 0.04961 $ 0.04510
Common stock retired $ 0 $ 0 $ 0
v3.20.4
Consolidated Statements of Cash Flows - USD ($)
12 Months Ended
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Cash flows from operating activities:      
Net income $ 131,000,000 $ 914,000,000 $ 1,176,000,000
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 506,000,000 468,000,000 301,000,000
Impairment charges 976,000,000 0 0
Non-cash interest expense, net of amortization of premium 20,000,000 17,000,000 9,000,000
Provision for doubtful accounts 60,000,000 53,000,000 51,000,000
Amortization of deferred income related to equity method investment (3,000,000) (3,000,000) (3,000,000)
Loss on extinguishment of debt 40,000,000 57,000,000 0
Loss on unconsolidated entity investments, net 16,000,000 21,000,000 10,000,000
Gain on fair value instrument 0 0 (43,000,000)
Dividend received from unconsolidated entity investment 2,000,000 2,000,000 2,000,000
Loss on restructuring 24,000,000 0 0
(Gain) loss on other investments (3,000,000) (3,000,000) 1,000,000
Share-based payment expense 223,000,000 250,000,000 133,000,000
Deferred income taxes 238,000,000 259,000,000 257,000,000
Amortization of right-of-use assets 56,000,000 56,000,000 0
Changes in operating assets and liabilities:      
Receivables (36,000,000) (137,000,000) (42,000,000)
Inventory (2,000,000) 11,000,000 (2,000,000)
Related party, net 0 (10,000,000) 1,000,000
Prepaid expenses and other current assets 14,000,000 10,000,000 (20,000,000)
Other long-term assets (61,000,000) 7,000,000 9,000,000
Accounts payable and accrued expenses 42,000,000 109,000,000 (20,000,000)
Accrued interest 13,000,000 32,000,000 (9,000,000)
Deferred revenue (223,000,000) (58,000,000) 70,000,000
Operating lease liabilities (53,000,000) (47,000,000) 0
Other long-term liabilities 38,000,000 9,000,000 (1,000,000)
Net cash provided by operating activities 2,018,000,000 2,017,000,000 1,880,000,000
Cash flows from investing activities:      
Additions to property and equipment (350,000,000) (363,000,000) (355,000,000)
Purchases of other investments (8,000,000) (7,000,000) (8,000,000)
Acquisition of business, net of cash acquired (300,000,000) 313,000,000 (2,000,000)
Sale of short-term investments 0 73,000,000 0
Investments in related parties and other equity investees (94,000,000) (19,000,000) (17,000,000)
Repayment from related party 11,000,000 0 3,000,000
Net cash used in investing activities (741,000,000) (3,000,000) (379,000,000)
Cash flows from financing activities:      
Proceeds from exercise of stock options 0 8,000,000 0
Taxes paid from net share settlements for stock-based compensation (114,000,000) (150,000,000) (120,000,000)
Revolving credit facility, net of deferred financing costs 649,000,000 (439,000,000) 136,000,000
Proceeds from long-term borrowings, net of costs 1,481,000,000 2,715,000,000 0
Proceeds from sale of capped call security 0 3,000,000 0
Principal payments of long-term borrowings (1,507,000,000) (1,666,000,000) (16,000,000)
Payment of premiums on redemption of debt (31,000,000) (45,000,000) 0
Common stock repurchased and retired (1,555,000,000) (2,159,000,000) (1,314,000,000)
Dividends paid (237,000,000) (226,000,000) (201,000,000)
Net cash used in financing activities (1,314,000,000) (1,959,000,000) (1,515,000,000)
Net (decrease) increase in cash, cash equivalents and restricted cash (37,000,000) 55,000,000 (14,000,000)
Cash, cash equivalents and restricted cash at beginning of period [1] 120,000,000 65,000,000 79,000,000
Cash, cash equivalents and restricted cash at end of period [1] 83,000,000 120,000,000 65,000,000
Cash paid during the period for:      
Interest, net of amounts capitalized 358,000,000 337,000,000 345,000,000
Income taxes paid 38,000,000 10,000,000 6,000,000
Non-cash investing and financing activities:      
Treasury stock not yet settled (19,000,000) 0 17,000,000
Fair value of shares issued related to acquisition of a business 0 2,355,000,000 0
Accumulated other comprehensive income (loss), net of tax $ 7,000,000 $ 14,000,000 $ (29,000,000)
[1] The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year.
(in millions)December 31, 2020December 31, 2019December 31, 2018December 31, 2017
Cash and cash equivalents$71 $106 $54 $69 
Restricted cash included in Other long-term assets12 14 11 10 
Total cash, cash equivalents and restricted cash at end of period$83 $120 $65 $79 
v3.20.4
Consolidated Statements of Cash Flows (Parenthetical) - USD ($)
$ in Millions
Dec. 31, 2020
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2017
Statement of Cash Flows [Abstract]        
Cash and cash equivalents $ 71 $ 106 $ 54 $ 69
Restricted cash included in Other long-term assets 12 14 11 10
Total cash, cash equivalents and restricted cash at end of period [1] $ 83 $ 120 $ 65 $ 79
[1] The following table reconciles cash, cash equivalents and restricted cash per the statement of cash flows to the balance sheet. The restricted cash balances are primarily due to letters of credit which have been issued to the landlords of leased office space. The terms of the letters of credit primarily extend beyond one year.
(in millions)December 31, 2020December 31, 2019December 31, 2018December 31, 2017
Cash and cash equivalents$71 $106 $54 $69 
Restricted cash included in Other long-term assets12 14 11 10 
Total cash, cash equivalents and restricted cash at end of period$83 $120 $65 $79 
v3.20.4
Business & Basis of Presentation
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Business & Basis of Presentation Business & Basis of Presentation
This Annual Report on Form 10-K presents information for Sirius XM Holdings Inc. and its subsidiaries (collectively “Holdings”).  The terms “Holdings,” “we,” “us,” “our,” and “our company” as used herein, and unless otherwise stated or indicated by context, refer to Sirius XM Holdings Inc. and its subsidiaries. “Sirius XM” refers to our wholly owned subsidiary Sirius XM Radio Inc. and its subsidiaries. “Pandora” refers to Sirius XM's wholly owned subsidiary Pandora Media, LLC (the successor to Pandora Media, Inc.) and its subsidiaries. Holdings has no operations independent of Sirius XM and Pandora.
Business
We operate two complementary audio entertainment businesses - our Sirius XM business and our Pandora business. 

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. 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. Satellite radios are primarily distributed through automakers, retailers and our website. Our Sirius XM service is also available through our user interface, which we call “360L,” that combines our satellite and streaming services into a single, cohesive in-vehicle entertainment experience.
The primary source of revenue from our Sirius XM business is subscription fees, with most of our customers subscribing to monthly, quarterly, semi-annual or annual plans.  We also derive revenue from advertising on select non-music channels, direct sales of our satellite radios and accessories, and other ancillary services.  As of December 31, 2020, our Sirius XM business had approximately 34.7 million subscribers.
In addition to our audio entertainment businesses, we provide connected vehicle services to several automakers. These services are designed to enhance the safety, security and driving experience of consumers. 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.
In May 2020, we terminated the Automatic Labs Inc. (“Automatic”) service, which was part of our connected services business. Automatic operated a service for consumers and auto dealers and offered an install-it-yourself adapter and mobile application, which transformed vehicles into connected vehicles. During the year ended December 31, 2020, we recorded $24 of restructuring expenses in our consolidated statements of comprehensive income related to this termination of the service. We did not record any restructuring expenses during the years ended December 31, 2019 and 2018. Refer to Note 5 for more information.
Sirius XM also holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”). Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics.

Pandora
Our Pandora 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, car speakers or connected devices.  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).  As of December 31, 2020, Pandora had approximately 6.3 million subscribers.
The majority of revenue from our Pandora 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.
Our Pandora business also sells advertising on audio platforms and in podcasts unaffiliated with us. Pandora has an arrangement with SoundCloud Holdings, LLC ("SoundCloud") to be its exclusive US ad sales representative. Through this arrangement Pandora is able to offer advertisers the ability to execute campaigns in the US across the Pandora and SoundCloud listening platforms. We also have arrangements to serve as the ad sales representative for certain podcasts. In addition, through AdsWizz Inc., Pandora provides a comprehensive digital audio and programmatic advertising technology platform, which connects audio publishers and advertisers with a variety of ad insertion, campaign trafficking, yield optimization, programmatic buying, marketplace and podcast monetization solutions.
On October 16, 2020, Sirius XM acquired certain assets and liabilities of Stitcher from The E.W. Scripps Company and certain of its subsidiaries for a total consideration of $296, which included $272 in cash and $30 related to contingent consideration, partially offset by working capital adjustments of $6. The acquisition of Stitcher, in conjunction with Simplecast, created a full-service platform for podcast creators, publishers and advertisers. Refer to Note 3 for more information on this acquisition.
On June 16, 2020, Sirius XM acquired Simplecast for $28 in cash. Simplecast is a podcast management and analytics platform. Refer to Note 3 for more information on this acquisition.
On February 10, 2020, Sirius XM invested $75 in SoundCloud. SoundCloud is the world’s largest open audio platform, with a connected community of creators, listeners, and curators. SoundCloud’s platform enables its users to upload, promote, share and create audio entertainment. The minority investment complements the existing ad sales relationship between SoundCloud and Pandora. Refer to Note 13 for more information on this investment.
Impact of the coronavirus (“COVID-19”) pandemic
The precise extent to which the COVID-19 pandemic will impact our operational and financial performance will depend on various factors. To date, the pandemic has not increased our costs of or access to capital under our revolving credit facility and in the debt markets, and we do not believe it is reasonably likely to in the future. In addition, we do not believe that the pandemic will affect our ongoing ability to meet the covenants in our debt instruments, including under our revolving credit facility. Due to the nature of our subscription business, the effect of the COVID-19 pandemic will not be fully reflected in certain of our results of operations until future periods.
Liberty Media
As of December 31, 2020, Liberty Media Corporation (“Liberty Media”) beneficially owned, directly and indirectly, approximately 76% of the outstanding shares of our common stock.  As a result, we are a “controlled company” for the purposes of the NASDAQ corporate governance requirements.
Basis of Presentation
The accompanying consolidated financial statements of Holdings have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany transactions have been eliminated in consolidation. Certain numbers in our prior period consolidated financial statements and footnotes have been reclassified or consolidated to conform to our current period presentation. Music Royalty Fee revenue was reported as Other revenue in our December 31, 2018 Annual Report on Form 10-K. This revenue was reclassified to Subscriber revenue to conform with the current period presentation.
For the Year Ended December 31, 2018
As ReportedReclassificationCurrent Report
Subscriber revenue$4,594 $670 $5,264 
Advertising revenue188 — 188 
Equipment revenue155 — 155 
Other revenue834 (670)164 
Total revenue$5,771 $— $5,771 
Public companies are required to disclose certain information about their reportable operating segments.  Operating segments are defined as significant components of an enterprise for which separate financial information is available and is evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources to an individual segment and in assessing performance of the segment. We have determined that we have two reportable segments as our chief operating decision maker, our Chief Executive Officer, assesses performance and allocates resources based on the financial results of these segments. Refer to Note 19 for information related to our segments.
We have evaluated events subsequent to the balance sheet date and prior to the filing of this Annual Report on Form 10-K for the year ended December 31, 2020 and have determined that no events have occurred that would require adjustment to our consolidated financial statements.  For a discussion of subsequent events that do not require adjustment to our consolidated financial statements refer to Note 20.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes.  Estimates, by their nature, are based on judgment and available information.  Actual results could differ materially from those estimates.  Significant estimates inherent in the preparation of the accompanying consolidated financial statements include asset impairment, depreciable lives of our satellites, share-based payment expense and income taxes.
We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates, judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained. Any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.
v3.20.4
Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2020
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
In addition to the significant accounting policies discussed in this Note 2, the following table includes our significant accounting policies that are described in other notes to our consolidated financial statements, including the number and page of the note:
Significant Accounting PolicyNote #Page #
Acquisition
F-16
Fair Value Measurements
F-19
Goodwill
F-21
Intangible Assets10 
F-22
Property and Equipment11 
F-24
Equity Method Investments13 
F-28
Share-Based Compensation16 
F-31
Legal Reserves17 
F-35
Income Taxes18 
F-39
Cash and Cash Equivalents
Our cash and cash equivalents consist of cash on hand, money market funds, certificates of deposit, in-transit credit card receipts and highly liquid investments purchased with an original maturity of three months or less.
Revenue Recognition
Revenue is measured according to Accounting Standards Codification (“ASC”) 606, Revenue - Revenue from Contracts with Customers, and is recognized based on consideration specified in a contract with a customer, and excludes any sales incentives and amounts collected on behalf of third parties. We recognize revenue when we satisfy a performance obligation by transferring control over a service or product to a customer. We report revenues net of any tax assessed by a governmental authority that is both imposed on, and concurrent with, a specific revenue-producing transaction between a seller and a customer in our consolidated statements of comprehensive income. Collected taxes are recorded within Other current liabilities until remitted to the relevant taxing authority. For equipment sales, we are responsible for arranging for shipping and handling. Shipping and handling costs billed to customers are recorded as revenue and are reported as a component of Cost of equipment.
The following is a description of the principal activities from which we generate our revenue, including from self-pay and paid promotional subscribers, advertising, and sales of equipment.
Subscriber revenue consists primarily of subscription fees and other ancillary subscription based revenues. Revenue is recognized on a straight line basis when the performance obligations to provide each service for the period are satisfied, which is over time as our subscription services are continuously transmitted and can be consumed by customers at any time. Consumers purchasing or leasing a vehicle with a factory-installed satellite radio may receive between a three and twelve month subscription to our service.  In certain cases, the subscription fees for these consumers are prepaid by the applicable automaker. Prepaid subscription fees received from automakers or directly from consumers are recorded as deferred revenue and amortized to revenue ratably over the service period which commences upon sale. Activation fees are recognized over one month as the activation fees are non-refundable and do not provide for a material right to the customer. There is no revenue recognized for unpaid trial subscriptions. In some cases we pay a loyalty fee to the automakers when we receive a certain amount of payments from self-pay customers acquired from that automaker. These fees are considered incremental costs to obtain a contract and are, therefore, recognized as an asset and amortized to Subscriber acquisition costs over an average subscriber life. Revenue share and loyalty fees paid to an automaker offering a paid trial are accounted for as a reduction of revenue as the payment does not provide a distinct good or service.
Music royalty fee primarily consists of U.S. music royalty fees (“MRF”) collected from subscribers. The related costs we incur for the right to broadcast music and other programming are recorded as Revenue share and royalties expense.  Fees received from subscribers for the MRF are recorded as deferred revenue and amortized to Subscriber revenue ratably over the service period.
We recognize revenue from the sale of advertising as performance obligations are satisfied, which generally occurs as ads are delivered. For our satellite radio service, ads are delivered when they are aired. For our streaming services, ads are delivered primarily based on impressions. Agency fees are calculated based on a stated percentage applied to gross billing revenue for our advertising inventory and are reported as a reduction of advertising revenue.  Additionally, we pay certain third parties a percentage of advertising revenue.  Advertising revenue is recorded gross of such revenue share payments as we control the advertising service, including the ability to establish pricing, and we are primarily responsible for providing the service.  Advertising revenue share payments are recorded to Revenue share and royalties during the period in which the advertising is transmitted.
Equipment revenue and royalties from the sale of satellite radios, components and accessories are recognized upon shipment, net of discounts and rebates. Shipping and handling costs billed to customers are recorded as revenue.  Shipping and handling costs associated with shipping goods to customers are reported as a component of Cost of equipment. Other revenue primarily includes revenue recognized from royalties received from Sirius XM Canada.
Customers pay for the services in advance of the performance obligation and therefore these prepayments are recorded as deferred revenue. The deferred revenue is recognized as revenue in our consolidated statement of comprehensive income as the services are provided. Changes in the deferred revenue balance during the year ended December 31, 2020 were not materially impacted by other factors.
As the majority of our contracts are one year or less, we have utilized the optional exemption under ASC 606-10-50-14 and do not disclose information about the remaining performance obligations for contracts which have original expected durations of one year or less. As of December 31, 2020, less than ten percent of our total deferred revenue balance related to contracts that extend beyond one year. These contracts primarily include prepaid data trials which are typically provided for three to five years as well as for self-pay customers who prepay for their audio subscriptions for up to three years in advance. These amounts are recognized on a straight-line basis as our services are provided.
Revenue Share
We share a portion of our subscription revenues earned from self-pay subscribers with certain automakers.  The terms of the revenue share agreements vary with each automaker, but are typically based upon the earned audio revenue as reported or gross billed audio revenue. Revenue share on self-pay revenue is recognized as an expense and recorded in Revenue share and royalties in our consolidated statements of comprehensive income. We also pay revenue share to certain talent on non-music stations on our satellite radio service and to podcast talent based on advertising revenue for the related channel or podcast. Revenue share on non-music channels and podcasts is recognized in Revenue share and royalties in our consolidated statements of comprehensive income when it is earned. In some cases we prepay minimum guarantees for revenue share to podcast talent which is recorded in Prepaid and other current assets in our consolidated statements of financial position. The minimum guarantee is recognized in Revenue share and royalties primarily on a straight line basis over the contractual term. The prepaid balance is regularly reviewed for recoverability and any amount not deemed to be recoverable is recognized as an expense in the period.
Royalties
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). Our Sirius XM and Pandora businesses 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. The music rights licensing arrangements for our Sirius XM and Pandora businesses are complex.
Musical Composition Copyrights
We pay performance royalties for our Sirius XM and Pandora businesses to holders and rights administrators of musical compositions copyrights, including performing rights organizations and other copyright owners. These performance royalties are based on agreements with performing rights organizations which represent the holders of these performance rights. Our Sirius XM and Pandora businesses have arrangements with these performance rights organizations. Arrangements with Sirius XM generally include fixed payments during the term of the agreement and arrangements with Pandora for its ad-supported radio service have variable payments based on usage and ownership of a royalty pool. Pandora must also license reproduction rights, which are also referred to as mechanical rights, to offer the interactive features of the Pandora services. For our Pandora subscription services, copyright holders receive payments for these rights at the rates determined in accordance with the statutory license set forth in Section 115 of the United States Copyright Act. These mechanical royalties are calculated as the greater of a percentage of our revenue or a percentage of our payments to record labels.
For our interactive music services offered by our Pandora business, we pay mechanical royalties to copyright holders at the rates determined by the Copyright Royalty Board (the “CRB”) in accordance with the statutory license set forth in Section 115 of the United States Copyright Act.
Sound Recording Copyrights
For our non-interactive satellite radio or streaming services we may license sound recordings under direct licenses with the owners of sound recordings or based on the royalty rate established by the CRB. For our Sirius XM business, the royalty rate for sound recordings has been set by the CRB. The revenue subject to royalty includes subscription revenue from our U.S. satellite digital audio radio subscribers, and advertising revenue from channels other than those channels that make only incidental performances of sound recordings. The rates and terms permit us to reduce the payment due each month for those sound recording 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.
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 sound recordings that we stream and for which we have not entered into a direct license agreement with the sound recording rights holders, the sound recordings are streamed pursuant to the statutory royalty rates set by the CRB. Pandora pays royalties to owners of sound recordings on either a per-performance fee based on the number of sound recordings transmitted or a percentage of revenue associated with the applicable service. Certain of these agreements also require Pandora to pay a per subscriber minimum amount.
Programming Costs
Programming costs which are for a specified number of events are amortized on an event-by-event basis; programming costs which are for a specified season or include programming through a dedicated channel are amortized over the season or period on a straight-line basis. We allocate a portion of certain programming costs which are related to sponsorship and marketing activities to Sales and marketing expense on a straight-line basis over the term of the agreement.
Advertising Costs
Media is expensed when aired and advertising production costs are expensed as incurred.  Advertising production costs include expenses related to marketing and retention activities, including expenses related to direct mail, outbound telemarketing and email communications.  We also incur advertising production costs related to cooperative marketing and promotional events and sponsorships.  During the years ended December 31, 2020, 2019 and 2018, we recorded advertising costs of $443, $392 and $267, respectively.  These costs are reflected in Sales and marketing expense in our consolidated statements of comprehensive income.
Subscriber Acquisition Costs
Subscriber acquisition costs consist of costs incurred to acquire new subscribers which include hardware subsidies paid to radio manufacturers, distributors and automakers, including subsidies paid to automakers who include a satellite radio and a prepaid subscription to our service in the sale or lease price of a new vehicle; subsidies paid for chipsets and certain other components used in manufacturing radios; device royalties for certain radios and chipsets; commissions paid to retailers and automakers as incentives to purchase, install and activate radios; product warranty obligations; freight; and provisions for inventory allowance attributable to inventory consumed in our automotive and retail distribution channels.  Subscriber acquisition costs do not include advertising costs, loyalty payments to distributors and dealers of radios and revenue share payments to automakers and retailers of radios.
Subsidies paid to radio manufacturers and automakers are expensed upon installation, shipment, receipt of product or activation and are included in Subscriber acquisition costs because we are responsible for providing the service to the customers.  Commissions paid to retailers and automakers are expensed upon either the sale or activation of radios.  Chipsets that are shipped to radio manufacturers and held on consignment are recorded as inventory and expensed as Subscriber acquisition costs when placed into production by radio manufacturers.  Costs for chipsets are expensed as Subscriber acquisition costs when the automaker confirms receipt.
Research & Development Costs
Research and development costs are expensed as incurred and primarily include the cost of new product development, chipset design, software development and engineering.  During the years ended December 31, 2020, 2019 and 2018, we recorded research and development costs of $220, $231 and $106, respectively.  These costs are reported as a component of Engineering, design and development expense in our consolidated statements of comprehensive income.
Accumulated Other Comprehensive Income (Loss), net of tax
Accumulated other comprehensive income of $15 was primarily comprised of the cumulative foreign currency translation adjustments related to Sirius XM Canada (refer to Note 13 for additional information). During the year ended December 31, 2020, we recorded a foreign currency translation adjustment gain of $7, which is recorded net of tax expense of $2. During the years ended December 31, 2019 and 2018, we recorded foreign currency translation adjustment gain (loss) of $14 and $(29), respectively, net of tax.
Recently Adopted Accounting Policies
ASU 2016-02, Leases (Topic 842). In February 2016, FASB issued ASU 2016-02 which requires companies to recognize lease assets and liabilities arising from operating leases in the statement of financial position. This ASU does not significantly change the previous lease guidance for how a lessee should recognize, measure, and present expenses and cash flows arising from a lease. Additionally, the criteria for classifying a finance lease versus an operating lease are substantially the same as the previous guidance. This ASU was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption was permitted. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, amending certain aspects of the new leasing standard. The amendment allows an additional optional transition method whereby an entity records a cumulative effect adjustment to opening retained earnings in the year of adoption without restating prior periods. We adopted this ASU on January 1, 2019 and elected the additional transition method per ASU 2018-11. Our leases consist of repeater leases, facility leases and equipment leases. We elected the package of practical expedients permitted under the transition guidance within the new standard.
Adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of approximately $347 and $369, respectively, as of January 1, 2019. The standard did not impact our consolidated statements of comprehensive income, consolidated statements of cash flows or debt. Additionally, we did not record a cumulative effect adjustment to opening retained earnings.
The effect of the changes made to our consolidated balance sheet as of January 1, 2019 for the adoption of ASU 2016-02 is included in the table below.
Balance at December 31, 2018Adjustments Due to ASU 2016-02Balance at January 1, 2019
Balance Sheet
Assets:
Operating lease right-of-use assets$— $347 $347 
Liabilities:
Accounts payable and accrued expenses$736 $(1)$735 
Operating lease current liabilities— 30 30 
Operating lease liabilities— 339 339 
Other long-term liabilities102 (21)81 
v3.20.4
Acquisitions
12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract]  
Acquisitions Acquisitions
Stitcher
On October 16, 2020, Sirius XM acquired certain assets and liabilities of Stitcher from The E.W. Scripps Company and certain of its subsidiaries ("Scripps") for $272 in cash, which amount includes net working capital adjustments. The agreement provides that Sirius XM will potentially make up to $60 in additional contingent payments to Scripps based on Stitcher achieving certain financial metrics in 2020 and 2021. The total purchase consideration of $296 includes $30 related to the acquisition date fair value of the contingent consideration, partially offset by working capital adjustments of $6. The fair value of the contingent consideration was determined using a probability-weighted cash flow model and will be remeasured to fair value at each subsequent reporting period. Stitcher is included in our Pandora reporting unit.
The table below summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:
Acquired Assets:
Receivables, net$21 
Prepaid expenses and other current assets16 
Property and equipment
Intangible assets38 
Goodwill218 
Operating lease right-of-use assets11 
Total assets$312 
Assumed Liabilities:
Accounts payable and accrued expenses$
Deferred revenue
Operating lease current liabilities
Operating lease liabilities
Total liabilities$16 
Total consideration$296 
The Stitcher acquisition was accounted for using the acquisition method of accounting. We recognized acquisition related costs of $4 that were expensed in Acquisition and restructuring costs in our consolidated statements of comprehensive income during the year ended December 31, 2020. The acquisition of Stitcher was financed through borrowings under our Credit Facility.
Simplecast
On June 16, 2020, Sirius XM acquired Simplecast for $28 in cash. Simplecast is a podcast management and analytics platform. Simplecast complements AdsWizz’s advertising technology platform, allowing the company to offer podcasters a simple solution for management, hosting, analytics and advertising sales, and is included in the Pandora reporting unit. The Simplecast acquisition was accounted for using the acquisition method of accounting. We recognized goodwill of $17, amortizable intangible assets of $12, other assets of less than $1 and deferred tax liabilities of $1. Acquisition related costs of less than $1 were expensed in Acquisition and restructuring costs in our consolidated statements of comprehensive income during the year ended December 31, 2020.
Pandora
On February 1, 2019, through a series of transactions, Pandora Media, Inc., became an indirect wholly owned subsidiary of Sirius XM and continues to operate as Pandora Media, LLC (the “Pandora Acquisition”). In connection with the Pandora Acquisition, we purchased all of the outstanding shares of the capital stock of Pandora for $2,355 by converting each outstanding share of Pandora common stock into 1.44 shares of our common stock and we also canceled our preferred stock investment in Pandora for $524 for total consideration of $2,879. Net cash acquired was $313. As part of the Pandora Acquisition, Holdings unconditionally guaranteed all of the payment obligations of Pandora under its outstanding 1.75% convertible senior notes due 2020 and 1.75% convertible senior notes due 2023.
The table below shows the value of the consideration paid in connection with the Pandora Acquisition:
Total
Pandora common stock outstanding272 
Exchange ratio1.44 
Common stock issued392 
Price per share of Holdings common stock$5.83 
Value of common stock issued to Pandora stockholders$2,285 
Value of replacement equity awards attributable to pre-combination service$70 
Consideration of common stock and replacement equity awards for pre-combination service$2,355 
Sirius XM’s Pandora preferred stock investment (related party fair value instrument) canceled$524 
Total consideration for Pandora Acquisition$2,879 
Value attributed to par at $0.001 par value
$
Balance to capital in excess of par value$2,354 
The table below summarizes the fair value of the assets acquired and liabilities assumed as of the acquisition date:
Acquired Assets:
Cash and cash equivalents$313 
Receivables, net353 
Prepaid expenses and other current assets109 
Property and equipment65 
Intangible assets1,107 
Goodwill1,553 
Deferred tax assets102 
Operating lease right-of-use assets104 
Long term assets
Total assets$3,713 
Assumed Liabilities:
Accounts payable and accrued expenses$324 
Deferred revenue37 
Operating lease current liabilities28 
Current maturities of debt151 
Long-term debt (a)218 
Operating lease liabilities69 
Other long-term liabilities
Total liabilities$834 
Total consideration$2,879 
(a)In order to present the assets acquired and liabilities assumed, the conversion feature associated with Pandora's convertible notes for $62 has been included within Long-term debt in the table above and included within Additional paid-in-capital within our statement of stockholders' equity (deficit). Refer to Note 14 for additional information.
The Pandora Acquisition was accounted for using the acquisition method of accounting. The excess purchase price over identifiable net tangible and intangible assets of $1,553 was recorded to Goodwill in our consolidated balance sheets as of December 31, 2019. Refer to Note 9 for a further discussion of Pandora goodwill which was impaired in the year ended December 31, 2020. A total of $776 has been allocated to identifiable intangible assets subject to amortization and relates to the assessed fair value of the acquired customer relationships and software and technology and is being amortized over the estimated weighted average useful lives of 8 and 5 years, respectively. A total of $331 has been allocated to identifiable
indefinite lived intangible assets and relates to the assessed fair value of the acquired trademarks. The fair value assessed for the majority of the remaining assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill has been allocated to the Pandora segment. Additionally, in connection with the Pandora Acquisition, we acquired gross net operating loss (“NOL”) carryforwards of approximately $1,287 for federal income tax purposes that are available to offset future taxable income. The acquired NOL's are limited by Section 382 of the Internal Revenue Code. Those limitations are not expected to impact our ability to fully utilize those NOL's within the carryforward period.
We recognized acquisition related costs of $84 that were expensed in Acquisition and restructuring costs in our consolidated statements of comprehensive income during the year ended December 31, 2019.
Pro Forma Financial Information
Pandora was consolidated into our financial statements starting on the acquisition date, February 1, 2019. The aggregate revenue and net loss of Pandora consolidated into our financial statements was $1,607 and $303, respectively, for the year ended December 31, 2019. The following pro forma financial information presents our results as if the Pandora Acquisition had occurred on January 1, 2018:
For the Years Ended December 31,
202020192018
Total revenue$8,046 $7,921 $7,348 
Net income$131 $938 $844 

These pro forma results are based on estimates and assumptions, which we believe are reasonable. They are not the results that would have been realized had the acquisition actually occurred on January 1, 2018 and are not indicative of our consolidated results of operations in future periods. The pro forma results primarily include adjustments related to amortization of acquired intangible assets, depreciation of property and equipment, acquisition costs, fair value gain or loss on the Pandora investment and associated tax impacts.
v3.20.4
Fair Value Measurements
12 Months Ended
Dec. 31, 2020
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants. As of December 31, 2020 and 2019, the carrying amounts of cash and cash equivalents, receivables, and accounts payable approximated fair value due to the short-term nature of these instruments. ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy for input into valuation techniques as follows:
i.Level 1 input: unadjusted quoted prices in active markets for identical instrument;
ii.Level 2 input: observable market data for the same or similar instrument but not Level 1, including quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and
iii.Level 3 input: unobservable inputs developed using management's assumptions about the inputs used for pricing the asset or liability.
Investments are periodically reviewed for impairment and an impairment is recorded whenever declines in fair value below carrying value are determined to be other than temporary. In making this determination, we consider, among other factors, the severity and duration of the decline as well as the likelihood of a recovery within a reasonable timeframe.
Our assets and liabilities measured at fair value were as follows:
 December 31, 2020December 31, 2019
 Level 1Level 2Level 3Total Fair
Value
Level 1Level 2Level 3Total Fair
Value
Liabilities:        
Debt (a)
— $9,011 — $9,011 — $8,378 — $8,378 
(a)The fair value for non-publicly traded instruments is based upon estimates from a market maker and brokerage firm.  Refer to Note 14 for information related to the carrying value of our debt as of December 31, 2020 and 2019.
v3.20.4
Restructuring Costs
12 Months Ended
Dec. 31, 2020
Restructuring and Related Activities [Abstract]  
Restructuring Costs Restructuring CostsIn May 2020, we terminated the Automatic service, which was part of our connected services business. During the year ended December 31, 2020, we recorded $24 of restructuring expenses primarily related to the write down of property and equipment, definite lived intangible assets and certain other assets in Acquisition and restructuring costs in our consolidated statements of comprehensive income. The termination of the Automatic service does not meet the requirements to be reported as a discontinued operation in our consolidated statements of comprehensive income because the termination of the service does not represent a strategic shift that will have a major effect on our operations and financial results. There were no restructuring costs during the years ended December 31, 2019 and 2018.
v3.20.4
Earnings per Share
12 Months Ended
Dec. 31, 2020
Earnings Per Share [Abstract]  
Earnings per Share Earnings per Share
Basic net income per common share is calculated by dividing the income available to common stockholders by the weighted average common shares outstanding during each reporting period.  Diluted net income per common share adjusts the weighted average number of common shares outstanding for the potential dilution that could occur if common stock equivalents (stock options, restricted stock units and convertible debt) were exercised or converted into common stock, calculated using the treasury stock method. We had no participating securities during the years ended December 31, 2020, 2019 and 2018.
Common stock equivalents of 62, 66, and 40 for the years ended December 31, 2020, 2019 and 2018, respectively, were excluded from the calculation of diluted net income per common share as the effect would have been anti-dilutive. We issued 392 shares of our common stock in connection with the Pandora Acquisition.
 For the Years Ended December 31,
 202020192018
Numerator:
Net Income available to common stockholders for basic net income per common share$131 $914 $1,176 
Effect of interest on assumed conversions of convertible notes, net of tax— 
Net Income available to common stockholders for dilutive net income per common share$139 $921 $1,176 
Denominator: 
Weighted average common shares outstanding for basic net income per common share4,330 4,501 4,462 
Weighted average impact of assumed convertible notes30 28 — 
Weighted average impact of dilutive equity instruments69 87 99 
Weighted average shares for diluted net income per common share
4,429 4,616 4,561 
Net income per common share: 
Basic$0.03 $0.20 $0.26 
Diluted$0.03 $0.20 $0.26 
v3.20.4
Receivables, net
12 Months Ended
Dec. 31, 2020
Receivables [Abstract]  
Receivables, net Receivables, net
Receivables, net, includes customer accounts receivable, receivables from distributors and other receivables. We do not have any customer receivables that individually represent more than ten percent of our receivables.
Customer accounts receivable, net, includes receivables from our subscribers, advertising customers, including advertising agencies and other customers, and is stated at amounts due, net of an allowance for doubtful accounts. Our allowance for doubtful accounts is based upon our assessment of various factors.  We consider historical experience, the age of the receivable balances, current economic conditions, industry experience and other factors that may affect the counterparty’s ability to pay.  Bad debt expense is included in Customer service and billing expense in our consolidated statements of comprehensive income.
Receivables from distributors primarily include billed and unbilled amounts due from automakers for services included in the sale or lease price of vehicles, as well as billed amounts due from wholesale distributors of our satellite radios.  Other receivables primarily include amounts due from manufacturers of our radios, modules and chipsets where we are entitled to subsidies and royalties based on the number of units produced.  We have not established an allowance for doubtful accounts for our receivables from distributors or other receivables as we have historically not experienced any significant collection issues with automakers or other third parties and do not expect issues in the foreseeable future.
Receivables, net, consists of the following:
 December 31, 2020December 31, 2019
Gross customer accounts receivable$574 $546 
Allowance for doubtful accounts(15)(14)
Customer accounts receivable, net$559 $532 
Receivables from distributors73 113 
Other receivables40 25 
Total receivables, net$672 $670 
v3.20.4
Inventory, net
12 Months Ended
Dec. 31, 2020
Inventory Disclosure [Abstract]  
Inventory, net Inventory, net
Inventory consists of finished goods, refurbished goods, chipsets and other raw material components used in manufacturing radios. Inventory is stated at the lower of cost or market.  We record an estimated allowance for inventory that is considered slow moving or obsolete or whose carrying value is in excess of net realizable value.  The provision related to products purchased for resale in our direct to consumer distribution channel and components held for resale by us is reported as a component of Cost of equipment in our consolidated statements of comprehensive income.  The provision related to inventory consumed in our OEM channel is reported as a component of Subscriber acquisition costs in our consolidated statements of comprehensive income.
Inventory, net, consists of the following:
 December 31, 2020December 31, 2019
Raw materials$— $
Finished goods13 13 
Allowance for obsolescence(3)(5)
Total inventory, net$10 $11 
v3.20.4
Goodwill
12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of the net tangible and identifiable intangible assets acquired in business combinations. Our annual impairment assessment of our two reporting units is performed as of the fourth quarter of each year, and an assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. ASC 350, Intangibles - Goodwill and Other, states that an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. ASC 350 also states that a reporting unit with a zero or negative carrying amount is not required to perform a qualitative assessment. Our Sirius XM reporting unit, which has an allocated goodwill balance of $2,290, had a negative carrying amount as of December 31, 2020.
We determined the fair value of our reporting units using a combination of an income approach, employing a discounted cash flow model, and a market approach. The discounted cash flow model relies on making assumptions, such as the extent of the economic downturn related to the COVID-19 pandemic, the expected timing of recovery, expected growth in profitability and discount rate, which we believe are appropriate. Additionally, assumptions related to guideline company financial multiples used in the market approach decreased based on current market observations. The results of our goodwill impairment test indicated that the estimated fair value of the Sirius XM reporting unit exceeded its carrying amount. The carrying amount of the Pandora reporting unit exceeded its estimated fair value primarily due to a reduction in the long-term forecast to reflect
increased costs related to royalty rates for streaming and increased uncertainty surrounding the projected demand for advertising and decrease of listening hours. As a result, we recorded a goodwill impairment charge of $956 during the year ended December 31, 2020 to write down the carrying amount of the Pandora goodwill in the Impairment charges line item in our consolidated statements of comprehensive income. No impairment losses were recorded for goodwill during the years ended December 31, 2019 and 2018.  
As of December 31, 2020, the cumulative balance of goodwill impairments recorded was $5,722, of which $4,766 was recognized during the year ended December 31, 2008 and is included in the carrying amount of the goodwill allocated to our Sirius XM reporting unit and $956 was recognized during the year ended December 31, 2020 and is included in the carrying amount of the goodwill allocated to our Pandora reporting unit.
As a result of the Simplecast and Stitcher acquisitions, we recorded additional goodwill of $17 and $218, respectively, during the year ended December 31, 2020 in our Pandora reporting unit. The goodwill of Simplecast is not deductible for tax purposes, however, the goodwill of Stitcher is deductible as it was an asset acquisition. Refer to Note 3 for information on these acquisitions.
Refer to the table below for our goodwill activity for the years ended December 31, 2020 and 2019.
Sirius XMPandoraTotal
Balance at December 31, 2018$2,290 $— $2,290 
Acquisition— 1,553 1,553 
Balance at December 31, 20192,290 1,553 3,843 
Acquisition— 235 235 
Impairment charge— (956)(956)
Balance at December 31, 2020$2,290 $832 $3,122 
v3.20.4
Intangible Assets
12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Intangible Assets
Our intangible assets include the following:
  December 31, 2020December 31, 2019
 Weighted
Average
Useful Lives
Gross
Carrying
Value
Accumulated AmortizationNet Carrying
Value
Gross
Carrying
Value
Accumulated AmortizationNet Carrying
Value
Indefinite life intangible assets:
       
FCC licensesIndefinite$2,084 $— $2,084 $2,084 $— $2,084 
TrademarksIndefinite250 — 250 251 — 251 
Definite life intangible assets:       
OEM relationships15 years220 (105)115 220 (90)130 
Licensing agreements12 years45 (45)— 45 (42)
Software and technology7 years31 (16)15 35 (25)10 
Due to Pandora and Stitcher Acquisitions:
Indefinite life intangible assets:
TrademarksIndefinite$311 $— $311 $331 $— $331 
Definite life intangible assets:
Customer relationships8 years441 (104)337 403 (49)354 
Software and technology5 years373 (145)228 373 (69)304 
Total intangible assets $3,755 $(415)$3,340 $3,742 $(275)$3,467 
Indefinite Life Intangible Assets
We have identified our FCC licenses and XM and Pandora trademarks as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use.
We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. Each of the FCC licenses authorizes us to use radio spectrum, a reusable resource that does not deplete or exhaust over time.
ASC 350-30-35, Intangibles - Goodwill and Other, provides for an option to first perform a qualitative assessment to determine whether it is more likely than not that an asset is impaired. If the qualitative assessment supports that it is more likely than not that the fair value of the asset exceeds its carrying value, a quantitative impairment test is not required. If the qualitative assessment does not support the fair value of the asset, then a quantitative assessment is performed. Our annual impairment assessment of our identifiable indefinite lived intangible assets is performed as of the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.
We completed a quantitative assessment of our FCC licenses and XM and Pandora trademarks during the fourth quarter of 2020 and qualitative assessments during the fourth quarter of 2019 and 2018. As of the date of our annual assessment for 2020, our impairment assessment of the fair value of our indefinite intangible assets indicated that the carrying value of our Pandora trademark exceeded the fair value of the asset by $20. The excess carrying value has been written off and recognized in the Impairment charges line item in our consolidated statements of comprehensive income. The impairment assessment for our FCC licenses and XM trademark indicate that the fair value of such assets substantially exceeded their carrying value and therefore were not at risk of impairment. As of the date of our annual assessment for 2019 and 2018, our impairment assessment of the fair value of our indefinite intangible assets indicated that the fair value of such assets substantially exceeded their carrying value and therefore were not at risk of impairment.
During the year ended December 31, 2020, we also recognized an impairment loss of less than $1 for intangible assets with indefinite lives related to the termination of the Automatic service.
No impairment loss was recognized for intangible assets with indefinite lives during the years ended December 31, 2019 and 2018.
Definite Life Intangible Assets
Definite-lived intangible assets are amortized over their respective estimated useful lives to their estimated residual values, in a pattern that reflects when the economic benefits will be consumed, and are reviewed for impairment under the provisions of ASC 360-10-35, Property, Plant and Equipment/Overall/Subsequent Measurement. We review intangible assets subject to amortization for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected cash flows, undiscounted and without interest, is less than the carrying amount of the asset, an impairment loss is recognized in an amount by which the carrying amount of the asset exceeds its fair value. No impairment loss was recognized for intangible assets with definite lives during the years ended December 31, 2020, 2019 and 2018.
Amortization expense for all definite life intangible assets was $152, $141 and $23 for the years ended December 31, 2020, 2019 and 2018, respectively. There were retirements of definite lived intangible assets of $17, which included a loss of $4, due to the termination of the Automatic service, during the year ended December 31, 2020. As part of the Simplecast acquisition, $12 was allocated to identifiable intangible assets subject to amortization and related to the assessed fair value of software and technology, which was determined by using the multi-period excess earnings method, as of the acquisition date. As part of the Stitcher acquisition, $38 was allocated to identifiable intangible assets subject to amortization and related to the assessed fair value of advertising relationship of $6, trademark of $3 and talent and content contracts of $29.
The expected amortization expense for each of the fiscal years 2021 through 2025 and for periods thereafter is as follows:
Years ending December 31,Amount
2021$153 
2022154 
2023141 
202475 
202569 
Thereafter103 
Total definite life intangible assets, net$695 
v3.20.4
Property and Equipment
12 Months Ended
Dec. 31, 2020
Property, Plant and Equipment [Abstract]  
Property and Equipment Property and Equipment
Property and equipment, including satellites, are stated at cost, less accumulated depreciation. Equipment under capital leases is stated at the present value of minimum lease payments. Depreciation is calculated using the straight-line method over the following estimated useful life of the asset:
Satellite system15 years
Terrestrial repeater network5-15 years
Broadcast studio equipment3-15 years
Capitalized software and hardware2-7 years
Satellite telemetry, tracking and control facilities3-15 years
Furniture, fixtures, equipment and other2-7 years
Building20or30 years
Leasehold improvementsLesser of useful life or remaining lease term
We review long-lived assets, such as property and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds the estimated future cash flows, an impairment charge is recognized in an amount by which the carrying amount exceeds the fair value of the asset. We did not record any impairments during the years ended December 31, 2020, 2019 and 2018.
Property and equipment, net, consists of the following:
 December 31, 2020December 31, 2019
Satellite system$1,587 $1,587 
Terrestrial repeater network105 100 
Leasehold improvements111 105 
Broadcast studio equipment100 137 
Capitalized software and hardware1,372 1,086 
Satellite telemetry, tracking and control facilities96 87 
Furniture, fixtures, equipment and other92 89 
Land38 38 
Building63 63 
Construction in progress510 505 
Total property and equipment4,074 3,797 
Accumulated depreciation and amortization(2,445)(2,171)
Property and equipment, net$1,629 $1,626 
Construction in progress consists of the following:
 December 31, 2020December 31, 2019
Satellite system$429 $371 
Terrestrial repeater network
Capitalized software and hardware52 107 
Other21 20 
Construction in progress$510 $505 
Depreciation and amortization expense on property and equipment was $354, $327 and $278 for the years ended December 31, 2020, 2019 and 2018, respectively.  Property and equipment of $94, which included a loss of $13 related to the termination of the Automatic service, was retired during the year ended December 31, 2020. We retired property and equipment of $9 and $35 during the years ended December 31, 2019 and 2018.
We capitalize a portion of the interest on funds borrowed to finance the construction and launch of our satellites. Capitalized interest is recorded as part of the asset’s cost and depreciated over the satellite’s useful life. Capitalized interest costs were $19, $17 and $12 for the years ended December 31, 2020, 2019 and 2018, respectively, which related to the construction of our SXM-7 and SXM-8 satellites. We also capitalize a portion of share-based compensation related to employee time for capitalized software projects. Capitalized share-based compensation costs were $17 and $13 for the years ended December 31, 2020 and 2019, respectively. We did not capitalize any share-based compensation for the year ended December 31, 2018.
Satellites
As of December 31, 2020, we operate a fleet of five satellites.  Each satellite requires an FCC license, and prior to the expiration of each license, we are required to apply for a renewal of the FCC satellite license.  The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. The chart below provides certain information on our satellites as of December 31, 2020:
Satellite DescriptionYear DeliveredEstimated End of
Depreciable Life
FCC License Expiration Year
SIRIUS FM-5200920242025
SIRIUS FM-6201320282022
XM-3200520202021
XM-4200620212022
XM-5201020252026
We have entered into agreements for the design construction and launch of two satellites, SXM-7 and SXM-8. On December 13, 2020, SXM-7 was successfully launched. In-orbit testing of SXM-7 began on January 4, 2021. During in-orbit testing of SXM-7, events occurred which have caused failures of certain SXM-7 payload units. An evaluation of SXM-7 is underway. The full extent of the damage to SXM-7 is not yet known. As of December 31, 2020, we had $220 capitalized in construction in progress related to SXM-7.
v3.20.4
Leases
12 Months Ended
Dec. 31, 2020
Leases [Abstract]  
Leases Leases
We have operating and finance leases for offices, terrestrial repeaters, data centers and certain equipment. Our leases have remaining lease terms of less than 1 year to 17 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. We elected the practical expedient to account for the lease and non-lease components as a single component. Additionally, we elected the practical expedient to not recognize right-of-use assets or lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the lease commencement date.
The components of lease expense were as follows:
For the Years Ended December 31,
20202019
Operating lease cost$82 $80 
Finance lease cost
Sublease income(2)(3)
Total lease cost$81 $81 
Supplemental cash flow information related to leases was as follows:
For the Years Ended December 31,
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$79 $70 
Financing cash flows from finance leases$$
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$$83 
Supplemental balance sheet information related to leases was as follows:
December 31, 2020December 31, 2019
Operating Leases
Operating lease right-of-use assets$427 $466 
Operating lease current liabilities48 46 
Operating lease liabilities419 456 
Total operating lease liabilities$467 $502 
December 31, 2020December 31, 2019
Finance Leases
Property and equipment, gross$$15 
Accumulated depreciation(7)(12)
Property and equipment, net$$
Current maturities of debt$$
Long-term debt— 
Total finance lease liabilities$$
December 31, 2020December 31, 2019
Weighted Average Remaining Lease Term
Operating leases9 years9 years
Finance leases1 year2 years
December 31, 2020December 31, 2019
Weighted Average Discount Rate
Operating leases5.3 %5.3 %
Finance leases1.7 %1.7 %
Maturities of lease liabilities were as follows:
Operating LeasesFinance Leases
Year ending December 31,
2020 (remaining)$71 $— 
202174 
202271 — 
202362 — 
202462 — 
Thereafter247 — 
Total future minimum lease payments587 
Less imputed interest(120)— 
Total$467 $
Leases Leases
We have operating and finance leases for offices, terrestrial repeaters, data centers and certain equipment. Our leases have remaining lease terms of less than 1 year to 17 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. We elected the practical expedient to account for the lease and non-lease components as a single component. Additionally, we elected the practical expedient to not recognize right-of-use assets or lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the lease commencement date.
The components of lease expense were as follows:
For the Years Ended December 31,
20202019
Operating lease cost$82 $80 
Finance lease cost
Sublease income(2)(3)
Total lease cost$81 $81 
Supplemental cash flow information related to leases was as follows:
For the Years Ended December 31,
20202019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$79 $70 
Financing cash flows from finance leases$$
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$$83 
Supplemental balance sheet information related to leases was as follows:
December 31, 2020December 31, 2019
Operating Leases
Operating lease right-of-use assets$427 $466 
Operating lease current liabilities48 46 
Operating lease liabilities419 456 
Total operating lease liabilities$467 $502 
December 31, 2020December 31, 2019
Finance Leases
Property and equipment, gross$$15 
Accumulated depreciation(7)(12)
Property and equipment, net$$
Current maturities of debt$$
Long-term debt— 
Total finance lease liabilities$$
December 31, 2020December 31, 2019
Weighted Average Remaining Lease Term
Operating leases9 years9 years
Finance leases1 year2 years
December 31, 2020December 31, 2019
Weighted Average Discount Rate
Operating leases5.3 %5.3 %
Finance leases1.7 %1.7 %
Maturities of lease liabilities were as follows:
Operating LeasesFinance Leases
Year ending December 31,
2020 (remaining)$71 $— 
202174 
202271 — 
202362 — 
202462 — 
Thereafter247 — 
Total future minimum lease payments587 
Less imputed interest(120)— 
Total$467 $
v3.20.4
Related Party Transactions
12 Months Ended
Dec. 31, 2020
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions 
In the normal course of business, we enter into transactions with related parties such as Sirius XM Canada and SoundCloud.

Liberty Media
As of December 31, 2020, Liberty Media beneficially owned, directly and indirectly, approximately 76% of the outstanding shares of our common stock. Liberty Media has one executive, one senior advisor and one of its directors on our board of directors.  Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of our board of directors.

Sirius XM Canada
Sirius XM holds a 70% equity interest and 33% voting interest in Sirius XM Canada, a privately held corporation. We own 591 shares of preferred stock of Sirius XM Canada, which has a liquidation preference of one Canadian dollar per share. Sirius XM also made a loan to Sirius XM Canada in the aggregate amount of $131. The loan is denominated in Canadian dollars and is considered a long-term investment with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income. During the years ended December 31, 2020 and 2019, Sirius XM Canada repaid $11 and less than $1 of the principal amount of the loan, respectively.
Sirius XM has a Services Agreement and an Advisory Services Agreement with Sirius XM Canada. Each agreement has a thirty-year term. Pursuant to the Services Agreement, Sirius XM Canada currently pays Sirius XM 25% of its gross revenues on a monthly basis, and pursuant to the Advisory Services Agreement, Sirius XM Canada pays Sirius XM 5% of its gross revenues on a monthly basis.
Sirius XM Canada is accounted for as an equity method investment, and its results are not consolidated in our consolidated financial statements. Sirius XM Canada does not meet the requirements for consolidation as we do not have the ability to direct the most significant activities that impact Sirius XM Canada's economic performance.
Our related party long-term assets as of December 31, 2020 and December 31, 2019 included the carrying value of our investment balance in Sirius XM Canada of $332 and $321, respectively, and, as of December 31, 2020 and December 31, 2019, also included $123 and $131, respectively, for the long-term value of the outstanding loan to Sirius XM Canada.

Sirius XM Canada paid gross dividends to us of $2 during each of the years ended December 31, 2020, 2019 and 2018.  Dividends are first recorded as a reduction to our investment balance in Sirius XM Canada to the extent a balance exists and then as Other (expense) income for any remaining portion.
We recorded revenue from Sirius XM Canada as Other revenue in our consolidated statements of comprehensive income of $97, $98 and $97 during the years ended December 31, 2020, 2019 and 2018.

SoundCloud
In February 2020, Sirius XM completed a $75 investment in SoundCloud's Series G Membership Units ("Series G Units"). The Series G Units are convertible at the option of the holders at any time into shares of ordinary membership units of SoundCloud at a ratio of one ordinary membership unit for each Series G Unit. The investment in SoundCloud is accounted for as an equity method investment which is recorded in Related party long-term assets in our consolidated balance sheet. Sirius XM has appointed two individuals to serve on SoundCloud's nine-member board of managers. For the year ended December 31, 2020, Sirius XM's share of SoundCloud's net loss was $1, which was recorded in Other income (expense) in our consolidated statement of comprehensive income.
In addition to our investment in SoundCloud, Pandora has an agreement with SoundCloud to be its exclusive US ad sales representative. Through this arrangement Pandora offers advertisers the ability to execute campaigns in the US across the Pandora and SoundCloud listening platforms. We recorded revenue share expense of $55, $40 and $0 for the years ended December 31, 2020, 2019 and 2018, respectively. We also had related party liabilities of $24 as of December 31, 2020 related to this agreement.
v3.20.4
Debt
12 Months Ended
Dec. 31, 2020
Debt Disclosure [Abstract]  
Debt Debt
Our debt as of December 31, 2020 and December 31, 2019 consisted of the following:
      
Carrying value(a) at
Issuer / BorrowerIssuedDebtMaturity DateInterest PayablePrincipal Amount at December 31, 2020December 31, 2020December 31, 2019
Pandora
(b) (c) (h)
December 2015
1.75% Convertible Senior Notes
December 1, 2020semi-annually on June 1 and December 1$— $— $
Sirius XM
(d)
July 2017
3.875% Senior Notes
August 1, 2022semi-annually on February 1 and August 11,000 997 995 
Sirius XM
(d) (g)
May 2013
4.625% Senior Notes
May 15, 2023semi-annually on May 15 and November 15— — 498 
Pandora
(b) (e)
June 2018
1.75% Convertible Senior Notes
December 1, 2023semi-annually on June 1 and December 1193