an extensive selection of music genres, ranging from rock, pop and ~~weather, including:~~

~~an extensive selection of music genres, ranging from rock, pop and~~ hip-hop to country, dance, jazz, Latin and classical;

live play-by-play sports from major leagues and colleges;

~~a multitude of talk and entertainment channels for a variety of audiences;~~

~~a wide range of national, international and financial news;~~

a multitude of talk and entertainment channels for a variety of audiences;

~~exclusive limited run channels;~~a wide range of national, international and financial news; and

~~local traffic and weather reports for 21 metropolitan markets throughout the United States.~~

exclusive limited run channels.

~~Table of Contents~~

Our diverse ~~spectrum of~~ programming, including our lineup of exclusive ~~material,~~content, is a significant differentiator from terrestrial radio and other audio entertainment providers. We make changes to our programming lineup from time to time as we strive to attract new subscribers and offer content which appeals to a broad range of audiences and to our existing subscribers. The channel ~~line-ups~~lineups for our services are available at siriusxm.com.

~~Internet Radio~~

Streaming Service

We stream select music and non-music channels over the Internet. Our ~~Internet radio~~streaming service ~~also~~ includes ~~certain~~ channels ~~and features~~ that are not available on our satellite radio service. Access to our ~~Internet radio~~streaming service is currently offered to subscribers for a fee. We also offer applications to allow consumers to access our ~~Internet radio~~streaming service on smartphones, tablets, computers, home devices and ~~tablet computers.~~

other consumer electronic equipment.

SiriusXM Internet Radio offers listeners enhanced programming discovery and the ability to connect with content currently playing across our commercial-free music, sports, comedy, news, talk and entertainment channels or available through SiriusXM On Demand.

~~We offer two innovative Internet-based products, SiriusXM On Demand and MySXM.~~ SiriusXM On Demand offers our ~~Internet radio~~streaming subscribers ~~listening on our online media player and on smartphones~~ the ability to choose their favorite episodes from a catalog of content whenever they want. ~~MySXM permits subscribers~~

In 2018, we launched a new platform and redesigned our mobile app to ~~personalize~~deliver an enhanced streaming experience. That experience includes expanded programming, greater discovery, more intuitive recommendations, the introduction of video programming and other features designed to increase consumer engagement with our ~~existing commercial-free music~~streaming product. Our internet-based video offering currently features Howard Stern, arranged and ~~comedy channels~~presented in an easy-to-view manner, with highlights from Howard Stern’s interviews with celebrity guests, musical performances in the Howard Stern studio, show clips, and show specials. We expect to ~~create~~expand our video offering in 2019 with, among other items, live segments of Howard Stern's show and video generated by our other hosts and guests.

360L

In 2018, we introduced a more tailored listening experience. Channel-specific sliders allow users to create over 100 variations of each of more than 50 channels by adjusting characteristics like library depth, familiarity, music style, tempo, region, and multiple other channel-specific attributes. SiriusXM On Demand and MySXM are offered to our Internet radio subscribers at no extra charge.

~~SXM17~~

~~We are developing a product,~~user interface, which we call ~~“SXM17,~~“360L,” that combines our satellite and ~~Internet~~streaming services into a single, cohesive in-vehicle entertainment ~~experience~~experience. Our 360L interface has been deployed in Dodge Ram trucks and is ~~expected to allow~~in the process of being introduced by several other automakers. 360L allows us to take advantage of ~~the automaker’s deployment of~~ advanced in-dash infotainment systems. ~~SXM17 will~~360L is intended to leverage the ubiquitous signal coverage of our satellite infrastructure and low delivery costs with the two-way communication capability of a wireless ~~Internet~~streaming service to provide consumers seamless access to ~~all of~~ our content, including our live channels, ~~SiriusXM On Demand programing~~on demand service and even more personalized music services. The wireless ~~Internet~~streaming connection included in ~~SXM17 will enable~~360L enables enhanced search and recommendations functions, making discovery of our content in the vehicle ~~easier than ever. SXM17 will allow~~easier. 360L also allows consumers to manage ~~many~~ aspects of their subscriptions directly through their vehicles’ ~~equipment. We expect automakers~~equipment and provides us important data to ~~begin including~~better enable us to understand how our ~~SXM17 product in vehicles as early as 2017.~~

subscribers use our service and how we can more effectively market our service to consumers.

Distribution of Radios

Automakers

We distribute satellite radios through the sale and lease of new vehicles. We have agreements with every major automaker to offer satellite radios in their vehicles. Satellite radios are available as a factory or dealer-installed option in substantially all vehicle makes sold in the United States.

Most automakers include a subscription to our ~~radio~~ service in the sale or lease of their new vehicles. In certain cases, we receive subscription payments from automakers in advance of the activation of our service. We share with certain automakers a portion of the revenues we derive from subscribers using vehicles equipped to receive our service. We also reimburse various automakers for certain costs associated with the satellite radios installed in new vehicles, including in certain cases hardware costs, engineering expenses and promotional and advertising expenses.

Previously Owned Vehicles

We acquire subscribers through the sale and lease of previously owned vehicles with factory-installed satellite radios. We have entered into agreements with many automakers to market subscriptions to purchasers and lessees of vehicles which include satellite radios sold through their certified pre-owned programs. We also work directly with franchise and independent dealers on programs for non-certified used vehicles.

We have developed systems and methods to identify purchasers and lessees of previously owned vehicles which include satellite radios and have established marketing plans to promote our services to these potential subscribers.

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Retail

We sell satellite radios directly to consumers through our website. Satellite radios are also marketed and distributed through national, regional and ~~regional retailers.~~

internet retailers, such as amazon.com.

Our Satellite Radio Systems

Our satellite radio systems are designed to provide clear reception in most areas of the continental United States despite variations in terrain, buildings and other obstructions. We continually monitor our infrastructure and regularly evaluate improvements in technology.

Our satellite radio systems have three principal components:

~~satellites, terrestrial repeaters and other satellite facilities;~~

~~studios; and~~

satellites, terrestrial repeaters and other satellite facilities;

~~radios.~~

studios; and

radios.

Satellites, Terrestrial Repeaters and Other Satellite Facilities

Satellites. We provide our service through a fleet of ~~eight~~five orbiting geostationary satellites, ~~five~~two in the Sirius system, ~~FM-1, FM-2, FM-3,~~ FM-5 and FM-6, and three in the XM system, XM-3, XM-4 and XM-5.

Our ~~constellation of three XM satellites operate in a geostationary, with~~ XM-5 ~~used~~satellite serves as a spare for both the XM and Sirius ~~constellations. Our constellation~~systems.

We have entered into agreements for the design, construction and launch of ~~five Sirius~~two new satellites, ~~operate in two separate orbits. Three of our Sirius satellites, FM-1, FM-2~~SXM-7 and ~~FM-3, operate in a highly inclined elliptical orbit. The other two Sirius satellites, FM-5 and FM-6, operate in a geostationary orbit. We~~SXM-8, which we plan to ~~transition our Sirius constellation~~launch into geostationary orbits in 2019 and 2020, respectively, as replacements for XM-3 and XM-4.

Satellite Insurance. We have procured insurance for SXM-7 and SXM-8 to ~~solely a geostationary orbit using~~cover the ~~FM-5~~risks associated with each satellite's launch and ~~FM-6 satellites. As part of this transition, FM-1, FM-2 and FM-3 are expected to be moved into disposal orbits during 2016.~~

~~Satellite Insurance.~~first year in orbit. We do not have ~~in-orbit~~ insurance policies covering our in-orbit satellites, as we consider the premium costs to be uneconomical relative to the risk of satellite failure.

Terrestrial Repeaters. In some areas with high concentrations of tall buildings, such as urban centers, signals from our satellites may be blocked and reception of satellite signals can be adversely affected. In other areas with a high density of next generation wireless systems our service may experience interference. In many of these areas, we have deployed terrestrial repeaters to supplement ~~satellite coverage.~~and enhance our signal coverage and, in many other areas, we are planning to deploy additional repeaters to reduce interference. We operate over ~~1,100~~1,000 terrestrial repeaters across the United States as part of our ~~systems across the United States.~~systems.

Other Satellite Facilities. We control and communicate with our satellites from facilities in North ~~America and maintain earth stations in Panama and Ecuador to control and communicate with three of our Sirius satellites, FM-1, FM-2 and FM-3.~~America. Our satellites are monitored, tracked and controlled by a third party satellite operator.

Studios

Our programming originates from studios in New York City and Washington D.C. and, to a lesser extent, from smaller studios in Los Angeles, Nashville and a variety of ~~smaller~~ venues across the country. Our corporate headquarters is based in New York City. ~~Both our New York City and Washington D.C. offices house facilities for programming origination, programming personnel and facilities to transmit programming.~~

Radios

~~Radios are primarily manufactured in two principal configurations - as in-dash radios and dock & play radios.~~

We do not manufacture radios. We have authorized manufacturers and distributors to produce and distribute radios, and have licensed our technology to various electronics manufacturers to develop, manufacture and distribute radios under certain

brands. We do manage various aspects of the production of satellite radios. To facilitate the sale of radios, we may subsidize a portion of the radio manufacturing costs to reduce the hardware price to consumers.

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Connected Vehicle Services

We ~~are a leader in providing~~provide connected vehicle ~~services.~~services to several automakers and directly to consumers through aftermarket devices. Our connected vehicle services are designed to enhance the safety, security and driving experience for vehicle operators while providing marketing and operational benefits to automakers and their dealers. We offer a portfolio of location-based services through two-way wireless connectivity, including safety, security, convenience, maintenance and data services, remote vehicles diagnostics, and stolen or parked vehicle locator ~~services, and monitoring of vehicle emission systems. Our~~services.

In 2017, Sirius XM purchased Automatic Labs Inc. ("Automatic"), a connected vehicle ~~business provides~~device and mobile application company. Automatic offers a subscription service for consumers and auto dealers. By pairing Automatic's install-it-yourself adapter and mobile application, most vehicles model year 1996 or later can be transformed into connected vehicles. Using the Automatic service, drivers have access to important services, such as crash alerts, roadside assistance, vehicle location monitoring and sharing, vehicle health and performance monitoring, and recall notifications and service reminders. Auto dealers can also employ the Automatic service to, ~~several automakers, including Acura, BMW, Honda, Hyundai, Infiniti, Lexus, Nissan~~among other things, assist in managing vehicle inventory, monitoring the status of vehicles and ~~Toyota.~~

delivering notifications and reminders to purchasers and lessees of vehicles. The Automatic adapter collects detailed information about each vehicle's geolocation, use, operation, performance and maintenance status in order to operate, maintain, and provide the features and functionality of the Automatic service.

Subscribers to our connected vehicle services are not included in our subscriber count or subscriber-based operating metrics.

~~Canada~~

We own approximately 37% of the equity of Sirius XM Canada Holdings Inc. ("Sirius XM Canada"), the satellite radio provider in Canada. Subscribers to the services offered by Sirius XM Canada are not included in our subscriber count.

Other Services

Commercial Accounts. Our programming is available for commercial establishments. Commercial subscription accounts are available through providers of in-store entertainment solutions and directly from us. ~~Certain commercial subscribers are included in our subscriber count.~~

Satellite Television Service. Certain of our music channels are offered as part of ~~certain~~select programming packages on the DISH Network satellite television service. ~~Subscribers~~

Travel Link. We offer Travel Link, a suite of data services that includes graphical weather, fuel prices, sports schedules and scores and movie listings.

Real-Time Traffic Services. We offer services that provide graphic information as to road closings, traffic flow and incident data to consumers with compatible in-vehicle navigation systems.

Real-Time Weather Services. We offer several real-time weather services designed for improving situational awareness in vehicles, boats and planes.

Commercial subscribers are included in our subscriber count, and subscribers to the DISH Network satellite television service are not included in our subscriber count.

Subscribers to ~~the following~~our Travel Link, real-time traffic services and real-time weather services are not included in our subscriber count, unless the applicable service is purchased by the subscriber separately and not as part of a radio subscription to our ~~services:~~

~~Travel Link.~~service.

Sirius XM Canada

Sirius XM holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”), with the remainder of Sirius XM Canada's voting and equity interests held by two shareholders.

Sirius XM has entered into 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 pays Sirius XM 25% of its gross revenues on a monthly basis through December 31, 2021 and 30% of its gross revenues on a monthly basis thereafter. Pursuant to the Advisory Services Agreement, Sirius XM Canada pays Sirius XM 5% of its gross revenues on a monthly basis.

As of December 31, 2018, Sirius XM Canada had approximately 2.6 million subscribers. Sirius XM Canada's subscribers are not included in our subscriber count or subscriber-based operating metrics.

Pandora Media, Inc.

In 2018, we entered into an agreement to acquire Pandora Media, Inc. ("Pandora"), in which Sirius XM had previously made an investment in 2017. Pandora operates an internet-based music discovery platform, offering a personalized experience for listeners. As of December 31, 2018, Sirius XM's investment in Pandora represented an approximately 18% interest in Pandora's outstanding common stock, and an approximately 15% interest on an as-converted basis. A description of Sirius XM's existing investment in Pandora and our agreement to acquire Pandora is set forth below.

About our Existing Pandora Investment

Pursuant to an Investment Agreement with Pandora, in 2017, Sirius XM purchased 480,000 shares of Pandora’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), for an aggregate purchase price of $480 million.

The Series A Preferred Stock is convertible at the option of the holders at any time into Pandora common stock, par value $0.0001 per share ("Pandora Common Stock"), at an initial conversion price of $10.50 per share of Pandora Common Stock and an initial conversion rate of 95.2381 shares of Pandora Common Stock per share of Series A Preferred Stock, subject to certain customary anti-dilution adjustments. Holders of the Series A Preferred Stock are entitled to a cumulative dividend at the rate of 6.0% per annum, payable quarterly in arrears, if and when declared. Any conversion of Series A Preferred Stock may be settled by Pandora, at its option, in shares of Pandora Common Stock, cash or any combination thereof. However, unless and until Pandora’s stockholders have approved the issuance of greater than 19.99% of the outstanding Pandora Common Stock, the Series A Preferred Stock may not be converted into more than 19.99% of Pandora’s outstanding Pandora Common Stock as of June 9, 2017.

The investment includes a mandatory redemption feature on any date from and after September 22, 2022 whereby Sirius XM, at its option, may require Pandora to purchase the Series A Preferred Stock at a price equal to 100% of the liquidation preference plus accrued but unpaid dividends for, at the election of Pandora, cash, shares of Pandora Common Stock or a combination thereof.

We ~~offer Travel Link, a suite~~have appointed James E. Meyer, our Chief Executive Officer, David J. Frear, our Senior Executive Vice President and Chief Financial Officer, and Gregory B. Maffei, the Chairman of ~~data services that includes graphical weather, fuel prices, sports schedules~~our Board of Directors, to Pandora's Board of Directors pursuant to our designation rights under the Investment Agreement. Mr. Maffei also serves as the Chairman of Pandora's Board of Directors.

Our right to designate directors will fall away once we and ~~scores and movie listings.~~

~~Real-Time Traffic Services.~~ ~~We offer services that provide graphic information as~~our affiliates fail to ~~road closings, traffic flow and incident data to consumers with compatible in-vehicle navigation systems.~~

~~Real-Time Weather Services.~~ ~~We offer several real-time weather services designed for improving situational awareness in vehicle, marine~~beneficially own shares of Series A Preferred Stock and/or ~~aviation use.~~Pandora Common Stock issued upon conversion thereof equal to (on an as-converted basis) at least 50% of the number of shares of Pandora Common Stock issuable upon conversion of the Series A Preferred Stock purchased under the Investment Agreement. Following the earlier to occur of (i) September 22, 2019 and (ii) the date on which we and our affiliates fail to beneficially own shares of Series A Preferred Stock and/or Pandora Common Stock that were issued upon conversion thereof equal to (on an as-converted basis) at least 75% of the number of shares of Pandora Common Stock issuable upon conversion of the Series A Preferred Stock purchased under the Investment Agreement, we have the right to designate only two directors.

We are entitled to vote as a single class with the holders of Pandora Common Stock on an as-converted basis (up to a maximum of 19.99% of the Pandora Common Stock outstanding on June 9, 2017, unless stockholder approval has been received). We are also entitled to a separate class vote with respect to certain amendments to Pandora’s organizational documents, issuances by Pandora of securities that are senior to, or equal in priority with, the Series A Preferred Stock and the incurrence of certain indebtedness by Pandora.

Upon certain change of control events involving Pandora, Pandora is required to repurchase all of the Series A Preferred Stock at a price equal to the greater of (1) an amount in cash equal to 100% of the liquidation preference thereof plus all accrued but unpaid dividends through June 9, 2022 (assuming such shares of Series A Preferred Stock remain outstanding through such date) and (2) the consideration the holders would have received if they had converted their shares of Series A Preferred Stock into Pandora Common Stock immediately prior to the change of control event (disregarding the 19.99% cap).

Beginning on September 22, 2020, if the volume weighted average price per share of Pandora Common Stock exceeds $18.375, as may be adjusted, for at least 20 trading days in any period of 30 consecutive trading days, Pandora may redeem all of the outstanding Series A Preferred Stock at a price equal to 100% of the liquidation preference thereof plus all accrued but unpaid dividends for, at the election of Pandora, cash, shares of Pandora Common Stock or a combination thereof, provided

that, unless stockholder approval has been received, Pandora may not settle the redemption for shares of Pandora Common Stock to the extent the 19.99% cap would be exceeded.

Pursuant to a registration rights agreement entered into with Pandora, we have certain customary registration rights with respect to the Series A Preferred Stock and Pandora Common Stock issued upon conversion thereof.

Agreement to Acquire Pandora

On September 23, 2018, Holdings entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”), by and among Holdings, Pandora, Billboard Holding Company, Inc., a wholly-owned subsidiary of Pandora, Billboard Acquisition Sub, Inc., a wholly-owned subsidiary of Billboard Holding Company, Inc., Sirius XM and White Oaks Acquisition Corp., pursuant to which, subject to the terms and conditions of the Merger Agreement, Holdings agreed to acquire Pandora (such transaction, the “Merger”). Pursuant to the Merger, each outstanding share of Pandora Common Stock, will be converted into the right to receive 1.44 shares (the “Exchange Ratio”) of Holdings common stock, par value $0.001 per share (“Holdings Common Stock”). In connection with the Merger, the Series A Preferred Stock will be canceled for no consideration.

Further, pursuant to the Merger:

each option granted by Pandora under its stock incentive plans to purchase shares of Pandora Common Stock, whether vested or unvested will be assumed and converted into an option to purchase shares of Holdings Common Stock, with appropriate adjustments (based on the Exchange Ratio) to the exercise price and number of shares of Holdings Common Stock subject to such option, and will have the same vesting schedule and exercise conditions as in effect as of immediately prior to the closing of the Merger;

each unvested restricted stock unit granted by Pandora under its stock incentive plans will be assumed and converted into an unvested restricted stock unit of Holdings, with appropriate adjustments (based on the Exchange Ratio) to the number of shares of Holdings Common Stock to be received, and will have the same vesting schedule and settlement date as in effect as of immediately prior to the closing of the Merger; and

each unvested performance award granted by Pandora under its stock incentive plans shall be canceled and forfeited if the per share value of merger consideration at the closing of the transactions as determined pursuant to the Merger Agreement is less than $20.00, and otherwise each such award will be assumed and converted into a time vesting award to receive a number of shares of Holdings Common Stock based on the Exchange Ratio, and will have the same vesting schedule as in effect as of immediately prior to the closing of the Merger.

The Merger Agreement contains customary representations and warranties from both Holdings and Pandora, and each party has agreed to customary covenants, including covenants relating to the conduct of Holdings’ and Pandora’s businesses during the period between the execution of the Merger Agreement and the closing of the Merger. In the case of Pandora, such obligations include its agreement to call a meeting of its stockholders to adopt the Merger Agreement, and, subject to certain exceptions, to recommend that its stockholders adopt the Merger Agreement.

The Pandora stockholders voted to adopt the Merger Agreement at a special stockholder meeting on January 29, 2019.

The completion of the Merger is subject to customary conditions, including, among others, the absence of any law or order that prohibits or makes illegal the Merger and, subject to certain exceptions, the accuracy of the representations and warranties of each party and compliance by the parties with their respective covenants.

It is intended that the Merger qualifies as a "reorganization" within the meaning of Section 368(a) of the Internal Revenue Code of 1986 for Federal income tax purposes. However, if either Pandora or Holdings are unable to receive an opinion of counsel to that effect, the parties have agreed to restructure the Merger so that the Merger will be treated as a taxable stock sale.

Competition

Satellite Radio

We face significant competition for both listeners and advertisers in our satellite radio business, including from providers of radio orand other audio services. ~~Our digital competitors are making in-roads into vehicles, where we are currently the prominent alternative to traditional AM/FM radio.~~

Traditional AM/FM Radio. Our services compete with traditional AM/FM radio. Several traditional radio companies are substantial entities owning large numbers of radio stations or other media properties. The radio broadcasting industry is highly competitive. Traditional AM/FM broadcasters are also aggressively pursuing Internet radio, wireless Internet-based distribution arrangements and data services.

Traditional AM/FM radio has a well-established demand for its services and offers free broadcasts paid for by commercial advertising rather than by subscription fees. Many radio stations offer information programming of a local nature, such as local news and sports. The availability of traditional free AM/FM radio ~~reduces~~may reduce the likelihood that customers would be willing to pay for our subscription services and, by offering free broadcasts, it may impose limits on what we can charge for our services.

~~Internet Radio and Internet-Enabled Smartphones.~~ Several traditional radio companies own large numbers of radio stations or other media properties.

Internet-Based Competitors. Internet radio services often have no geographic limitations and provide listeners with radio programming from across the country and around the world. Major ~~media companies and~~ online providers ~~including Apple, Google Play, Pandora and iHeartRadio,~~ make high fidelity digital streams available through the Internet for free or, in some cases, for less than the cost of a satellite radio subscription. ~~These services compete directly with our services, at home, in vehicles, and wherever audio entertainment is consumed.~~

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~~Smartphone applications are often free to the user and offer music and talk content. Leading audio smartphone radio applications include Apple, Pandora, Spotify, and iHeartRadio.~~ Certain of these ~~applications also~~services include advanced functionality, such as personalization, and allow the user to access large libraries of content. ~~These~~For some consumers, these services ~~are easily integrated into vehicles.~~may compete with our services, at home, in vehicles, and wherever audio entertainment is consumed.

Advanced In-Dash Infotainment Systems. Nearly all automakers have deployed ~~or are planning to deploy~~ integrated multimedia systems in ~~dashboards.~~their vehicles, including in many cases Apple CarPlay and Android Auto. These systems combine control of audio entertainment from a variety of sources, including AM/FM/HD radio broadcasts, satellite radio, Internet radio, smartphone applications and stored audio, with navigation and other advanced ~~applications such as restaurant bookings, movie show times and financial information.~~applications. Internet radio and other data are typically connected to the system ~~via a bluetooth link to~~through an Internet-enabled smartphone or wireless modem installed in the vehicle, and the entire system may be controlled by touchscreen or voice recognition. These systems may enhance the attractiveness of Internet-based competitors by making such applications more prominent, easier to access, and safer to use in ~~the car. Similar systems are also available in the aftermarket and sold through retailers.~~vehicles.

Direct Broadcast Satellite and Cable Audio. A number of providers offer specialized audio services through either direct broadcast satellite or cable audio systems. These services are targeted to fixed locations, mostly in-home. The radio service offered by direct broadcast satellite and cable audio is often included as part of a package of digital services with video service, and video customers generally do not pay an additional monthly charge for the audio service.

Other Digital Media Services. The audio entertainment marketplace continues to evolve rapidly, with a steady emergence of new media platforms that compete with our services now or that could compete with those services in the future.

Traffic ~~News~~ Services

A number of providers compete with our traffic ~~news~~ services. In-dash navigation is threatened by smartphones that provide data services through a direct vehicle interface. Most of these smartphones offer GPS mapping ~~often~~ with sophisticated data-based turn-by-turn navigation.

Connected Vehicle Services

Our connected vehicle services business operates in a highly competitive environment and competes with several providers, including Verizon ~~Telematics.~~Telematics as well as products being developed by automakers for their vehicles. OnStar, a division of General Motors, also offers connected vehicle services in GM vehicles. We also compete with wireless devices such as mobile ~~phones, carriers of mobile communications and, to a lesser extent, with systems developed internally by automakers.~~phones. We compete against other connected vehicle service providers for automaker arrangements on the basis of innovation, service quality and reliability, technical capabilities and systems customization, scope of service, industry experience, past performance and price.

Government Regulation

As operators of a privately-owned satellite system, we are regulated by the FCC under the Communications Act of 1934, principally with respect to:

~~the licensing of our satellite systems;~~

~~preventing interference with or to other users of radio frequencies; and~~

the licensing of our satellite systems;

~~compliance with FCC rules established specifically for U.S. satellites~~preventing interference with or to other users of radio frequencies; and ~~satellite radio services.~~

compliance with FCC rules established specifically for U.S. satellites and satellite radio services.

Any assignment or transfer of control of our FCC licenses must be approved by the FCC. The FCC's order approving the merger of our wholly-owned subsidiary, Vernon Merger Corporation, with and into XM Satellite Radio Holdings Inc. in July 2008 ~~(the “Merger”)~~ requires us to comply with certain voluntary commitments we made as part of the FCC ~~Merger~~merger proceeding. We believe we comply with those commitments.

In 1997, we were the winning bidders for FCC licenses to operate a satellite digital audio radio service and provide other ancillary services. Our FCC licenses for our Sirius satellites expire in ~~2017~~2022 and ~~2022.~~2025. Our FCC licenses for our XM satellites expire in ~~2018,~~ 2021, 2022 and ~~2022. XM-1 is operating under Special Temporary Authority from the~~2026. The FCC has also granted us licenses to construct, deploy and ~~is in the process of being de-orbited.~~operate SXM-7 and SXM-8 as replacement satellites. We anticipate that, absent significant misconduct on our part, the FCC will renew our licenses to permit operation of our satellites for their useful lives, and grant licenses for any replacement satellites.

In some ~~areas with high concentrations of tall buildings, such as urban centers, signals from our satellites may be blocked and reception can be adversely affected. In many of these~~ areas, we have installed terrestrial repeaters to supplement our satellite signal coverage. The FCC has established rules governing terrestrial repeaters and has granted us a license through 2027 to operate our repeater network.

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In ~~many~~certain cases, we obtain FCC certifications for satellite radios, including satellite radios that include FM modulators. We believe our radios that are in production comply with all applicable FCC rules.

We are required to obtain export licenses or other approvals from the United States government to export certain ~~ground control~~ equipment, ~~satellite communications/control~~ services and technical data related to our satellites and their operations. The ~~delivery~~transfer of such equipment, services and technical data ~~to destinations~~ outside the United States ~~and~~or to foreign persons is subject to strict export control and prior approval requirements from the United States government (including prohibitions on the sharing of certain satellite-related goods and services with China).

Changes in law or regulations relating to communications policy or to matters affecting our services could adversely affect our ability to retain our FCC licenses or the manner in which we operate.

Copyrights to Programming

In connection with our ~~satellite radio~~ music programming, we must negotiate and enter into royalty arrangements with two sets of rights holders: ~~Holders~~holders of copyrights in musical works (that is, the music and lyrics) and holders of copyrights in sound recordings (that is, the actual recording of a work).

Musical Works

Musical works rights holders, generally songwriters and music publishers, have been traditionally represented by performing rights organizations, such as the American Society of Composers, Authors and Publishers (“ASCAP”), Broadcast Music, Inc. (“BMI”) and SESAC, Inc. (“SESAC”). The market for rights relating to musical works is changing rapidly. Songwriters and music publishers have withdrawn from the traditional performing rights organizations, particularly ASCAP and BMI, and new entities, such as Global Music Rights LLC (“GMR”), have been formed to represent rights holders. These organizations negotiate fees with copyright users, collect royalties and distribute them to the rights holders. We have arrangements with ~~all of these organizations. However,~~ASCAP, SESAC and GMR, and are in negotiations with BMI for a new agreement. If we are unable to reach an agreement with BMI, a court will determine the ~~market for rights relating~~royalty we will be required to musical works is changing rapidly. Certain songwriters and music publishers have withdrawn from the traditional performing rights organizations, particularly ASCAP and BMI, and new entities have formed to represent rights holders. In addition, the United States Justice Department is reviewing the consent decrees that have governed ASCAP and BMI since the 1940s and other aspects of the musical works market.pay BMI. The changing market for musical works may have an adverse effect on us, including increasing our costs or limiting the musical works available to us.

Sound Recordings

Sound recording rights holders, typically large record companies, are primarily represented by SoundExchange, Inc., an organization which negotiates licenses, and collects and distributes royalties on behalf of record companies and performing artists. ~~Under the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998, we~~We may negotiate royalty arrangements with the owners of sound recordings, ~~fixed after February 15, 1972,~~ or, if negotiation is unsuccessful, the royalty rate is established by the Copyright Royalty Board (the “CRB”) of the Library of Congress.

~~The~~

In December 2017, the CRB ~~has~~ issued its determination regarding the royalty rate payable by us under the statutory license covering the performance of sound recordings fixed after February 15, 1972 over our satellite ~~digital audio~~ radio service, and the making of ephemeral (server) copies in support of such performances, for the five-year period starting January 1, 2018 and ending on December 31, ~~2017.~~2022. Under the terms of the ~~CRB's~~CRB’s decision, we ~~will~~are required to pay a royalty ~~based on~~of 15.5% of gross revenues, subject to ~~certain~~ exclusions and adjustments.

The rates and terms contained in the CRB’s December 2017 determination permit us to reduce the payment due each month by the percentage of ~~10.5% for 2016~~our transmissions of recordings that are directly licensed from copyright owners and ~~11% for 2017. The rate for 2015 was 10%.~~

the percentage of transmissions that comprise recordings fixed before February 15, 1972 that we have licensed. 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. Exclusions from revenue subject to the statutory license fee include, among other ~~things, revenue~~things:

monies or other consideration attributable to the sale and/or license of equipment and/or other technology, including but not limited to bandwidth, sales of devices that receive our satellite radio services and any shipping and handling fees therefor;

royalties paid to us for intellectual property rights;

sales and use taxes;

credit card, invoice, activation, swap and early termination fees charged to subscribers and reasonably related to the expenses to which they pertain;

bad debt expense; and

revenues attributable to our current and future: data services offered for a separate charge (such as weather, traffic, destination information, messaging, sports scores, stock ticker information, extended program associated data, video and photographic images, and such other telematics and/or data services as may exist from time to time); channels, programming, ~~and~~ products and/or other services offered for a separate charge where such channels ~~make~~use only incidental performances of sound recordings; ~~revenue~~channels, programming, products and/or other services provided outside of the United States; and channels, programming, products and/or other services for which the performance of the recordings is exempt from ~~equipment sales; revenue from current and future data services (including video and connected vehicle services) offered for~~any license requirement or is separately licensed, including by a ~~separate charge; intellectual property royalties received~~statutory license.

In 2018, the Copyright Act was amended by ~~us; credit card, invoice and fulfillment service fees; and bad debt expense.~~ The ~~regulations also allow us to further reduce our monthly royalty fee in proportion to~~Orrin G. Hatch-Bob Goodlatte Music Modernization Act (the “Music Modernization Act”). Under the ~~percentage~~Music Modernization Act, the use of ~~our performances that feature pre-1972~~sound recordings ~~(which are not~~fixed before February 15, 1972 is now subject to ~~federal copyright protection) as well as those~~a royalty at the existing rate set by the CRB; the existing sound recording royalty rate was extended for five years, through December 31, 2027; and the law foreclosed our ability to appeal the December 2017 determination of the CRB. Sound recordings that ~~are licensed directly from the copyright holder, rather than through the statutory license.~~

~~To secure the rights to stream music content over the Internet, including to mobile devices,~~were fixed before February 15, 1972 were previously governed by state law. During 2015 and 2016, we ~~also must obtain licenses from, and pay royalties to,~~settled suits with copyright owners for almost all of ~~musical compositions~~the pre-1972 sound recordings we use and ~~sound recordings. We have arrangements with ASCAP, SESAC and BMI to license the musical compositions we stream over the Internet.~~ entered into direct licenses for their use.

The licensing of ~~certain~~ sound recordings ~~fixed after February 15, 1972~~ for use on the Internet is also subject to the ~~Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium~~United States Copyright Act ~~of 1998~~ on terms established by the CRB. In ~~2015,~~2018, we paid a per performance rate for the streaming of certain sound recordings on the Internet of ~~$0.0024.~~

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In December 2015, the CRB released the rates and terms for the use of sound recordings by non-interactive Internet services, such as our Internet radio service, for the period of 2016 through 2020. Effective as of January 1, 2016, the CRB set a royalty rate at $0.0017 per performance for ad-supported services and a royalty rate at $0.0022 per performance for subscription-based services.$0.0023. In accordance with the CRB’s decision, ~~these~~this royalty ~~rates will~~rate may increase ~~during the period from 2017~~ through 2020 based on changes in the consumer price index.

Our rights to perform certain copyrighted sound recordings (that is, the actual recording of a work) that were fixed after February 15, 1972 are governed by United States federal law, the Copyright Act. In contrast, our rights to perform certain sound recordings that were fixed before February 15, 1972 are governed by state statutes and common law and are subject to litigation in five States. See "Item 3. Legal Proceedings" below.

Trademarks

We have registered, and intend to maintain, the trademarks “Sirius”, “XM”, “SiriusXM” and “SXM” with the United States Patent and Trademark Office in connection with the services we offer. We are not aware of any material claims of infringement or other challenges to our right to use the “Sirius”, “XM”, “SiriusXM” or ~~"SXM”~~“SXM” trademarks in the United States. We also have registered, and intend to maintain, trademarks for the names of certain of our channels. We have also registered the trademarks “Sirius”, “XM” and ~~"SiriusXM"~~“SiriusXM” in Canada. We have granted a license to use certain of our trademarks in Canada to Sirius XM Canada.

Personnel

As of December 31, ~~2015,~~2018, we had ~~2,323~~2,699 full-time employees. In addition, we rely upon a number of part-time employees, consultants, other advisors and outsourced relationships. None of our employees are represented by a labor union, and we believe that our employee relations are good.

Corporate Information and Available Information

Our executive offices are located at ~~1221~~1290 Avenue of the Americas, ~~36th~~11th floor, New York, New York ~~10020~~10104 and our telephone number is (212) 584-5100. Our internet address is www.siriusxm.com. Our annual, quarterly and current reports, and any amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the ~~"Exchange Act"~~“Exchange Act”), may be accessed free of charge through our website after we have electronically filed or furnished such material with the SEC. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Siriusxm.com (including any other reference to such address in this Annual Report) is an inactive textual reference only, meaning that the information contained on or accessible from the website is not part of this Annual Report on Form 10-K and is not incorporated in this report by reference.

We may use our website as a distribution channel of material company information. Financial and other important information regarding us is routinely posted on and accessible through our website at https://www.siriusxm.com. In

addition, you may automatically receive email alerts and other information about us when you enroll your email address by visiting the "Email Alerts" section under the "Shareholder Services" heading at http://investor.siriusxm.com/investor-overview.

Executive Officers of the Registrant

Certain information regarding our executive officers as of January ~~29, 2016~~28, 2019 is provided below:

~~Name~~			~~Age~~	~~Position~~

Name	Age	Position
James E. Meyer	61 64	Chief Executive Officer
Scott A. Greenstein	56 59	President and Chief Content Officer
David J. Frear	59 62	Senior Executive Vice President and Chief Financial Officer
Dara F. Altman	57 60	Executive Vice President and Chief Administrative Officer
James A. Cady	55 58	Executive Vice President, Operations, Products and Connected Vehicle
Stephen Cook	60 63	Executive Vice President, Sales and Automotive
Patrick L. Donnelly	54 57	Executive Vice President, General Counsel and Secretary
~~Katherine Kohler Thomson~~ Joseph A. Verbrugge	49	Executive Vice President & General Manager, Emerging Business
Jennifer C. Witz	50	Executive Vice President, Chief Marketing Officer
~~Joseph A. Verbrugge~~	46	~~Executive Vice President, Sales and Development~~

James E. Meyerhas served as our Chief Executive Officer since December 2012. From May 2004 to December 2012, Mr. Meyer was our President, Operations and Sales. Prior to May 2004, Mr. Meyer was President of Aegis Ventures Incorporated, a consulting firm that ~~provides~~provided general management services. From December 2001 until 2002, Mr. Meyer served as special advisor to the Chairman of Thomson S.A., a leading consumer electronics company. From January 1997 until December 2001, Mr. Meyer served as the Senior Executive Vice President for Thomson as well as a member of ~~the~~its executive committee. From 1992 until 1996, Mr. Meyer served as Thomson's Senior Vice President of Product Management. Mr. Meyer is a director of ~~ROVI~~Charter Communications, Inc. and Pandora Media, Inc. and Chairman of the Board of Directors and a director of TiVo Corporation.

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Scott A. Greenstein has served as our President and Chief Content Officer since May 2004. Prior to May 2004, Mr. Greenstein was Chief Executive Officer of The Greenstein Group, a media and entertainment consulting firm. From 1999 until 2002, he was Chairman of USA Films, a motion picture production, marketing and distribution company. From 1997 until 1999, Mr. Greenstein was Co-President of October Films, a motion picture production, marketing and distribution company. Prior to joining October Films, Mr. Greenstein was Senior Vice President of Motion Pictures, Music, New Media and Publishing at Miramax Films, and held senior positions at Viacom Inc.

David J. Frear has served as our Senior Executive Vice President and Chief Financial Officer since June 2015. From June 2003 to June 2015, he served as our Executive Vice President and Chief Financial Officer. From 1999 to 2003, Mr. Frear was Executive Vice President and Chief Financial Officer of Savvis Communications Corporation, a global managed service provider, delivering internet protocol applications for business customers. Mr. Frear also served as a director of Savvis. From 1993 to 1998, Mr. Frear was Senior Vice President and Chief Financial Officer of Orion Network Systems Inc., an international satellite communications company that was acquired by Loral Space & Communications Ltd. in 1998. From 1990 to 1993, Mr. Frear was Chief Financial Officer of Millicom Incorporated, a cellular, paging and cable television company. Prior to joining Millicom, he was an investment banker at Bear, Stearns & Co., Inc. and Credit Suisse. Mr. Frear is a member of the board of directors of The NASDAQ Stock Market LLC, NASDAQ PHLX LLC, and NASDAQ BX, Inc., subsidiaries of Nasdaq, Inc., a leading provider of trading, clearing, exchange technology, listing, information and public company services, and Pandora Media, Inc.

Dara F. Altman has served as our Executive Vice President and Chief Administrative Officer since September 2008. From January 2006 until September 2008, Ms. Altman served as Executive Vice President, Business and Legal Affairs, of XM. Ms. Altman was Executive Vice President of Business Affairs for Discovery Communications from 1997 to 2005. From 1993 to 1997, Ms. Altman served as Senior Vice President and General Counsel of Reiss Media Enterprises, which owned Request TV, a national pay-per-view service. Before Request TV, Ms. Altman served as counsel for Home Box Office. Ms. Altman started her career as an attorney at the law firm of Willkie Farr & Gallagher LLP.

James A. Cadyhas served as our Executive Vice President, Operations, Products and Connected Vehicle, since July 2015 and, prior to July 2015, served as Senior Vice President and General Manager of our Connected Services Platform since February 2014. Mr. Cady ~~served as~~was the Chief Executive Officer and President of Slacker, Inc., an internet music service provider,

from August 2009 until February 2014. He was the President and Chief Operating Officer of Slacker, Inc. from May 2006 until August 2009. From September 2004 until May 2006, he served as the Chief Executive Officer and President of LightPointe Communications, Inc., a manufacturer of wireless data transmission equipment. Prior to that time, Mr. Cady served in a variety of roles at an assortment of technology companies, including WatchGuard Technologies Inc., a manufacturer of computer security solutions; Rio, a division of SONICblue, Incorporated; Diamond Multimedia Systems, a manufacturer of various multimedia components; Supra Corp., a producer of hardware for computers; Moore Company, a wholesale distributor of consumer electronics; and Atari Corp., a manufacturer of computer and video games.

Stephen Cookhas served as our Executive Vice President, Sales and Automotive, since January 2013. Mr. Cook served as our Group Vice President and General Manager, Automotive Division, from July 2008 until January 2013. Mr. Cook served as Executive Vice President, Automotive, of XM from July 2006 to July 2008. He also served as XM's Executive Vice President, Sales and Marketing, from January 2002 until July 2006, and as XM's Senior Vice President, Sales and Marketing, from February 1999 until January 2002. Prior to joining XM, Mr. Cook was Chief Operating Officer for Conxus Communications. From 1990 to 1997, Mr. Cook held management positions with GTE's cellular operations. Prior to that time, Mr. Cook worked in brand management for Procter & Gamble.

Patrick L. Donnelly has served as our Executive Vice President, General Counsel and Secretary, since May 1998. From June 1997 to May 1998, he was Vice President and Deputy General Counsel of ITT Corporation, a hotel, gaming and entertainment company that was acquired by Starwood Hotels & Resorts Worldwide, Inc. in February 1998. From October 1995 to June 1997, he was assistant general counsel of ITT Corporation. Prior to October 1995, Mr. Donnelly was an attorney at the law firm of Simpson Thacher & Bartlett LLP.

~~Katherine Kohler Thomson~~

Joseph A. Verbrugge has served as our Executive Vice President ~~Chief Marketing Officer,~~& General Manager, Emerging Business, since April 2017. From December ~~2013. Ms. Thomson~~2015 until April 2017, he was the President and Chief Operating Officer of the Los Angeles Times Media Group from May 2011 until November 2013. She was also the Chief Operating Officer of Tribune Publishing Company, Inc. from April 2013 until November 2013. Ms. Thomson served as Vice President, Business Operations of FLO TV, a division of Qualcomm Incorporated that delivered live television to mobile devices, from September 2009 until May 2011. From September 2008 through September 2009, she was Executive Vice President and Chief of Staff at the Los Angeles Times Media Group. She joined the Los Angeles Times Media Group from Energy Innovations, an affordable solar energy provider, where she was Chief Operating Officer from August 2007 until September 2008. Prior to that time, she spent fourteen years in a variety of positions at DIRECTV, culminating in the role of Senior Vice President, Sales and Marketing Operations.

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~~Joseph A. Verbrugge~~ ~~has served as~~ our Executive Vice President, Sales and ~~Development, since December 2015.~~Development. Mr. Verbrugge previously served as ourSenior Vice President and General Manager, Automotive Remarketing and Retail Sales, from April 2012 until December 2015; as our Senior Vice President, Automotive Remarketing, from February 2010 until April 2012; and as our Senior Vice President, AutomotivePartnerships, from September 2008 until February 2010. From January 2007 through September 2008, he was Senior Vice President, Automotive Accounts/Partnerships and International Operations, of XM; from May 2006 until January 2007, Mr. Verbrugge served asSenior Vice President, Administration and International Operations of XM; from January 2005 until May 2006, he was Vice President, International Operations, of XM; and from September 2004 until January 2005 he served as Vice President, Special Projects, of XM. Prior to joining XM, Mr. Verbrugge was a consultant with The Dealy Strategy Group LLC, a management consulting firm specializing in international satellite communications and information services companies, from 1999 until 2004. From 1992 until 1995, Mr. Verbrugge was a bond representative with Aetna Life and Casualty Company, an insurance company.

Jennifer C. Witz has served as our Executive Vice President, Chief Marketing Officer, since August 2017. Ms. Witz joined us in March 2002 and, prior to her appointment as Executive Vice President, Chief Marketing Officer, served in a variety of senior financial and operating roles. From September 2005 to August 2017, she was our Senior Vice President, Finance, from May 2003 to September 2005, she was our Vice President, Finance, and from March 2002 to May 2003, she was our Senior Director, Finance. Before joining Sirius XM, Ms. Witz was Vice President, Planning and Development, at Viacom Inc., a global media company, and prior to that she was Vice President, Finance and Corporate Development, at Metro-Goldwyn-Mayer, Inc., an entertainment company focused on the production and global distribution of film and television content. Ms. Witz began her career in the Investment Banking Department at Kidder, Peabody & Co Inc.


ITEM 1A.	RISK FACTORS

In addition to the other information in this Annual Report on Form 10-K, including the information under the caption Item 1. Business “Competition,” the following risk factors should be considered carefully in evaluating us and our business. This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results and the timing of events could differ materially from those projected in forward-looking statements due to a number of factors, including those set forth below and elsewhere in this Annual Report on Form 10-K. See “Special Note ~~Regarding~~About Forward-Looking Statements” following this Item 1A. Risk Factors.

We face substantial competition and that competition is likely to increase over time.

We face substantial competition from other providers of radio and audio services. Our ability to ~~retain~~attract and ~~attract~~retain subscribers depends on our success in creating and providing popular or unique music, entertainment, news and sports programming. Our subscribers can obtain certain similar content for free through terrestrial radio stations, Internet radio services and Internet streaming services. Audio content delivered via the Internet, including through mobile devices that are

easily integrated in vehicles, is increasingly competitive with our services. A summary of various services that compete with us is contained in the section entitled “Item 1. ~~Business-Competition”~~Business - Competition” of this Annual Report on Form 10-K.

Competition could result in lower subscription, advertising or other revenue orand an increase in our marketing, promotion or other expenses and, consequently, lower our earnings and free cash flow. We cannot assure you we will be able to compete successfully with our existing or future competitors or that competition will not have a material adverse impact on our operations and financial condition.

Our ability to ~~attract and~~ retain subscribers inor increase the ~~future~~number of subscribers is uncertain.

Our ability to retain our subscribers, or increase the number of subscribers to our service, is uncertain and subject to many factors, including:

~~the production and sale or lease of new vehicles in the United States;~~

the price of our service;

the health of the economy;

~~the rate at which existing self-pay subscribers buy and sell~~the sale or lease rate of new ~~and used~~ vehicles in the United States;

~~our ability to convince owners and lessees of new and previously owned vehicles that include satellite radios to purchase subscriptions to our service;~~

the rate at which our self-pay subscribers buy and sell new and used vehicles in the United States;

~~the effectiveness of our marketing programs;~~

our ability to convince owners and lessees of new and used vehicles that include satellite radios to purchase subscriptions to our service;

~~the entertainment value of our programming;~~

the effectiveness of our marketing programs;

~~our ability to respond to evolving consumer tastes, relative to the flexibility of our Internet-based competitors; and~~

the entertainment value of our programming and the packages we offer;

~~actions by our competitors, such as terrestrial radio~~our ability to respond to evolving consumer tastes; and ~~other audio entertainment and information providers.~~

actions by our competitors, such as other audio entertainment and information providers.

As part of our business, we experience, and expect to experience in the future, subscriber turnover (i.e., churn). Some elements of our business strategy may result in churn increasing. For example, our efforts to increase the penetration of satellite radios in new, lower priced vehicle lines may result in the growth of economy-minded subscribers; our work to acquire subscribers purchasing or leasing pre-owned vehicles may attract subscribers of more limited economic means; and our product and marketing efforts may attract more price sensitive subscribers.

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If we are unable to retain current subscribers at expected rates, or the costs of retaining subscribers are higher than expected, our financial performance and operating results could be adversely affected. We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our satellite radio service. ~~We spend~~A substantial ~~amounts~~portion of our subscribers are on ~~advertising~~discounted pricing plans and ~~marketing and in transactions with automakers, retailers and others~~our ability to ~~obtain and attract subscribers.~~

retain these subscribers or migrate them to higher priced plans is uncertain. A substantial number of those subscribers periodically cancel their subscriptions when offered a subscription at a higher price.

Our profitability could be adversely affected if we are unable to consistently attract new subscribers and retain our current subscribers at prices and margins consistent with our past performance.

~~Consumer protection laws and their enforcement could damage our business.~~

~~We engage in extensive marketing efforts~~

Our ability to profitably attract and retain subscribers ~~to our services. We employ a wide variety of communications tools~~ as ~~part of~~ our marketing ~~campaigns, including telemarketing~~ efforts reach more price-sensitive consumers is uncertain.

Our efforts to acquire subscribers purchasing or leasing used vehicles may attract subscribers of more limited economic means. For example, consumers purchasing or leasing used vehicles may be more price sensitive than consumers purchasing or leasing new vehicles, may convert from trial subscribers to self-paying subscribers at a lower rate, and ~~email solicitations. Consumer protection laws cover nearly all aspects~~may cancel their subscriptions more frequently than consumers purchasing or leasing new vehicles. Some of our marketing efforts including the content of our advertising, the terms of consumer offers and the manner in which we communicate with subscribers and prospective subscribers. The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with federal and state laws, rules and regulations relating to consumer protection, including laws relating to telemarketing activities and privacy. There can be no assurance that these efforts will be successful or that we will not have to expend even greater resources towards compliance efforts.

We are subject to various claims under the Telephone Consumer Protection Act (the "TCPA") relating to telephone calls our call center vendors have made to consumers and subscribers, including calls to mobile phones. Modifications to federal and state laws, rules and regulations concerning consumer protection, including decisions by federal and state courts and agencies interpreting these laws, could have an adverse impact on our ability tomay also attract ~~and retain subscribers to our services. There can be no assurance that new laws or regulations will not be enacted or adopted, preexisting laws or regulations will not be~~ more ~~strictly enforced or that our varied operations will comply with all applicable laws, which could have a material adverse impact on our operations and financial condition.~~

~~The unfavorable outcome of pending or future litigation, including class actions alleging violations of the TCPA, could have a material adverse impact on our operations and financial condition.~~

We are parties to several legal proceedings arising out of various aspects of our business, including class actions seeking substantial damages for purported violations by us, or by our call center vendors acting on our behalf, of the TCPA. The TCPA imposes significant restrictions on communications made using automatic telephone dialing systems (“ATDS”) or artificial or prerecorded voices. The class actions against us allege, among other things, that we called mobile phones using an ATDS without the consumer’s prior consent or, alternatively, after the consumer revoked his or her prior consent, in violation of the TCPA. Under the TCPA, such violations may result in statutory damages of up to five hundred dollars per call for inadvertent violations and up to fifteen hundred dollars per call for knowing or willful violations. Given the significant number of communications our call center vendors make to consumersprice sensitive subscribers; and our ~~subscribers, a determination that we, or our call center vendors acting on our behalf, have violated~~efforts to increase the TCPA could expose us to statutory damages and, if incurred, could, individually or in the aggregate, have a material adverse impact on our operations and financial condition. Further, if any indemnification claims we have against our call center vendors are unsuccessful, we may be required to pay the full amountpenetration of ~~any damages.~~

The outcome of these proceedings may not be favorable, and one or more unfavorable outcomes could have a material adverse impact on our financial condition. Beyond these current proceedings, if, going forward, we fail to ensure that the telemarketing efforts of our call center vendors are TCPA-compliant, and we are held responsible for their acts, we may be subject to further litigation and could be required to pay significant statutory damages. See "Item 3. Legal Proceedings" below.

~~The market for music rights is changing and is subject to significant uncertainties.~~

We must maintain music programming royalty arrangements with, and pay license fees to, owners of rights in musical works. Traditionally, BMI, ASCAP and SESAC have negotiated for these copyright users, collected royalties and distributed them to songwriters and music publishers. These traditional arrangements are changing rapidly. For example, owners of rights in musical works have withdrawn from BMI, ASCAP and SESAC, third parties have contacted us regarding the need to separately license works, the United States Justice Department is evaluating modifications to the Consent Decrees that have governed ASCAP and BMI since the 1940s, and Committees of Congress have held hearings on substantial revisions of the Copyright Act. The fracturing of the traditional system for licensing rights in musical works may have significant consequences to our business, including increasing licensing costs and reducing the availability of certain pieces for use on our services.

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Under the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998, we also must pay royalties to copyright owners of sound recordings fixed after February 15, 1972. Those royalty rates may be established through negotiation or, if negotiation is unsuccessful, by the CRB. Owners of copyrights in sound recordings have created SoundExchange, a collective organization, to collect and distribute royalties. SoundExchange is exempt by statute from certain U.S. antitrust laws and exercises significant market power in the licensing of sound recordings. Under the terms of the CRB's decision governing sound recording royalties for the five-year period ending on December 31, 2017, we will be required to pay a royalty based on our gross revenues, subject to certain exclusions, of 10.5% for 2016, and 11% for 2017. The CRB proceeding to set royalty rates for the five year period beginning 2018 will begin later this year. SoundExchange currently has a petition before the CRB, requesting an interpretation of the CRB's regulations related to sound recording royalties for the five year period ended December 31, 2012. SoundExchange alleges that we underpaid royalties for statutory licenses within that time period. See "Item 3. Legal Proceedings" below.

The right to perform certain copyrighted sound recordings that were fixed before February 15, 1972 is governed by state common law principles and, in certain instances, may be subject to state statutes. We are a defendant in litigation in several States, regarding the alleged distribution, duplication and performance of certain copyrighted sound recordings that were fixed before February 15, 1972. In 2015, we settled one such suit for $210 million. The settling record companies claimed to own, control or otherwise have the right to settle with respect to approximately 85% of the pre-1972 recordings we have historically played. See "Item 3. Legal Proceedings" below. If courts ultimately hold that a performance right exists under various state copyright laws, we may be required to pay additional royalties to perform copyrighted sound recordings that were fixed before February 15, 1972 or remove those works from our service.

~~Our business depends in large part upon the auto industry.~~

A substantial portion of our subscription growth has come from purchasers and lessees of new and previously owned automobiles in the United States. The sale and lease of vehicles with satellite radios is an important source of subscribers for our satellite radio service. We have agreements with every major automaker to include satellite radios in new, ~~vehicles, although these agreements do not require automakers to install specific or minimum quantities of radios in any given period.~~

~~Automotive production and sales are dependent on many factors, including the availability of consumer credit, general economic conditions, consumer confidence and fuel costs. To the extent~~lower-priced vehicle ~~sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, subscriber growth for our satellite radio services~~lines may ~~be adversely impacted.~~

~~Sales of previously owned vehicles represent a significant source of new subscribers for us. We have agreements with auto dealers and companies operating~~result in the ~~used vehicle market~~growth of more economy-minded subscribers. In addition, over time the changing demographics of our subscriber base, such as the expected increase in customers from the “millennial generation,” may increase the number of subscribers accustomed to ~~provide us with data on sales of previously owned satellite radio enabled vehicles. The continuing availability of this information is important to our future growth.~~

~~General economic conditions can affect our business.~~

The purchase of a satellite radio subscription is discretionary, and our business and our financial condition can be negatively affected by general economic conditions. Poor general economic conditions could adversely affect subscriber churn, conversion rates and vehicle sales.

consuming entertainment through free products.

If we fail to protect the security of personal information about our customers, we could be subject to costly government enforcement actions and private litigation and our reputation could suffer.

The nature of our business involves the receipt and storage of personal information about our subscribers including, in many cases, credit and debit card information. If we fail to protect the security of personal information about our customers or if we experience a significant data security breach, we could be exposed to costly government enforcement actions and private litigation and our reputation could suffer. In addition, our subscribers and potential customers could lose confidence in our

ability to protect their personal information, which could cause them to discontinue usage of our services. Such events could lead to lost future sales and adversely affect our results of operations.

~~Other existing or future government laws and regulations could harm our business.~~

We are subject to many laws, including federal, state, local and foreign laws. These laws and regulations cover issues such as user privacy, behavioral advertising, automatic renewal of agreements, pricing, fraud, electronic waste, mobile and electronic device communications, quality of products and services, taxation, advertising, intellectual property rights and information security. The expansion of these laws, both in terms of their number and their applicability, could harm our business.

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~~Failure of our satellites would significantly damage our business.~~

~~The lives of our satellites vary depending on a number of factors, including:~~

~~degradation and durability of solar panels;~~

~~quality of construction;~~

~~random failure of satellite components, which could result in significant damage to or loss of a satellite;~~

~~amount of fuel the satellite consumes; and~~

~~damage or destruction as a result of electrostatic storms, terrorist attacks, collisions with other objects in space or other events, such as nuclear detonations, occurring in space.~~

In the ordinary course of operation, satellites experience failures of component parts and operational and performance anomalies. Components on our in-orbit satellites have failed; and from time to time we have experienced anomalies in the operation and performance of these satellites. These failures and anomalies are expected to continue in the ordinary course, and we cannot predict if any of these possible future events will have a material adverse effect on our operations or the life of our existing in-orbit satellites. Any material failure of our satellites could cause us to lose customers and could materially harm our reputation and our operating results. We hold no in-orbit insurance for our satellites. Additional information regarding our fleet of satellites is contained in the section entitled “Item 1. Business - Satellites, Terrestrial Repeaters and Other Satellite Facilities” of this Annual Report on Form 10-K.

We plan to transition our Sirius constellation of satellites to a geostationary orbit using our existing FM-5 and FM-6 satellites. The transition of our Sirius constellation to a geostationary orbit will, in certain areas, affect the signal coverage for customers served by those satellites.

In addition, our Sirius network of terrestrial repeaters communicates with a single third-party satellite. Our XM network of terrestrial repeaters communicates with a single XM satellite. If the satellites communicating with the applicable repeater network fail unexpectedly, the services would be disrupted for several hours or longer.

~~Interruption or failure of our information technology and communications systems could negatively impact our results and our brand.~~

We operate a complex and growing business. We offer a wide variety of subscription packages at different price points. Our business is dependent on the operation and availability of our information technology and communication systems and those of certain third party service providers. Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brand. Although we have implemented practices designed to maintain the availability of our information technology systems and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities. We occasionally experience unplanned outages or technical difficulties. We could also experience loss of data or processing capabilities, which could cause us to lose customers and could materially harm our reputation and our operating results.

We rely on internal systems and external systems maintained by manufacturers, distributors and service providers to take, fulfill and handle customer service requests and host certain online activities. Any interruption or failure of our internal or external systems could prevent us from servicing customers or cause data to be unintentionally disclosed.

Our data centers and our information technology and communications systems are vulnerable to damage or interruption from natural disasters, malicious attacks, fire, power loss, telecommunications failures, computer viruses or other attempts to harm our systems.

We have a program in place to detect and respond to data security incidents. However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. In addition, hardware, software, or applications we develop or procure from third parties may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our employees, contractors or other agents.

If hackers were able to circumvent our security measures, ~~we could lose~~a release of proprietary information or personal information could occur or we could experience significant disruptions. If our systems become unavailable or suffer a security breach, we may be required to expend significant resources to address these problems, including notification under various ~~federal and state~~ data privacy regulations, and our reputation and operating results could suffer.

~~Table~~ To our knowledge, we have not suffered a release of ~~Contents~~

any proprietary information or personal information that is material to our operations or brand.

Our service may experience harmful interference from new wireless operations.

The development of new applications and services in spectrum adjacent to the frequencies licensed to us, as well as the combination of signals in other frequencies, may cause harmful interference to our satellite radio service in certain areas of the United States. Certain operations or combination of operations permitted by the FCC in spectrum, other than our licensed frequencies, results in the loss of signal to our service, and the reception of our satellite radio service can be adversely affected in certain areas. Elimination of this interference may not be possible in all cases. In other cases, our efforts to reduce this interference may require extensive engineering efforts and additions to our terrestrial infrastructure. These mitigation efforts may be costly and take several years to implement and may not be entirely effective. In certain cases, we are dependent on the FCC to assist us in preventing harmful interference to our service.

We engage in extensive marketing efforts and the continued effectiveness of those efforts are an important part of our business.

We engage in extensive marketing efforts across a broad range of media to attract and retain subscribers to our services. We employ a wide variety of communications tools as part of our marketing campaigns, including telemarketing efforts and email solicitations. The effectiveness of our marketing efforts is affected by a broad range of factors, including creative and execution factors. Our ability to reach consumers with radio and television advertising, direct mail materials, email solicitations and telephone calls is an important part of our efforts and a significant factor in the effectiveness of our marketing. If we are unable to reach consumers through email solicitations or telemarketing, including as a result of “spam” and email filters or call blocking technologies, our marketing efforts will be adversely affected. A decline in the effectiveness of our marketing efforts could have a material adverse impact on our operations and financial condition.

Consumer protection laws and their enforcement could damage our business.

Consumer protection laws cover nearly all aspects of our marketing efforts, including the content of our advertising, the terms of consumer offers and the manner in which we communicate with subscribers and prospective subscribers. The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with federal and state laws, rules and regulations relating to consumer protection, including laws relating to telemarketing activities and privacy. There can be no assurance that these efforts will be successful or that we will not have to expend even greater resources in our compliance efforts.

Modifications to federal and state laws, rules and regulations concerning consumer protection, including decisions by federal and state courts and agencies interpreting these laws, could have an adverse impact on our ability to attract and retain subscribers to our services. There can be no assurance that new laws or regulations will not be enacted or adopted, preexisting laws or regulations will not be more strictly enforced or that our varied operations will comply with all applicable laws, which could have a material adverse impact on our operations and financial condition.

We may not realize the benefits of acquisitions or other strategic ~~initiatives.~~

investments and initiatives, including the acquisition of Pandora.

Our business strategy ~~may include~~includes selective acquisitions, or other strategic investments and initiatives that allow us to expand our business. The success of any acquisition, including the acquisition of Pandora, depends upon effective integration and management of acquired businesses and assets into our operations, which is subject to risks and uncertainties, including ~~realization of any~~realizing the growth potential, the anticipated synergies and cost savings, the ability to retain and attract personnel, the diversion of management’s attention for other business concerns, and undisclosed or potential legal liabilities of the acquired business or assets.

The acquisition of Pandora involves the combination of two entities which currently operate as independent companies. We will be required to devote significant management attention and resources to integrate the businesses and operations of Pandora. Potential difficulties we may encounter in the integration process includes:

the inability to successfully combine our business and the business of Pandora in a manner that permits us to offer cross-promotion opportunities, audio packages that integrate our content and programming with Pandora’s ad-supported and subscription services and achieve other benefits anticipated to result from the acquisition, in the time frame currently anticipated or at all;

the complexities associated with integrating personnel from the two companies and of combining two companies with different histories, cultures and customer bases;

our failure to retain key employees;

potential unknown liabilities and unforeseen increased expenses associated with the acquisition; and

performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention in connection with completing the acquisition and integrating the companies’ operations.

It is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the transactions, or could otherwise adversely affect our business and financial results following the closing of the acquisition.

The unfavorable outcome of pending or future litigation could have a material adverse impact on our operations and financial condition.

We are parties to several legal proceedings arising out of various aspects of our business, including class actions arising out of our marketing practices. The outcome of these proceedings may not be favorable, and one or more unfavorable outcomes could have a material adverse impact on our financial condition. See “Item 3. Legal Proceedings” below.

The market for music rights is changing and is subject to significant uncertainties.

We must maintain music programming royalty arrangements with, and pay license fees to, owners of rights in musical works. Traditionally, BMI, ASCAP and SESAC have negotiated for these copyright users, collected royalties and distributed them to songwriters and music publishers. These traditional arrangements are changing. Owners of rights in musical works have withdrawn from BMI, ASCAP and SESAC and new entities, such as GMR, have been formed to represent owners of musical works. The fracturing of the traditional system for licensing rights in musical works may have significant consequences to our business, including increasing licensing costs and reducing the availability of certain pieces for use on our services.

Under the United States Copyright Act, we also must pay royalties to copyright owners of sound recordings. Those royalty rates may be established through negotiation or, if negotiation is unsuccessful, by the CRB. Owners of copyrights in sound recordings have created SoundExchange, a collective organization, to collect and distribute royalties. SoundExchange is exempt by statute from certain U.S. antitrust laws and exercises significant market power in the licensing of sound recordings. Under the terms of the CRB's December 2017 decision governing sound recording royalties for satellite radio, we are required to pay a royalty based on our gross revenues, subject to certain exclusions, of 15.5% per year for each of the next nine years. This is a substantial increase over the royalty rate of 11% of our gross revenues that we paid in 2017.

Our business depends in large part upon the auto industry.

A substantial portion of our subscription growth has come from purchasers and lessees of new and used automobiles in the United States. The sale and lease of vehicles with satellite radios is an important source of subscribers for our satellite radio

service. We have agreements with every major automaker to include satellite radios in new vehicles, although these agreements do not require automakers to install specific or minimum quantities of radios in any given period.

Automotive production and sales are dependent on many factors, including the availability of consumer credit, general economic conditions, consumer confidence and fuel costs. To the extent vehicle sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, subscriber growth for our satellite radio services may be adversely impacted.

Sales of used vehicles represent a significant source of new subscribers for us. We have agreements with auto dealers and companies operating in the used vehicle market to provide us with data on sales of used satellite radio enabled vehicles. The continuing availability of this information is important to our future growth.

General economic conditions can affect our business.

Existing or future laws and regulations could harm our business.

Failure of our satellites would significantly damage our business.

The lives of our satellites vary depending on a number of factors, including:

degradation and durability of solar panels;

quality of construction;

random failure of satellite components, which could result in significant damage to or loss of a satellite;

amount of fuel the satellite consumes; and

damage or destruction as a result of electrostatic storms, terrorist attacks, collisions with other objects in space or other events, such as nuclear detonations, occurring in space.

In the ordinary course of operation, satellites experience failures of component parts and operational and performance anomalies. Components on our in-orbit satellites have failed; and from time to time we have experienced anomalies in the operation and performance of these satellites. These failures and anomalies are expected to continue in the ordinary course, and we cannot predict if any of these possible future events will have a material adverse effect on our operations or the life of our existing in-orbit satellites. In addition, our Sirius network of terrestrial repeaters communicates with a single third-party satellite. Our XM network of terrestrial repeaters communicates with a single XM satellite. If the satellites communicating with the applicable repeater network fail unexpectedly, the services would be disrupted for several hours or longer.

Any material failure of our satellites could cause us to lose customers and could materially harm our reputation and our operating results. We hold no in-orbit insurance for our existing in-orbit satellites. Additional information regarding our fleet of satellites is contained in the section entitled “Item 1. Business - Satellites, Terrestrial Repeaters and Other Satellite Facilities” of this Annual Report on Form 10-K.

Interruption or failure of our information technology and communications systems could negatively impact our results and our brand.

the availability of the information technology systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities. We occasionally experience unplanned outages or technical difficulties. We could also experience loss of data or processing capabilities, which could cause us to lose customers and could materially harm our reputation and operating results.

Damage or interruption to our data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems. The compromise of personal, confidential or proprietary information could also subject us to legal liability or regulatory action under evolving cyber-security, data protection and privacy laws and regulations enacted by the U.S. federal and state governments or other foreign jurisdictions or by various regulatory organizations. As a result, our ability to conduct our business and our results of operations might be materially and adversely affected.

Rapid technological and industry changes and new entrants could adversely impact our services.

The audio entertainment industry is characterized by rapid technological change, frequent product innovations, changes in customer requirements and expectations, evolving standards and ~~evolving standards.~~new entrants offering products and services. If we are unable to keep pace with these changes, our business may not succeed. Products using new technologies ~~or emerging industry standards,~~ could make our technologies less competitive in the marketplace.

Failure of third parties to perform could adversely affect our business.

Our business depends, in part, on various third parties, including:

manufacturers that build and distribute satellite radios;

companies that manufacture and sell integrated circuits for satellite radios;

programming providers and on-air talent;

~~vendors that operate our call centers;~~

vendors that operate our call centers; and

~~retailers that market and sell satellite radios and promote subscriptions to our services; and~~

vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites.

~~vendors that have designed or built, and vendors that support or operate, other important elements of our systems.~~

If one or more of these third parties do not perform in a satisfactory or timely manner, including complying with our standards and practices relating to business integrity, personnel, cybersecurity and other values, our business could be adversely affected. For example, Space Systems/Loral has announced that it expects to cease manufacturing large geostationary communications satellites following completion of its existing orders. Space Systems/Loral is currently building two satellites for our service (our SXM-7 and SXM-8 satellites). The discontinuance of this business by Space Systems/Loral could adversely affect the delivery schedules of these satellites and the on-going technical support for our existing in-orbit satellites.

In addition, a number of third parties on which we depend have experienced, and may in the future experience, financial difficulties or file for bankruptcy protection. Such third parties may not be able to perform their obligations to us in a timely manner, if at all, as a result of their financial condition or may be relieved of their obligations to us as part of seeking bankruptcy protection.

We design, establish specifications, source or specify parts and components, and manage various aspects of the logistics of the production of satellite radios. As a result of these activities, we may be exposed to liabilities associated with the design, manufacture and distribution of radios that the providers of an entertainment service would not customarily be subject to, such as liabilities for design defects, patent infringement and compliance with applicable laws, as well as the costs of returned product.

~~Our service may experience harmful interference from new and existing wireless operations.~~

The development of new applications and services in spectrum adjacent to the frequencies licensed to us for satellite radio and ancillary services, as well as the possible loss of service caused by the combination of signals in other frequencies, could cause harmful interference to our satellite radio service. Certain operations or combination of operations permitted by the FCC in spectrum, other than our licensed frequencies, could result in the loss of signal to our service and the reception of our satellite radio service could be adversely affected in certain areas. In certain cases, we are dependent on the FCC to assist us in preventing harmful interference to our service.

Failure to comply with FCC requirements could damage our business.

We hold FCC licenses and authorizations to operate commercial satellite radio services in the United States, including ~~authorizations for~~ satellites, ~~and~~ terrestrial repeaters and related authorizations. The FCC generally grants licenses and authorizations for a fixed term. Although we expect our licenses and authorizations to be renewed in the ordinary course upon their expiration, there can be no assurance that this will be the case. Any assignment or transfer of control of any of our FCC licenses or authorizations must be approved in advance by the FCC.

~~Table of Contents~~

The operation of our satellite radio systems is subject to significant regulation by the FCC under authority granted through the Communications Act of 1934 and related federal law. We are required, among other things, to operate only within specified frequencies; to meet certain conditions regarding the interoperability of our satellite radios with those of other licensed satellite radio systems; to coordinate our satellite radio services with radio systems operating in the same range of frequencies in neighboring countries; and to coordinate our communications links to our satellites with other systems that operate in the same frequency band. Noncompliance by us with these requirements or other conditions or with other applicable FCC rules and regulations could result in fines, additional license conditions, license revocation or other detrimental FCC actions. There is no guarantee that Congress will not modify the statutory framework governing our services, or that the FCC will not modify its rules and regulations in a manner that would have a material impact on our operations.

The terms of our licenses and the order of the FCC approving the Merger requires us to meet certain conditions. Non-compliance with these conditions could result in fines, additional license conditions, license revocation or other detrimental FCC actions.

We may from time to time modify our business plan, and these changes could adversely affect us and our financial condition.

We regularly evaluate our plans and strategy. These evaluations often result in changes to our plans and strategy, some of which may be material. These changes in our plans or strategy may include: the acquisition or termination of unique or compelling programming; the introduction of new features or services; significant new or enhanced distribution arrangements; investments in infrastructure, such as satellites, equipment or radio spectrum; and investments in, and/or acquisitions of, other businesses, including acquisitions that are not directly related to our satellite radio business.

We have a significant amount of indebtedness, and our ~~revolving credit facility~~debt contains certain covenants that restrict our ~~current and future~~ operations.

As of December 31, ~~2015,~~2018, we had an aggregate principal amount of approximately ~~$5.5~~$6.9 billion of indebtedness outstanding, ~~$340~~$439.0 million of which was outstanding under a $1.75 billion Senior Secured Revolving Credit Facility.

Our indebtedness increases our vulnerability to general adverse economic and industry conditions; requires us to dedicate a portion of our cash flow from operations to payments on indebtedness, reducing the availability of cash flow to fund capital expenditures, marketing and other general corporate activities; limits our ability to borrow additional funds; ~~limits~~and may limit our flexibility in planning for, or reacting to, changes in our business and the audio entertainment ~~industry; and may place us at a competitive disadvantage compared to other competitors.~~

industry.

Our studios, terrestrial repeater networks, satellite uplink facilities or other ground facilities could be damaged by natural catastrophes or terrorist activities.

An earthquake, hurricane, tornado, flood, terrorist attack or other catastrophic event could damage our studios, terrestrial repeater networks or satellite uplink facilities, interrupt our service and harm our business.

Any damage to the satellites that transmit to our terrestrial repeater networks would likely result in degradation of the affected service for some subscribers and could result in complete loss of service in certain or all areas. Damage to our satellite uplink facilities could result in a complete loss of our services until we could transfer operations to suitable back-up facilities.

Our principal stockholder has significant influence, including over actions requiring stockholder approval, and its interests may differ from the interests of other holders of our common stock.

As of December 31, 2018, Liberty Media beneficially ~~owns over 50%~~owned approximately 73% of Holdings’ common stock and has the ability to influence our affairs, policies and operations. Two Liberty Media executives and one other member of the board of directors of Liberty Media are members of our board of directors. Our board of directors currently has thirteen members. Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of Holdings’ board of directors. Our board of directors is responsible for, among other things, the appointment of executive management, future issuances of common stock or other securities, the payment of dividends, if any, the incurrence of debt, and the approval of various transactions.

Liberty Media can also determine the outcome of all matters requiring general stockholder approval, including the election of the board of directors and changes to our certificate of incorporation or by-laws. Liberty Media can also cause or prevent a change of control of Holdings and could preclude any unsolicited acquisition of our company. The concentration of ownership could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock. In certain cases, the interests of Liberty Media may not be aligned with the interests of other stockholders of Holdings.

~~Table of Contents~~

We are a “controlled company” within the meaning of the NASDAQ listing rules and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements.

We are a “controlled company” for the purposes of the NASDAQ Stock Market listing rules. As such, we have elected not to comply with certain NASDAQ corporate governance requirements. Although a majority of our board of directors consists of independent directors, we do not have a compensation committee and nominating and corporate governance committee that consist entirely of independent directors.

Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.

Our business may be impaired by third-party intellectual property rights.

Development of our systems has depended upon the intellectual property that we have developed, as well as intellectual property licensed from third parties. If the intellectual property that we have developed or use is not adequately protected, others will be permitted to and may duplicate portions of our systems or services without liability. In addition, others may challenge, invalidate, render unenforceable or circumvent our intellectual property rights, patents or existing licenses or we may face significant legal costs in connection with defending and enforcing those intellectual property rights. Some of the know-how and technology we have developed, and plan to develop, is not now, nor will it be, covered by U.S. patents or trade secret protections. Trade secret protection and contractual agreements may not provide adequate protection if there is any unauthorized use or disclosure. The loss of necessary technologies could require us to substitute technologies of lower quality performance standards, at greater cost or on a delayed basis, which could harm us.

Other parties may have patents or pending patent applications, which will later mature into patents or inventions that may block or put limits on our ability to operate our system or license technologies. We may have to resort to litigation to enforce our rights under license agreements or to determine the scope and validity of other parties’ proprietary rights in the subject matter of those licenses. This may be expensive and we may not succeed in any such litigation.

Third parties may assert claims or bring suit against us for patent, trademark or copyright infringement, or for other infringement or misappropriation of intellectual property rights. Any such litigation could result in substantial cost, and diversion of effort and adverse findings in any proceeding could subject us to significant liabilities to third parties; require us to seek licenses from third parties; block our ability to operate our systems or license our technology; or otherwise adversely affect our ability to successfully develop and market our satellite radio systems.

While we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time.

We currently pay a quarterly cash dividend to holders of our common stock, although we have no obligation to do so, and our dividend policy may change at any time without notice to our stockholders. The declaration and payment of dividends is at the discretion of our board of directors in accordance with applicable law after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, limitations imposed by our indebtedness, legal requirements and other factors that our board of directors deems relevant.

Special Note About Forward-Looking Statements

We have made various statements in this Annual Report on Form 10-K that may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may also be made in our other reports filed with or furnished to the SEC, in our press releases and in other documents. In addition, from time to time, we, through our management, may make oral forward-looking statements. ~~Forward-looking~~For example, these forward-looking statements ~~are subject to risks~~may include, among other things, our statements about our outlook and ~~uncertainties, including those identified above, which could cause actual~~our future results ~~to differ materially from such statements.~~of operations and financial condition; share repurchase plans; the impact of economic and market conditions; and the impact of our acquisition of Pandora. The words “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “may,” “should,” “could,” “would,” “likely,” “projection,” “outlook” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties, including those identified above, which

could cause actual results to differ materially from such statements. We caution you that the risk factors described above are not exclusive. There may also be other risks that we are unable to predict at this time that may cause actual results to differ materially from those in forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which will arise or to assess with any precision the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statements, except as required by law.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

None.

~~None.~~

~~Table of Contents~~


ITEM 2.	PR~~OPERTIES~~ PROPERTIES

Below is a list of the principal properties that we own or lease:

~~Location~~			~~Purpose~~	~~Own/Lease~~

Location	Purpose	Own/Lease
New York, NY	Corporate headquarters, office facilities and studio/production facilities	Lease
Washington, DC	Office, studio/production facilities and data center	Own
Lawrenceville, NJ	Office and technical/engineering facilities	Lease
Deerfield Beach, FL	Office and technical/engineering facilities	Lease
Farmington Hills, MI	Office and technical/engineering facilities	Lease
Nashville, TN	Studio/production facilities	Lease
Vernon, NJ	Technical/engineering facilities	Own
Ellenwood, GA	Technical/engineering facilities	Lease
Fredericksburg, VA	Warehouse and technical/engineering facilities	Lease
Los Angeles, CA	~~Studio/~~Office and studio/production facilities	Lease
Irving, TX	Office and engineering facilities/call center	Lease
San Francisco, CA	Office and engineering facilities	Lease

We also ~~own or~~ lease other small facilities that we use as offices for our advertising sales personnel, studios and warehouse and maintenance space. These facilities are not material to our business or operations. ~~We also lease properties in Panama and Ecuador that we use as earth stations to command and control satellites.~~

In addition, we lease or license space at approximately ~~730~~540 locations for use in connection with the terrestrial repeater networks that support our satellite radio services. In general, these leases and licenses are for space on building rooftops and communications towers. None of these individual ~~arrangements~~locations are material to our business or operations.


ITEM 3.	LEGAL PROCEEDINGS

In the ordinary course of business, we are a defendant or party to various claims and lawsuits, including those discussed below. ~~These claims are at various stages of arbitration or adjudication.~~

Telephone Consumer Protection Act Suits. ~~We are~~On March 13, 2017, Thomas Buchanan, individually and on behalf of all others similarly situated, filed a ~~defendant in several purported~~ class action ~~suits that allege that we, or call center vendors acting on our behalf, made calls which violate provisions~~complaint against us in the United States District Court for the Northern District of ~~the TCPA.~~Texas, Dallas Division. The ~~plaintiffs~~plaintiff in these actions allege, among other things, that we called mobile phones using an automatic telephone dialing system without the consumer’s prior consent or, alternatively, after the consumer revoked his or her prior consent. In one of the actions, the plaintiff alsothis action alleges that we violated the ~~TCPA’s call time restrictions~~Telephone Consumer Protection Act of 1991 (the “TCPA”) by, among other things, making telephone solicitations to persons on the National Do-Not-Call registry, a database established to allow consumers to exclude themselves from telemarketing calls unless they consent to receive the calls in a signed, written agreement, and ~~in one of the other actions the plaintiff also alleges that we violated the TCPA’s do not call restrictions. Our vendors make millions of~~making calls ~~each month~~ to consumers ~~including our subscribers, as part~~in violation of our ~~customer service and marketing efforts.~~internal Do-Not-Call registry. The ~~plaintiffs in these suits are~~plaintiff is seeking various forms of relief, including statutory damages of ~~five hundred dollars~~$500 for each violation of the TCPA or, in the alternative, treble damages of up to ~~fifteen hundred dollars~~$1,500 for each knowing and willful violation of the TCPA ~~as well as payment of interest, attorneys’ fees~~ and ~~costs, and certain injunctive relief~~a permanent injunction prohibiting us from making, or having made, any ~~violations of~~calls to land lines that are listed on the ~~TCPA in the future.~~

~~These purported class action cases are titled~~ ~~Erik Knutson v. Sirius XM Radio Inc., No. 12-cv-0418-AJB-NLS (S.D. Cal.),~~ ~~Francis W. Hooker v. Sirius XM Radio, Inc., No. 4:13-cv-3 (E.D. Va.),~~ ~~Yefim Elikman v. Sirius XM Radio, Inc. and Career Horizons, Inc., No. 1:15-cv-02093 (N.D. Ill.), and~~ ~~Anthony Parker v. Sirius XM Radio, Inc.~~, No. 8:15-cv-01710-JSM-EAJ (M.D. Fla). These actions were commenced in February 2012, January 2013, April 2015 and July 2015, respectively. Information concerning each of these actions is publicly available in court filings under their docket numbers.

~~We have notified certain of~~National Do-Not-Call registry or our call center vendors of these actions and requested that they defend and indemnify us against these claims pursuant to the provisions of their existing or former agreements with us. We believe we have valid contractual claims against call center vendors in connection with these claims and intend to preserve and pursue our rights to recover from these entities; however, no assurance can be made as to our ability to fully recover all claims we may have against these entities.

~~Pre-1972 Sound Recording Matters.~~ ~~In August 2013, SoundExchange, Inc.~~internal Do-Not-Call registry. The plaintiff has filed a ~~complaint in the United States District Court for the District of Columbia alleging~~motion seeking class certification, and that we underpaid royalties for statutory licenses during the 2007-2012 period in violation of the regulations established by the Copyright Royalty Board for that period. SoundExchange principally alleges that we improperly reduced our calculation of gross revenues, on which the royalty payments are based, by deducting non-recognized revenue attributable to pre-1972 recordings and Premier package revenue thatmotion is not “separately charged” as required by the regulations. SoundExchange is seeking compensatory damages of not less than $50 million and up to $100 million or more, payment of late fees and interest, and attorneys’ fees and costs.

~~Table of Contents~~

In August 2014, the United States District Court for the District of Columbia granted our motion to dismiss the complaint without prejudice on the grounds that the case properly should be pursued before the Copyright Royalty Board rather than the district court. In December 2014, SoundExchange filed a petition with the Copyright Royalty Board requesting an order interpreting the applicable regulations.

~~This matter is titled~~ ~~SoundExchange, Inc. v. Sirius XM Radio, Inc., No.13-cv-1290-RJL (D.D.C.), and~~ ~~Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio Services,~~ ~~United States Copyright Royalty Board, No. 2006-1 CRB DSTRA. Information concerning each of these actions is publicly available in filings under their docket numbers.~~

In addition, since 2013, we have been named as a defendant in several suits, including putative class action suits, challenging our use and public performance via satellite radio and the Internet of sound recordings fixed prior to February 15, 1972 (“pre-1972 recordings”) under various state laws. ~~In June 2015, we settled the suit brought by~~ Capitol Records LLC, Sony Music Entertainment, UMG Recordings, Inc., Warner Music Group Corp. and ABKCO Music & Records, Inc. relating to our use and public performance of pre-1972 recordings for $210 million, which amount was paid in July 2015. These settling record companies claimed to own, control or otherwise have the right to settle with respect to approximately 85% of the pre-1972 recordings we have historically played. We have also entered into certain direct licenses with other owners of pre-1972 recordings, which in many cases include releases of any claims associated with our use of pre-1972 recordings.

~~Several putative class actions suits challenging our use and public performance of other pre-1972 recordings under various state laws remain~~ pending. We believe we have substantial defenses to the claims asserted ~~we are defending these actions vigorously,~~in this action, and ~~do not believe that the resolution of these remaining cases will have a material adverse effect on our business, financial condition or results of operations.~~

~~With respect to certain matters described above under the captions “Telephone Consumer Protection Act Suits” and “Pre-1972 Sound Recording Matters,~~” we have determined that the outcome of these matters is inherently unpredictable and subject to significant uncertainties, many of which are beyond our control. No provision was made for losses to the extent such are not probable and estimable. We believe we have substantial defenses to the claims asserted, and intend to defend ~~these actions~~this action vigorously.

Other Matters. In the ordinary course of business, we are a defendant in various other lawsuits and arbitration proceedings, including derivative actions; actions filed by subscribers, both on behalf of themselves and on a class action basis; former employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual property. None of these other matters, in our opinion, is likely to have a material adverse effect on our business, financial condition or results of operations.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

~~Table of Contents~~

PART II

~~PART~~ II


ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on the NASDAQ Global Select Market under the symbol “SIRI.” ~~The following table sets forth the high and low per share sales price for our common stock, as reported by NASDAQ, for the periods indicated below:~~

High

Low

Year Ended December 31, 2014

First Quarter

$
3.89

$
3.09

Second Quarter

$
3.49

$
2.98

Third Quarter

$
3.65

$
3.28

Fourth Quarter

$
3.63

$
3.14

Year Ended December 31, 2015

First Quarter

$
4.04

$
3.33

Second Quarter

$
4.00

$
3.70

Third Quarter

$
4.01

$
3.31

Fourth Quarter

$
4.20

$
3.69

On January ~~29, 2016, the closing sales price of our common stock on the NASDAQ Global Select Market was $3.70 per share. On January 29, 2016,~~28, 2019, there were approximately ~~9,560~~7,879 record holders of our common stock.

~~Dividends~~

We currently do not pay dividends on our common stock. Our ability to pay dividends is currently limited by covenants under our revolving credit facility. In December 2012, we paid a special cash dividend. Our board of directors has not made any determination whether similar special cash dividends will be paid in the future.

Issuer Purchases of Equity Securities

~~Since December 2012,~~

On January 29, 2019, our board of directors approved an additional $2.0 billion for repurchase of our common stock. The new approval increases the amount of common stock that we have been authorized to repurchase to an aggregate of ~~$8.0~~ ~~billion of our common stock~~.$14.0 billion. Our board of directors did not establish an end date for this stock repurchase program. Shares of common stock may be purchased from time to time on the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions, including transactions with Liberty Media and its affiliates, or otherwise. As of December 31, ~~2015,~~2018, our cumulative repurchases since December 2012 under our stock repurchase program totaled ~~1.8~~2.7 billion shares for ~~$6.3~~approximately $10.7 billion, and ~~$1.7~~approximately $1.3 billion remained available under our existing $12.0 billion stock repurchase program. The size and timing of our repurchases will be based on a number of factors, including price and business and market conditions.

The following table provides information about our purchases of equity securities registered pursuant to Section 12 of the Exchange Act during the quarter ended December 31, ~~2015:~~

2018:

Period

Total Number of
Shares Purchased

Average Price Paid
Per Share (a)

Total Number of Shares
Purchased as Part of Publicly
Announced Plans or Programs

Approximate Dollar Value
of Shares that May Yet Be
Purchased Under the Plans
or Programs (a)

October 1, 2015 - October 31, 2015

29,667,244

$
3.93

29,667,244

$
1,951,440,398

November 1, 2015 - November 30, 2015

19,121,892

$
4.12

19,121,892

$
1,872,689,142

December 1, 2015 - December 31, 2015

42,816,509

$
4.06

42,816,509

$
1,698,860,143

Total

91,605,645

$
4.03

91,605,645



Period	Total Number of Shares Purchased	Average Price Paid Per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
October 1, 2018 - October 31, 2018	21,390,182	$	5.95	21,390,182	$	1,844,729,159
November 1, 2018 - November 30, 2018	51,750,000	$	6.17	51,750,000	$	1,525,513,359
December 1, 2018 - December 31, 2018	32,116,082	$	6.22	32,116,082	$	1,325,748,492
Total	105,256,264	$	6.14	105,256,264

~~(a)~~
(a)	These amounts include fees and commissions associated with the shares repurchased. All of these repurchases were made pursuant to our share repurchase program.

~~Table of Contents~~

COMPARISON OF CUMULATIVE TOTAL RETURNS

Set forth below is a graph comparing the cumulative performance of our common stock with the Standard & Poor's Composite-500 Stock Index, or the S&P 500, and the NASDAQ Telecommunications Index from December 31, ~~2010~~2013 to December 31, ~~2015.~~2018. The graph assumes that $100 was invested on December 31, ~~2010~~2013 in each of our common stock, the S&P 500 and the NASDAQ Telecommunications Index. ~~A dividend with respect~~In November 2016 we paid our first quarterly dividend. Our board of directors expects to ~~our common stock was declared in 2012 only.~~

declare regular quarterly dividends.

Stockholder Return Performance Table

NASDAQ
Telecommunications Index

S&P 500 Index

Sirius XM Holdings Inc.

December 31, 2010
$
100.00

$
100.00

$
100.00

December 31, 2011
$
87.38

$
100.00

$
111.66

December 31, 2012
$
89.13

$
113.40

$
177.30

December 31, 2013
$
110.54

$
146.97

$
214.11

December 31, 2014
$
120.38

$
163.71

$
214.72

December 31, 2015
$
111.36

$
162.52

$
249.69



	NASDAQ Telecommunications Index		S&P 500 Index		Sirius XM Holdings Inc.
December 31, 2013	$	100.00	$	100.00	$	100.00
December 31, 2014	$	108.91	$	111.39	$	100.29
December 31, 2015	$	100.74	$	110.58	$	116.62
December 31, 2016	$	115.72	$	121.13	$	127.51
December 31, 2017	$	135.90	$	144.65	$	153.58
December 31, 2018	$	140.02	$	135.63	$	163.61

Equity Compensation Plan Information

Plan Category (shares in thousands)

Column (a)
Number of Securities to
be Issued upon Exercise
of Outstanding Options,
Warrants and Rights

Column (b)
Weighted-Average
Exercise Price of
Outstanding Options,
Warrants and Rights⁽¹⁾

Column (c)
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation Plans
(excluding Securities
Reflected in Column (a))

Equity compensation plans approved by security holders

354,569

$
3.29

246,778

Equity compensation plans not approved by security holders

—

—

—

Total

354,569

$
3.29

246,778



Plan Category (shares in thousands)	Column (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights⁽¹⁾	Column (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights⁽²⁾		Column (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders	278,010	$	4.22	154,973
Equity compensation plans not approved by security holders	—	—		—
Total	278,010	$	4.22	154,973

__________

~~(1)~~

~~Excludes~~

(1)

In addition to shares issuable upon exercise of stock options, amount also includes approximately ~~16,088~~34,608 shares ~~covering RSUs from~~underlying restricted stock units, including performance-based restricted stock units (“PRSUs”) and dividend equivalents thereon. The number of shares to be issued in respect of PRSUs and dividend equivalents thereon have been calculated based on the ~~calculation~~assumption that the maximum levels of performance applicable to the ~~weighted average exercise price.~~

PRSUs will be achieved.

~~Table of Contents~~

~~ITEM 6.~~	~~SELECTED FINANCIAL DATA~~
(2)	The weighted-average exercise price of outstanding options, warrants and rights relates solely to stock options, which are the only currently outstanding exercisable security.

ITEM 6. SELECTED FINANCIAL DATA

The operating and balance sheet data included in the following selected financial data ~~for 2015 and 2014 have~~has been derived from our audited consolidated financial statements. Historical operating and balance sheet data included within the following selected financial data from 2011 through 2013 is derived from the audited Consolidated Financial Statements of Sirius XM and Holdings. This selected financial data should be read in conjunction with the audited Consolidated Financial Statements and related notes thereto included in Item 8 of this Annual Report on Form 10-K and “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of this Annual Report on Form 10-K.

As of and for the Years Ended December 31,

(in thousands, except per share data)
2015

2014

2013 (1)

2012 (2)

2011

Statements of Comprehensive Income Data:

Total revenue
$
4,570,058

$
4,181,095

$
3,799,095

$
3,402,040

$
3,014,524

Net income
$
509,724

$
493,241

$
377,215

$
3,472,702

$
426,961

Net income per share - basic
$
0.09

$
0.09

$
0.06

$
0.55

$
0.07

Net income per share - diluted
$
0.09

$
0.08

$
0.06

$
0.51

$
0.07

Weighted average common shares outstanding - basic

5,375,707

5,788,944

6,227,646

4,209,073

3,744,606

Weighted average common shares outstanding - diluted

5,435,166

5,862,020

6,384,791

6,873,786

6,500,822

Cash dividends declared per share
$
—

$
—

$
—

$
0.05

$
—

Balance Sheet Data:

Cash and cash equivalents
$
111,838

$
147,724

$
134,805

$
520,945

$
773,990

Restricted investments
$
9,888

$
5,922

$
5,718

$
3,999

$
3,973

Total assets (3)
$
8,046,662

$
8,369,065

$
8,826,959

$
9,024,800

$
7,452,738

Long-term debt, net of current portion (3)
$
5,443,614

$
4,487,419

$
3,088,701

$
2,400,943

$
2,969,093

Stockholders' (deficit) equity
$
(166,491
)

$
1,309,837

$
2,745,742

$
4,039,565

$
704,145



	As of and for the Years Ended December 31,
(in thousands, except per share data)	2018			2017			2016 (1)			2015			2014
Statements of Comprehensive Income Data:
Total revenue	$	5,770,692		$	5,425,129		$	5,017,220		$	4,570,058		$	4,181,095
Net income	$	1,175,893		$	647,908		$	745,933		$	509,724		$	493,241
Net income per share - basic (2)	$	0.26		$	0.14		$	0.15		$	0.09		$	0.09
Net income per share - diluted (2)	$	0.26		$	0.14		$	0.15		$	0.09		$	0.08
Weighted average common shares outstanding - basic	4,461,827			4,637,553			4,917,050			5,375,707			5,788,944
Weighted average common shares outstanding - diluted	4,560,720			4,723,535			4,964,728			5,435,166			5,862,020
Cash dividends declared per share	$	0.0451		$	0.0410		$	0.0100		$	—		$	—
Balance Sheet Data:
Cash and cash equivalents	$	54,431		$	69,022		$	213,939		$	111,838		$	147,724
Restricted investments	$	10,939		$	10,352		$	9,889		$	9,889		$	5,922
Total assets (3)	$	8,172,736		$	8,329,374		$	8,003,595		$	8,046,662		$	8,369,065
Long-term debt, net of current portion (3)	$	6,884,536		$	6,741,243		$	5,842,764		$	5,443,614		$	4,487,419
Stockholders' (deficit) equity	$	(1,816,921	)	$	(1,523,874	)	$	(792,015	)	$	(166,491	)	$	1,309,837

_______________________

~~(1)~~

~~The selected financial data for 2013 includes the balances and approximately two months of activity related to the acquisition of the connected vehicle business of Agero, Inc. in November 2013.~~

~~(2)~~

(1)

For the year ended December 31, ~~2012,~~2016, we ~~had~~recorded $293,896 as an increase to our Deferred tax assets and decrease to our Accumulated deficit as a result of the adoption of Accounting Standards Update 2016-09, Compensation-Stock Compensation (Topic 718).

(2)

The 2017 net income per basic and diluted share includes the impact of $184,599 in income tax ~~benefit~~expense, or a decrease of ~~$2,998,234~~approximately $0.04 per share due to the ~~release~~reduction in our net deferred tax asset balance as a result of the Tax Cut and Jobs Act signed into law on December 22, 2017. For additional information refer to Note 16 to our ~~valuation allowance. A special cash dividend was paid during 2012.~~

consolidated financial statements in Item 8 of this Annual Report on Form 10-K.

~~(3)~~

(3)

The ~~2011~~2014 – 2015 balances reflect the adoption of Accounting Standards Update 2015-03, ~~Interest- Imputation~~Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,and Accounting Standards Update 2015-15,~~Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Agreements.~~ As a result of our adoption of these ASUs, Total Assets was reduced by $7,155, $6,444, $17,821, $30,043 and $43,258 for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively, and Long-term debt, net of current portion, was reduced by $7,155, $6,444, $5,120, $30,043 and $43,258 for the years ended December 31, 2015, 2014, 2013, 2012 and 2011, respectively.

~~Table~~

Presentation and Subsequent Measurement of ~~Contents~~

Debt Issuance Costs Associated with Line-of-Credit Agreements. As a result of our adoption of these ASUs, Total Assets was reduced by $7,155 and $6,444 for the years ended December 31, 2015 and 2014, respectively, and Long-term debt, net of current portion, was reduced by $7,155 and $6,444 for the years ended December 31, 2015 and 2014, respectively.


ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OFOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results and the timing of events could differ materially from those projected in forward-looking statements due to a number of factors, including those described under “Item 1A - Risk Factors” and elsewhere in this Annual Report on Form 10-K. See “Special Note ~~Regarding~~About Forward-Looking Statements.”

(

All amounts referenced in this Item 7 are in thousands, except per subscriber and per installation amounts, unless otherwise ~~stated)~~

stated.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

Executive Summary

We transmit music, sports, entertainment, comedy, talk, news, traffic and weather channels, as well as infotainment services, in the United States on a subscription fee basis through our two proprietary satellite radio ~~systems. Subscribers can also receive~~systems, and a larger set of music and other channels ~~plus features such as SiriusXM On Demand~~through our streaming service. Our streaming service is available online and ~~MySXM, over our Internet radio service, including~~ through applications for mobile ~~devices.~~devices, home devices and other consumer electronic equipment. We ~~are~~ also ~~a leader in providing~~provide connected vehicle services. Our connected vehicle services are designed to enhance the safety, security and driving experience for vehicle operators while providing marketing and operational benefits to automakers and their dealers.

We have agreements with every major automaker (“OEMs”) to offer satellite ~~radios~~radio in their ~~vehicles.~~vehicles, through which we acquire the majority of our subscribers. We also acquire subscribers through marketing to owners and lessees of previously owned vehicles that include factory-installed satellite radios that are not currently subscribing to our services. ~~Additionally, we distribute our~~Our satellite radios are primarily distributed through automakers, retailers, ~~online~~ and ~~at locations nationwide and through~~ our website. Satellite radio services are also offered to customers of certain rental car companies.

As of December 31, ~~2015,~~2018, we had approximately ~~29.6~~34.0 million subscribers of which approximately ~~24.3~~28.9 million were self-pay subscribers and approximately ~~5.3~~5.1 million were paid promotional subscribers. Our subscriber totals include subscribers under our regular pricing plans; discounted pricing plans; subscribers that have prepaid, including payments either made or due from automakers for subscriptions included in the sale or lease price of a vehicle; subscribers to our ~~Internet~~streaming services who do not also have satellite radio subscriptions; and certain subscribers to our weather, traffic, and data services who do not also have satellite radio subscriptions. Subscribers and subscription related revenues and expenses associated with the Sirius XM Canada service, which had approximately 2.6 million subscribers as of December 31, 2018, and our connected vehicle services are not included in our subscriber count or subscriber-based operating metrics.

Our primary source of revenue is subscription fees, with most of our customers subscribing ~~on an~~to monthly, quarterly, semi-annual or annual ~~semi-annual, quarterly or monthly plan.~~plans. We offer discounts for prepaid ~~longer term~~ subscription plans, as well as a multiple subscription discount. We also derive revenue from ~~activation and other~~certain fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services, such as our weather, traffic and data services.

We provide traffic services to approximately 8.6 million vehicles.

In ~~certain~~many cases, a subscription to our radio ~~services~~service is included inwith the ~~sale~~purchase or lease ~~price~~ of new ~~vehicles~~ or previously owned vehicles. The length of these subscriptions varies but is typically three to twelve months. We receive payments for these subscriptions from certain automakers. We also reimburse various automakers for certain costs associated with satellite radios installed in new ~~vehicles.~~

vehicles and pay revenue share to various automakers.

As of December 31, 2018, Liberty Media beneficially ~~owns,~~owned, directly and indirectly, ~~over~~ ~~50%~~approximately 73% of the outstanding shares of our common stock. As a result, we are a “controlled company” for the purposes of the NASDAQ corporate governance requirements. ~~Liberty Media owns interests in a range of media, communications and entertainment businesses.~~

~~We also have~~

Sirius XM holds an ~~approximate 37%~~ equity ~~interest~~method investment in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”), which offers satellite radio services in Canada. ~~Subscribers~~As of December 31, 2018, Sirius XM owned an approximate 70% equity interest and 33% voting interest in Sirius XM Canada.

Sirius XM holds an investment in Pandora Media, Inc. (“Pandora”), which operates an internet-based music discovery platform, offering a personalized experience for listeners. As of December 31, 2018, Sirius XM's interest in Pandora

represented an approximately 18% interest in Pandora's outstanding common stock, and an approximately 15% interest on an as-converted basis.

Recent Developments; Agreement to Acquire Pandora Media, Inc.

On September 23, 2018, Holdings entered into an Agreement and Plan of Merger and Reorganization (the “Merger

Agreement”), by and among Holdings, Pandora Billboard Holding Company, Inc., a wholly-owned subsidiary of Pandora, Billboard Acquisition Sub, Inc., a wholly-owned subsidiary of Billboard Holding Company, Inc., Sirius XM and White Oaks Acquisition Corp., pursuant to which, subject to the ~~Sirius XM Canada service~~terms and conditions of the Merger Agreement, Holdings agreed to acquire Pandora (such transaction, the “Merger”). Pursuant to the Merger, each outstanding share of Pandora common stock, par value $0.0001 per share (“Pandora Common Stock”), will be converted into the right to receive 1.44 shares (the “Exchange Ratio”) of Holdings common stock, par value $0.001 per share (“Holdings Common Stock”). In connection with the Merger, the Series A Preferred Stock will be canceled for no consideration.

Further, pursuant to the Merger:

The Pandora stockholders voted to adopt the Merger Agreement at a special stockholder meeting on January 29, 2019.

The completion of the Merger is subject to customary conditions, including, among others, the absence of any law or order that prohibits or makes illegal the Merger and subject to certain exceptions, the accuracy of the representations and warranties of each party and compliance by the parties with their respective covenants.

~~Table~~unable to receive an opinion of ~~Contents~~

counsel to that effect, the parties have agreed to restructure the Merger so that the Merger will be treated as a taxable stock sale.

Results of Operations

Set forth below are our results of operations for the year ended December 31, ~~2015~~2018 compared with the year ended December 31, ~~2014~~2017 and the year ended December 31, ~~2014~~2017 compared with the year ended December 31, ~~2013.~~

2016.

For the Years Ended December 31,

2015 vs 2014 Change

2014 vs 2013 Change

2015

2014

2013

Amount

%

Amount

%

Revenue:

Subscriber revenue

$
3,824,793

$
3,554,302

$
3,284,660

$
270,491

8
%

$
269,642

8
%
Advertising revenue

122,292

100,982

89,288

21,310

21
%

11,694

13
%
Equipment revenue

110,923

104,661

80,573

6,262

6
%

24,088

30
%
Other revenue

512,050

421,150

344,574

90,900

22
%

76,576

22
%
Total revenue

4,570,058

4,181,095

3,799,095

388,963

9
%

382,000

10
%
Operating expenses:

Cost of services:

Revenue share and royalties

1,034,832

810,028

677,642

224,804

28
%

132,386

20
%
Programming and content

293,091

297,313

290,323

(4,222
)

(1
%)

6,990

2
%
Customer service and billing

377,908

370,585

320,755

7,323

2
%

49,830

16
%
Satellite and transmission

94,609

86,013

79,292

8,596

10
%

6,721

8
%
Cost of equipment

42,724

44,397

26,478

(1,673
)

(4
%)

17,919

68
%
Subscriber acquisition costs

532,599

493,464

495,610

39,135

8
%

(2,146
)

0
%
Sales and marketing

354,189

336,480

291,024

17,709

5
%

45,456

16
%
Engineering, design and development

64,403

62,784

57,969

1,619

3
%

4,815

8
%
General and administrative

324,801

293,938

262,135

30,863

10
%

31,803

12
%
Depreciation and amortization

272,214

266,423

253,314

5,791

2
%

13,109

5
%
Total operating expenses

3,391,370

3,061,425

2,754,542

329,945

11
%

306,883

11
%
Income from operations

1,178,688

1,119,670

1,044,553

59,018

5
%

75,117

7
%
Other income (expense):

Interest expense, net of amounts capitalized

(299,103
)

(269,010
)

(204,671
)

(30,093
)

(11
%)

(64,339
)

(31
%)
Loss on extinguishment of debt
and credit facilities, net

—

—

(190,577
)

—

0
%

190,577

100
%
Loss on change in value of derivatives

—

(34,485
)

(20,393
)

34,485

100
%

(14,092
)

(69
%)
Other income

12,379

14,611

8,180

(2,232
)

(15
%)

6,431

79
%
Total other expense

(286,724
)

(288,884
)

(407,461
)

2,160

1
%

118,577

29
%
Income before income taxes

891,964

830,786

637,092

61,178

7
%

193,694

30
%
Income tax expense

(382,240
)

(337,545
)

(259,877
)

(44,695
)

(13
%)

(77,668
)

(30
%)
Net income

$
509,724

$
493,241

$
377,215

$
16,483

3
%

$
116,026

31
%

Our ~~results of operations discussed~~forward-looking statements below ~~include~~regarding our expectations for our revenues and expenses do not reflect the impact of ~~purchase price accounting adjustments associated with the July 2008 merger between~~ our wholly owned subsidiary, Vernon Merger Corporation, and XM Satellite Radio Holdings Inc. (the “Merger”). The purchase price accounting adjustments related to the Merger, include the: (i) eliminationproposed acquisition 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. The deferred credits on executory contracts attributable to third party arrangements with an OEM included in revenue share and royalties, subscriber acquisition costs, and sales and marketing concluded with the expiration of the acquired contract during 2013. The purchase price accounting adjustments related to programming providers concluded with the expiration of the acquired contract in June 2015. The impact of these purchase price accounting adjustments is detailed in our Adjusted Revenues and Operating Expenses tables on pages ~~37 through 38 of our glossary.~~

Pandora.



	For the Years Ended December 31,									2018 vs 2017 Change					2017 vs 2016 Change
	2018			2017			2016			Amount			%		Amount			%
Revenue:
Subscriber revenue	$	4,593,803		$	4,472,522		$	4,196,852		$	121,281		3	%	$	275,670		7	%
Advertising revenue	187,569			160,347			138,231			27,222			17	%	22,116			16	%
Equipment revenue	154,878			131,586			118,947			23,292			18	%	12,639			11	%
Music royalty fee and other revenue	834,442			660,674			563,190			173,768			26	%	97,484			17	%
Total revenue	5,770,692			5,425,129			5,017,220			345,563			6	%	407,909			8	%
Operating expenses:
Cost of services:
Revenue share and royalties	1,393,842			1,210,323			1,108,515			183,519			15	%	101,808			9	%
Programming and content	405,686			388,033			353,779			17,653			5	%	34,254			10	%
Customer service and billing	382,537			385,431			387,131			(2,894		)	(1	)%	(1,700		)	—	%
Satellite and transmission	95,773			82,747			103,020			13,026			16	%	(20,273		)	(20	)%
Cost of equipment	30,768			35,448			40,882			(4,680		)	(13	)%	(5,434		)	(13	)%
Subscriber acquisition costs	470,336			499,492			512,809			(29,156		)	(6	)%	(13,317		)	(3	)%
Sales and marketing	484,044			437,739			386,724			46,305			11	%	51,015			13	%
Engineering, design and development	123,219			112,427			82,146			10,792			10	%	30,281			37	%
General and administrative	356,819			334,023			341,106			22,796			7	%	(7,083		)	(2	)%
Depreciation and amortization	300,720			298,602			268,979			2,118			1	%	29,623			11	%
Total operating expenses	4,043,744			3,784,265			3,585,091			259,479			7	%	199,174			6	%
Income from operations	1,726,948			1,640,864			1,432,129			86,084			5	%	208,735			15	%
Other income (expense):
Interest expense	(350,073		)	(345,820		)	(331,225		)	(4,253		)	(1	)%	(14,595		)	(4	)%
Loss on extinguishment of debt	—			(43,679		)	(24,229		)	43,679			100	%	(19,450		)	(80	)%
Other income (expense)	43,699			12,844			14,985			30,855			240	%	(2,141		)	(14	)%
Total other income (expense)	(306,374		)	(376,655		)	(340,469		)	70,281			19	%	(36,186		)	(11	)%
Income before income taxes	1,420,574			1,264,209			1,091,660			156,365			12	%	172,549			16	%
Income tax expense	(244,681		)	(616,301		)	(345,727		)	371,620			60	%	(270,574		)	(78	)%
Net income	$	1,175,893		$	647,908		$	745,933		$	527,985		81	%	$	(98,025	)	(13	)%

Total Revenue

Subscriber Revenueincludes subscription, activation and other fees.

~~2015 vs. 2014~~: ~~For the years ended December 31, 2015 and 2014, subscriber revenue was $3,824,793 and $3,554,302,~~

2018 vs. 2017: For the years ended December 31, 2018 and 2017, subscriber revenue was $4,593,803 and $4,472,522, respectively, an increase of 8%, or $270,491. The increase was primarily attributable to an 8% increase in the daily weighted average number of subscribers and increases in certain of our self-pay subscription rates, partially offset by subscription discounts and limited channel plans offered in customer acquisition and retention programs.

~~Table~~ of ~~Contents~~

3%, or $121,281. The increase was primarily attributable to a 5% increase in the daily weighted average number of subscribers. Subscriber revenue was negatively impacted by $94,767 for the year ended December 31, 2018 due to the adoption of Accounting Standards Update ("ASU") 2014-09, effective January 1, 2018.

~~2014 vs. 2013~~

2017 vs. 2016: For the years ended December 31, 2017 and 2016, subscriber revenue was $4,472,522 and $4,196,852, respectively, an increase of 7%, or $275,670. The increase was primarily attributable to a 4% increase in the daily weighted average number of subscribers as well as a 3% increase in average monthly revenue per subscriber resulting from certain rate increases. : For the years ended December 31, 2014 and 2013, subscriber revenue was $3,554,302 and $3,284,660, respectively, an increase of 8%, or $269,642. The increase was primarily attributable to a 6% increase in the daily weighted average number of subscribers, the inclusion of a full year of subscription revenue generated by our connected vehicle business and the increase in certain of our subscription rates beginning in January 2014. These increases were partially offset by subscription discounts and limited channel plans offered in customer acquisition and retention programs, a change in an agreement with an automaker and a rental car company, and an increasing number of lifetime subscription plans that had reached full revenue recognition.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, advertising revenue was $160,347 and $138,231, respectively, an increase of 16%, or $22,116. The increase was primarily due to a greater number of advertising spots sold and transmitted as well as increases in rates charged per spot.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, equipment revenue was $131,586 and $118,947, respectively, an increase of 11%, or $12,639. The increase was driven by royalty revenue on certain satellite radio components starting in the second quarter of 2016 due to our transition to a new generation of chipsets and revenue from the sales of connected vehicle devices since the acquisition of Automatic, partially offset by lower revenue generated through satellite radio sales to distributors and consumers and lower OEM production.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, music royalty fee and other revenue was $660,674 and $563,190, respectively, an increase of 17%, or $97,484. The increase was primarily driven by higher revenue from Sirius XM Canada due to the new Services Agreement and Advisory Services Agreement entered into in the second quarter of 2017, additional revenues from the U.S. Music Royalty Fee due to an increase in the number of subscribers and subscribers paying at a higher rate and higher revenue generated from our connected vehicle services.

~~2015 vs. 2014~~: ~~For the years ended December 31, 2015 and 2014, revenue share and royalties were $1,034,832 and $810,028,~~

2018 vs. 2017: For the years ended December 31, 2018 and 2017, revenue share and royalties were $1,393,842 and $1,210,323, respectively, an increase ~~of 28%, or $224,804, and increased as a percentage of total revenue. The increase was primarily due to $128,256 in expense recorded during the year ended December 31, 2015~~ ~~related to our settlements associated with our use of certain pre-1972 sound recordings through December 31, 2015. Revenue share and royalties also increased due~~ ~~to greater revenues subject to royalty and revenue sharing arrangements and a 5.3% increase in the statutory royalty rate for the performance of post-1972 sound recordings.~~

2017 vs. 2016: For the years ended December 31, 2017 and 2016, revenue share and royalties were $1,210,323 and $1,108,515, respectively, an increase of 9%, or $101,808, and increased as a percentage of total revenue. The increase was due to overall greater revenues subject to music royalties and revenue share to automakers and an increase in the statutory royalty rate applicable to our use of post-1972 recordings, which increased from 10.5% in 2016 to 11% in 2017. We recorded $45,100 and $45,900 of expense related to music royalty legal settlements and related reserves in 2017 and 2016, respectively.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, programming and content expenses were $388,033 and $353,779, respectively, an increase of 10%, or $34,254, and increased as a percentage of total revenue. The increase was primarily due to the addition of video content rights, payment for which started during the third quarter of 2016, as well as talent and personnel-related costs.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, customer service and billing expenses were $385,431 and $387,131, respectively, a decrease of less than 1%, or $1,700, and decreased as a percentage of total revenue. The decrease was primarily due to a decline in call center agent rates and contact rates, partially offset by increased transaction fees based on a higher subscriber base.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, satellite and transmission expenses were $82,747 and $103,020, respectively, a decrease of 20%, or $20,273, and decreased as a percentage of total revenue. The decrease was driven by lower wireless costs associated with our connected vehicle services, and a reduction in terrestrial repeater costs as a result of the elimination of duplicative repeater sites; partially offset by increased streaming costs. Satellite and transmission costs in 2016 included a loss on disposal of certain obsolete satellite parts of $12,912.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, cost of equipment was $35,448 and $40,882, respectively, a decrease of 13%, or $5,434, and decreased as a percentage of equipment revenue. The decrease was primarily due to lower direct satellite radio sales to distributors and consumers, partially offset by the incremental costs associated with the sale of connected vehicle devices since the acquisition of Automatic.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, subscriber acquisition costs were $499,492 and $512,809, respectively, a decrease of 3%, or $13,317, and decreased as a percentage of total revenue. The decrease was driven by reductions to OEM hardware subsidy rates, lower subsidized costs related to the transition of chipsets, and a decrease in satellite radio installations.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, sales and marketing expenses were $437,739 and $386,724, respectively, an increase of 13%, or $51,015, and increased as a percentage of total revenue. The increase was primarily due to additional subscriber communications, retention programs and acquisition campaigns as well as higher personnel-related costs; partially offset by the timing of certain OEM marketing campaigns.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, interest expense was $345,820 and $331,225, respectively, an increase of 4%, or $14,595. The increase was primarily due to higher average debt during the year ended December 31, 2017 compared to the ~~extent the amount of our total debt outstanding increases.~~

year ended December 31, 2016.

2017 vs. 2016: For the ~~commitments under~~years ended December 31, 2017 and 2016, loss on extinguishment of debt, net, was $43,679 and $24,229, respectively. During the ~~share repurchase agreement with Liberty Media, which were are accounted for as~~year ended December 31, 2017, we recorded losses on extinguishment of debt due to the redemption of our 4.25% Senior Notes due 2020, 5.75% Senior Notes due 2021, and 5.25% Senior Secured Notes due 2022. During the year ended December 31, 2016, a ~~derivative.~~loss was recorded on the redemption of our then outstanding 5.875% Senior Notes due 2020.

~~2015 vs. 2014~~: ~~For the years ended December 31, 2015 and 2014, the loss on change in value of derivatives was $0~~ ~~and $34,485, respectively~~. The loss in 2014 resulted from a change in the market value of our common stock to be purchased under the share repurchase agreement with Liberty Media. On April 25, 2014, we completed the final purchase installment under this share repurchase agreement and repurchased $340,000 of our shares of common stock from Liberty Media at a price of $3.66 per share.

~~2014 vs. 2013~~: ~~For the years ended December 31, 2014 and 2013, the loss on change in value of derivatives was $34,485~~ ~~and $20,393, respectively~~. The loss resulted from a change in the market value of our common stock to be purchased under the share repurchase agreement with Liberty Media. On April 25, 2014, we completed the final purchase installment under this share repurchase agreement and repurchased $340,000 of our shares of common stock from Liberty Media at a price of $3.66 per share.

Other Income primarilyincludes realized and unrealized gains and losses, interest income, and our share of the income or loss of Sirius XM Canada.

~~2015 vs. 2014~~: For the years ended December 31, 2015 and 2014, other income was $12,379 and $14,611, respectively. Other income for the year ended December 31, 2015 was driven by dividends received from Sirius XM Canada in excess of our investment. Other income for the year ended December 31, 2014 was driven by our share of Sirius XM Canada’s net income and gain from the conversion of certain debentures into shares of Sirius XM Canada, partially offset by the amortization expense related to our equity method intangible assets.

~~2014 vs. 2013~~

2018 vs. 2017: For the years ended December 31, 2018 and 2017, other income was $43,699 and $12,844, respectively. Other income for the year ended December 31, 2018 was driven by unrealized gains of $42,617 from a fair value adjustment of our investment in Pandora, and interest earned on our loan to Sirius XM Canada of $10,302, partially offset by losses on other investments of $9,675. Other income for the year ended December 31, 2017, included interest earned on our loan to Sirius XM Canada, and our share of Sirius XM Canada's net income, partially offset by transaction costs associated with our investment in Pandora.: For the years ended December 31, 2014 and 2013, other income was $14,611 and $8,180, respectively. The other income for the year ended December 31, 2014 was driven by dividends received from Sirius XM Canada, our share of Sirius XM Canada's net income and income from the conversion of certain debentures into shares of Sirius XM Canada, partially offset by the amortization expense related to our equity method intangible assets. The other income for 2013 was primarily due to the inclusion of our share of Sirius XM Canada's net income, partially offset by the amortization expense related to our equity method intangible assets.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, other income was $12,844 and $14,985, respectively. Other income for the year ended December 31, 2017 included interest earned on our loan to Sirius XM Canada, and our share of Sirius XM Canada's net income, partially offset by transaction costs associated with our investment in Pandora. Other income for the year ended December 31, 2016 was primarily driven by our share of Sirius XM Canada’s net income and dividends received from Sirius XM Canada in excess of our investment.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, income tax expense was $616,301 and $345,727, respectively, and our effective tax rate was 48.7% and 31.7%, respectively. As a result of the reduction of the federal corporate income tax rate, we revalued our net deferred tax asset, excluding after tax credits, as of December 31, 2017. Based on this revaluation, we recorded a net tax expense of $184,599 to reduce our net deferred tax asset balance, which was recorded as additional income tax expense for the year ended December 31, 2017. Our effective tax rate increased by 14.6% to 48.7% primarily as a result of the revaluation of our net deferred tax asset. For the years ended December 31, 2017 and 2016, we recorded a $21,700 and a $66,326 tax credit, respectively, under the Protecting Americans from Tax Hikes Act of 2015 related to research and development activities, which reduced our effective tax rate by 1.7% and 6.1%, respectively.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue - Revenue from Contracts with Customers.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

~~2015 vs. 2014~~

2018 vs. 2017: For the years ended December 31, 2018 and 2017, our new vehicle consumer conversion rate was 39% and 40%, respectively. The decrease was driven primarily by a decline in conversion of first time trial subscribers.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, our new vehicle consumer conversion rate was 40% and 39%, respectively. The increase was driven by improvements in the conversion of promotional subscribers who were also existing self-pay subscribers.

ARPU : For the years ended December 31, 2015 and 2014, the new vehicle consumer conversion rate was 40% and 41%, respectively. The decrease in conversion was primarily due to an increased vehicle penetration rate and

~~ARPU~~is derived from total earned subscriber revenue (excluding revenue derived from our connected vehicle ~~services business)~~services), net advertising revenue and other subscription-related revenue, ~~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. ~~(For a reconciliation to GAAP see~~(See the accompanying glossary on pages 3641 through 4045 for more details.)

2018 vs. 2017: For the years ended December 31, 2018 and 2017, ARPU was $13.34 and $13.25, respectively. The increase in certain of our subscription rates, including the U. S. Music Royalty Fee, and higher advertising revenue was negatively impacted by the adoption of the new revenue standard, effective as of January 1, 2018 of $0.24, and the growth in subscription discounts offered through customer acquisition and retention programs.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, ARPU was $13.25 and $12.91, respectively. The increase was driven primarily by increases in certain of our subscription rates in 2016, partially offset by growth in subscription discounts offered through customer acquisition and retention programs.

~~2014 vs. 2013~~: For the years ended December 31, 2014 and 2013, ARPU was $12.38 and $12.23, respectively. The increase was driven primarily by the contribution of the U.S. Music Royalty Fee, and the impact of the increase in certain of our subscription rates beginning in January 2014. The positive result was partially offset by growth in subscription discounts and limited channel plans offered through our customer acquisition and retention programs, lifetime subscription plans that had reached full revenue recognition and changes in contracts with an automaker and a rental car company.

SAC, Per Installation,is derived from subscriber acquisition costs and margins from the sale of radios, components and accessories ~~excluding purchase price accounting adjustments,~~(excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. ~~(For a reconciliation to GAAP see~~(See the accompanying glossary on pages 3641 through 4045 for more details.)

2018 vs. 2017: For the years ended December 31, 2018 and 2017, SAC, per installation, was $25.66 and $29.53, respectively. The decrease was driven by reductions to OEM hardware subsidy rates, our transition to a new generation of chipsets as well as the impact of the adoption of the new revenue standard, effective as of January 1, 2018, of $0.26.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, SAC, per installation, was $29.53 and $30.61, respectively. The decrease was driven by reductions to OEM hardware subsidy rates as well as lower subsidized costs related to the transition of chipsets.

~~2014 vs. 2013~~: ~~For the years ended December 31, 2014 and 2013, SAC, per installation, was $34 and $43, respectively. The decrease was primarily due to improvements in contractual OEM rates.~~

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. ~~(For a reconciliation to GAAP see~~(See the accompanying glossary on pages 3641 through 4045 for more details.)

2018 vs. 2017: For the years ended December 31, 2018 and 2017, customer service and billing expenses, per average subscriber, were $0.88 and $0.94, respectively. The decrease was primarily driven by lower call center costs due to lower agent rates, increased customer self-service resulting in lower contact rates and improved non-pay processes driving lower bad debt expense.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, customer service and billing expenses, per average subscriber, were $0.94 and $1.00, respectively. The decrease was primarily related to lower call center costs due to lower contact rates and lower agent rates, partially offset by higher transaction fees.

Adjusted EBITDA. EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. Adjusted EBITDA excludes the impact of other income, loss on extinguishment of debt, acquisition related costs, other non-cash charges, such as certain purchase price accounting adjustments, share-based payment expense, loss on disposal of assets, and legal settlements and reserves related to the historical use of sound recordings. (See the accompanying glossary on pages 41 through 45 for a reconciliation to GAAP and for more details.)

2018 vs. 2017: For the years ended December 31, 2018 and 2017, adjusted EBITDA was $2,240,396 and $2,115,886, respectively, an increase of 6%, or $124,510. The increase was due to: growth of 6% in total revenue which was primarily a result of the increase in our subscriber base; additional revenues from the U.S. Music Royalty Fee; an increase in advertising revenue; and lower subscriber acquisition costs. The increases were partially offset by higher revenue share and royalty, sales and marketing, programming and content, satellite and transmission, and general and administrative costs.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, adjusted EBITDA was $2,115,886 and $1,875,775, respectively, an increase of 13%, or $240,111. The increase was due to: a growth in revenues resulting from an increase in our subscriber base; an increase in certain of our subscription prices; an increase in Other revenue from higher revenue from Sirius XM Canada under the new Services Agreement and Advisory Services Agreement; additional amounts produced by the U.S. Music Royalty Fee; and lower general and administrative costs and subscriber acquisition costs. These favorable variances were partially offset by higher revenue share and royalty costs due to growth in our revenues and royalty rates, programming and content, sales and marketing and engineering, design and development costs.

~~2014 vs. 2013~~: For the years ended December 31, 2014 and 2013, customer service and billing expenses, per average subscriber, were $1.07 and $1.06, respectively. The increase was primarily driven by bad debt expense.

Free Cash Flowincludes cash provided by operations, net of additions to property and equipment, restricted and other investment activity and the return of capital from an investment in an unconsolidated ~~entity, excluding the $210,000 pre-1972 sound recordings legal settlement payment. (For a reconciliation to GAAP see~~entity. (See the accompanying glossary on pages 3641 through 4045 for a reconciliation to GAAP and for more details.)

~~2014 vs. 2013~~

2018 vs. 2017: For the years ended December 31, 2014 and 2013, free cash flow was $1,155,776 and $927,496, respectively, an increase of $228,280, or 25%. The increase was primarily driven by higher net cash provided by operating activities from improved performance, collections from subscribers and distributors, the absence of

~~Adjusted EBITDA.~~ EBITDA is defined as net income before interest expense, net of amounts capitalized; income tax expense and depreciation and amortization. Adjusted EBITDA excludes the impact of other income, loss on disposal of assets, loss on extinguishment of debt, loss on change in value of derivatives as well as certain other non-cash charges, such as certain purchase price accounting adjustments, share-based payment expense and settlements related to the historical use of pre-1972 sound recordings. (For a reconciliation to GAAP see the accompanying glossary on pages 36 through 40 for more details.)

~~Cash Flows for years ended December 31, 2015 compared with~~ the years ended December 31, ~~2014~~2018 and 2017, free cash flow was $1,517,110 and $1,559,772, respectively, a decrease of $42,662, or 3%. The decrease was driven by the one-time lump sum payment of $150,000 to resolve all outstanding claims under our statutory license for sound recordings for the period January 1, 2007 through December 31, 2017, an increase in additions to property and equipment due to the timing of payments for new satellite construction, and the timing of payments to vendors; partially offset by higher net cash provided by operating activities resulting from improved operating performance.

2017 vs. 2016: For the years ended December 31, 2017 and 2016, free cash flow was $1,559,772 and $1,509,113, respectively, an increase of $50,659, or 3%. The increase was driven by higher net cash provided by operating activities resulting from improved operating performance, partially offset by an increase in additions to property and equipment resulting from new satellite construction.

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 XM Merger. 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 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:

Unaudited

For the Years Ended December 31,

2015

2014

2013

Net income (GAAP):

$
509,724

$
493,241

$
377,215

Add back items excluded from Adjusted EBITDA:

Purchase price accounting adjustments:

Revenues (see pages 37-38)

7,251

7,251

7,251

Operating expenses (see pages 37-38)

(1,394
)

(3,781
)

(207,854
)
Pre-1972 sound recordings historical legal settlements (GAAP)

109,164

—

—

Loss on disposal of assets (GAAP)

7,384

—

—

Loss on change in value of derivatives (GAAP)

—

34,485

20,393

Share-based payment expense (GAAP)

84,310

78,212

68,876

Depreciation and amortization (GAAP)

272,214

266,423

253,314

Interest expense, net of amounts capitalized (GAAP)

299,103

269,010

204,671

Loss on extinguishment of debt and credit facilities, net (GAAP)

—

—

190,577

Other income (GAAP)

(12,379
)

(14,611
)

(8,180
)
Income tax expense (GAAP)

382,240

337,545

259,877

Adjusted EBITDA

$
1,657,617

$
1,467,775

$
1,166,140

~~Table of Contents~~

~~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 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 years ended December 31, 2015, 2014 and 2013:

Unaudited For the Year Ended December 31, 2015

As Reported

Purchase Price
Accounting
Adjustments

Allocation of
Share-based
Payment Expense

Adjusted

Revenue:

Subscriber revenue

$
3,824,793

$
—

$
—

$
3,824,793

Advertising revenue

122,292

—

—

122,292

Equipment revenue

110,923

—

—

110,923

Other revenue

512,050

7,251

—

519,301

Total revenue

$
4,570,058

$
7,251

$
—

$
4,577,309

Operating expenses

Cost of services:

Revenue share and royalties

$
1,034,832

$
—

$
—

$
1,034,832

Programming and content

293,091

1,394

(10,325
)

284,160

Customer service and billing

377,908

—

(2,982
)

374,926

Satellite and transmission

94,609

—

(4,147
)

90,462

Cost of equipment

42,724

—

—

42,724

Subscriber acquisition costs

532,599

—

—

532,599

Sales and marketing

354,189

—

(17,985
)

336,204

Engineering, design and development

64,403

—

(9,470
)

54,933

General and administrative

324,801

—

(39,401
)

285,400

Depreciation and amortization (a)

272,214

—

—

272,214

Share-based payment expense

—

—

84,310

84,310

Total operating expenses

$
3,391,370

$
1,394

$
—

$
3,392,764

~~(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. The increased depreciation and amortization for the year ended December 31, 2015 was $35,000.

~~Table of Contents~~

Unaudited For the Year Ended December 31, 2014

As Reported

Purchase Price
Accounting
Adjustments

Allocation of
Share-based
Payment Expense

Adjusted

Revenue:

Subscriber revenue

$
3,554,302

$
—

$
—

$
3,554,302

Advertising revenue

100,982

—

—

100,982

Equipment revenue

104,661

—

—

104,661

Other revenue

421,150

7,251

—

428,401

Total revenue

$
4,181,095

$
7,251

$
—

$
4,188,346

Operating expenses

Cost of services:

Revenue share and royalties

$
810,028

$
—

$
—

$
810,028

Programming and content

297,313

3,781

(9,180
)

291,914

Customer service and billing

370,585

—

(2,780
)

367,805

Satellite and transmission

86,013

—

(4,091
)

81,922

Cost of equipment

44,397

—

—

44,397

Subscriber acquisition costs

493,464

—

—

493,464

Sales and marketing

336,480

—

(15,454
)

321,026

Engineering, design and development

62,784

—

(8,675
)

54,109

General and administrative

293,938

—

(38,032
)

255,906

Depreciation and amortization (a)

266,423

—

—

266,423

Share-based payment expense

—

—

78,212

78,212

Total operating expenses

$
3,061,425

$
3,781

$
—

$
3,065,206

~~(a)~~

Unaudited For the Year Ended December 31, 2013

As Reported

Purchase Price
Accounting
Adjustments

Allocation of Share-
based Payment
Expense

Adjusted

Revenue:

Subscriber revenue

$
3,284,660

$
—

$
—

$
3,284,660

Advertising revenue

89,288

—

—

89,288

Equipment revenue

80,573

—

—

80,573

Other revenue

344,574

7,251

—

351,825

Total revenue

$
3,799,095

$
7,251

$
—

$
3,806,346

Operating expenses

Cost of services:

Revenue share and royalties

$
677,642

$
122,534

$
—

$
800,176

Programming and content

290,323

8,033

(7,584
)

290,772

Customer service and billing

320,755

—

(2,219
)

318,536

Satellite and transmission

79,292

—

(3,714
)

75,578

Cost of equipment

26,478

—

—

26,478

Subscriber acquisition costs

495,610

64,365

—

559,975

Sales and marketing

291,024

12,922

(14,792
)

289,154

Engineering, design and development

57,969

—

(7,405
)

50,564

General and administrative

262,135

—

(33,162
)

228,973

Depreciation and amortization (a)

253,314

—

—

253,314

Share-based payment expense

—

—

68,876

68,876

Total operating expenses

$
2,754,542

$
207,854

$
—

$
2,962,396



	For the Years Ended December 31,
	2018			2017			2016
Net income:	$	1,175,893		$	647,908		$	745,933
Add back items excluded from Adjusted EBITDA:
Purchase price accounting adjustments:
Revenues	7,251			7,251			7,251
Sound recording legal settlements and reserves	69,144			45,100			45,900
Acquisition related costs	3,158			—			—
Loss on disposal of assets	—			—			12,912
Share-based payment expense	133,175			124,069			108,604
Depreciation and amortization	300,720			298,602			268,979
Interest expense	350,073			345,820			331,225
Loss on extinguishment of debt	—			43,679			24,229
Other (income) expense	(43,699		)	(12,844		)	(14,985		)
Income tax expense	244,681			616,301			345,727
Adjusted EBITDA	$	2,240,396		$	2,115,886		$	1,875,775

~~(a)~~

~~Table of Contents~~

ARPU- is derived from total earned subscriber revenue (excluding revenue associated with our connected vehicle services), advertising revenue and other subscription-related revenue, ~~excluding revenue associated with our connected vehicle business,~~ divided bythe 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. The ARPU for the year ended December 31, 2018 reflects adjustments as a result of adopting the new revenue standard as of January 1, 2018. ARPU is calculated as follows:

Unaudited

For the Years Ended December 31,

2015

2014

2013

Subscriber revenue, excluding connected vehicle
(GAAP)

$
3,726,340

$
3,466,050

$
3,272,718

Add: advertising revenue (GAAP)

122,292

100,982

89,288

Add: other subscription-related revenue (GAAP)

410,644

336,408

290,895

$
4,259,276

$
3,903,440

$
3,652,901

Daily weighted average number of subscribers

28,337

26,284

24,886

ARPU

$
12.53

$
12.38

$
12.23



	For the Years Ended December 31,
	2018		2017		2016
Subscriber revenue, excluding connected vehicle services	$	4,482,382	$	4,388,676	$	4,108,547
Add: advertising revenue	187,569		160,347		138,231
Add: other subscription-related revenue	669,563		518,457		478,063
	$	5,339,514	$	5,067,480	$	4,724,841
Daily weighted average number of subscribers	33,345		31,866		30,494
ARPU	$	13.34	$	13.25	$	12.91

The table below illustrates the impact that the adoption of the new revenue standard had on ARPU for the year ended December 31, 2018.



	For the Year Ended December 31, 2018
	As Reported		Impact of Adopting ASU 2014-09		Balances Without Adoption of ASU 2014-09
Subscriber revenue, excluding connected vehicle services	$	4,482,382	$	94,767	$	4,577,149
Add: advertising revenue	187,569		—		187,569
Add: other subscription-related revenue	669,563		—		669,563
	$	5,339,514	$	94,767	$	5,434,281
Daily weighted average number of subscribers	33,345		33,345		33,345
ARPU	$	13.34	$	0.24	$	13.58

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 as share-based payment expense is not directly related 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:

Unaudited

For the Years Ended December 31,

2015

2014

2013

Customer service and billing expenses, excluding
connected vehicle (GAAP)

$
346,789

$
340,094

$
317,832

Less: share-based payment expense (GAAP)

(2,982
)

(2,780
)

(2,219
)

$
343,807

$
337,314

$
315,613

Daily weighted average number of subscribers

28,337

26,284

24,886

Customer service and billing expenses, per average
subscriber

$
1.01

$
1.07

$
1.06



	For the Years Ended December 31,
	2018			2017			2016
Customer service and billing expenses, excluding connected vehicle services	$	357,997		$	365,005		$	367,978
Less: share-based payment expense	(4,558		)	(4,229		)	(3,735		)
	$	353,439		$	360,776		$	364,243
Daily weighted average number of subscribers	33,345			31,866			30,494
Customer service and billing expenses, per average subscriber	$	0.88		$	0.94		$	1.00

Free cash flow- is derived from cash flow provided by operating activities, net of additions to property and equipment ~~restricted~~and purchases of other investments. Free cash flow is a metric that our management and board of directors use to evaluate the cash generated by our operations, net of capital expenditures and other investment activity. In a capital intensive business, with significant investments in satellites, we look at our operating cash flow, net of these investing cash outflows, to determine cash available for future subscriber acquisition and capital expenditures, to repurchase or retire debt, to acquire other companies and to evaluate our ability to return capital to stockholders. We exclude from free cash flow certain items that do not relate to the on-going performance of our business, such as cash outflows for acquisitions, strategic investments, and net loan activity with related parties and other equity investees. We believe free cash flow is an indicator of the long-term financial stability of our business. Free cash flow, which is reconciled to “Net cash provided by operating activities,” is a Non-GAAP financial measure. This measure can be calculated by deducting amounts under the captions “Additions to property and equipment” and deducting or adding Restricted and other investment activity from “Net cash provided by operating activities” from the consolidated statements of cash flows. Free cash flow should be used in conjunction with other GAAP financial performance measures and may not be comparable to free cash flow measures presented by other companies. Free cash flow should be viewed as a supplemental measure rather than an alternative measure of cash flows from operating activities, as determined in accordance with GAAP. Free cash flow is limited and does not represent remaining cash flows available for discretionary expenditures due to the ~~return of capital~~fact that the measure does not deduct the payments required for debt maturities. We believe free cash flow provides useful supplemental information to investors regarding our current cash flow, along with other GAAP measures (such as cash flows from ~~investment in unconsolidated entity, excluding the $210,000 pre-1972 sound recordings legal settlement payment.~~operating and investing activities), to determine our financial condition, and to compare our operating performance to other communications, entertainment and media companies. Free cash flow is calculated as follows:

Unaudited

For the Years Ended December 31,

2015

2014

2013

Cash Flow information

Net cash provided by operating activities

$
1,244,051

$
1,253,244

$
1,102,832

Net cash used in investing activities

$
(138,858
)

$
(96,324
)

$
(700,688
)
Net cash used in financing activities

$
(1,141,079
)

$
(1,144,001
)

$
(788,284
)
Free Cash Flow

Net cash provided by operating activities

$
1,244,051

$
1,253,244

$
1,102,832

Additions to property and equipment

(134,892
)

(121,646
)

(173,617
)
Purchases of restricted and other investments

(3,966
)

—

(1,719
)
Return of capital from investment in unconsolidated
entity

—

24,178

—

Pre-1972 sound recordings legal settlement

210,000

��
—

—

Free cash flow

$
1,315,193

$
1,155,776

$
927,496

~~Table of Contents~~



	For the Years Ended December 31,
	2018			2017			2016
Cash Flow information
Net cash provided by operating activities	$	1,880,418		$	1,855,589		$	1,719,237
Net cash used in investing activities	$	(379,276	)	$	(1,146,349	)	$	(210,124	)
Net cash used in financing activities	$	(1,515,146	)	$	(853,694	)	$	(1,407,012	)
Free Cash Flow
Net cash provided by operating activities	$	1,880,418		$	1,855,589		$	1,719,237
Additions to property and equipment	(355,703		)	(287,970		)	(205,829		)
Purchases of other investments	(7,605		)	(7,847		)	(4,295		)
Free cash flow	$	1,517,110		$	1,559,772		$	1,509,113

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~~promotional period 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, components and accessories ~~excluding purchase price accounting adjustments,~~(excluding connected vehicle services), divided by the number of satellite radio installations in new vehicles and shipments of aftermarket radios for the period. ~~Purchase price accounting~~The SAC, per installation, for the year ended December 31, 2018 reflects adjustments ~~associated with~~as a result of adopting the ~~Merger include the elimination~~new revenue standard as of ~~the benefit of amortization of deferred credits on executory contracts recognized at the Merger date attributable to an OEM.~~January 1, 2018. SAC, per installation, is calculated as follows:

Unaudited

For the Years Ended December 31,

2015

2014

2013

Subscriber acquisition costs (GAAP)

$
532,599

$
493,464

$
495,610

Less: margin from direct sales of radios and accessories
(GAAP)

(68,199
)

(60,264
)

(54,095
)
Add: purchase price accounting adjustments

—

—

64,365

$
464,400

$
433,200

$
505,880

Installations

14,041

12,788

11,765

SAC, per installation

$
33

$
34

$
43



	For the Years Ended December 31,
	2018			2017			2016
Subscriber acquisition costs, excluding connected vehicle services	$	470,336		$	499,492		$	512,809
Less: margin from sales of radios and accessories, excluding connected vehicle services	(122,347		)	(96,110		)	(78,065		)
	$	347,989		$	403,382		$	434,744
Installations	13,563			13,662			14,203
SAC, per installation	$	25.66		$	29.53		$	30.61

The table below illustrates the impact that the adoption of the new revenue standard has had on SAC, per installation, for the year ended December 31, 2018.



	For the Year Ended December 31, 2018
	As Reported			Impact of Adopting ASU 2014-09		Balances Without Adoption of ASU 2014-09
Subscriber acquisition costs, excluding connected vehicle services	$	470,336		$	3,540	$	473,876
Less: margin from sales of radios and accessories, excluding connected vehicle services	(122,347		)	—		(122,347		)
	$	347,989		$	3,540	$	351,529
Installations	13,563			13,563		13,563
SAC, per installation	$	25.66		$	0.26	$	25.92


ITEM 7A.	QUANTITATIVE AND ~~QUALITATIVE~~QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Pandora Series A Preferred Stock, which we have elected to account for under the fair value option. As of December 31, 2018, the fair value of this investment was $523.1 million which was based on a Black-Scholes option pricing model and an income approach - discounted cash flow analysis. Had the market price of Pandora's common stock been 10% lower as of December 31, 2018, the value of this investment would have been approximately $2.1 million lower.

In connection with the recapitalization of Sirius XM Canada on May 25, 2017, we loaned Sirius XM Canada $130.8 million. The loan is considered a long-term investment with any unrealized gains or losses reported within Accumulated other comprehensive (loss) income. The loan has a term of fifteen years, bears interest at a rate of 7.62% per annum and includes customary covenants and events of default, including an event of default relating to Sirius XM Canada’s failure to maintain specified leverage ratios. The carrying value of the loan as of December 31, 2018 was $126.0 million and approximated its fair value. The loan is denominated in Canadian dollars and it is subject to changes in foreign currency. Had the Canadian to U.S. dollar exchange rate been 10% lower as of December 31, 2018, the value of this loan would have been approximately $12.6 million lower.

Convertible Perpetual
Preferred Stock,
Series B-1

Common Stock

Treasury Stock

(in thousands)

Shares

Amount

Shares

Amount

Accumulated
Other
Comprehensive
Income (Loss)

Additional
Paid-in
Capital

Shares

Amount

Accumulated
Deficit

Total
Stockholders’ (Deficit) Equity

Balance at January 1, 2013

6,250

$
6

5,262,440

$
5,263

$
120

$
10,345,566

—

$
—

$
(6,311,390
)

$
4,039,565

Comprehensive income, net of tax

—

—

—

—

(428
)

—

—

—

377,215

376,787

Share-based payment expense

—

—

—

—

—

68,876

—

—

—

68,876

Exercise of options and vesting of restricted
   stock units

—

—

32,841

32

—

19,396

—

—

—

19,428

Minimum withholding taxes on net share
   settlement of stock-based compensation

—

—

—

—

—

(46,342
)

—

—

—

(46,342
)
Conversion of preferred stock to common
   stock

(6,250
)

(6
)

1,293,509

1,293

—

(1,287
)

—

—

—

—

Conversion of Exchangeable Notes to
   common stock

—

—

27,688

28

—

45,069

—

—

—

45,097

Common stock repurchased

—

—

—

—

—

—

520,258

(1,764,969
)

—

(1,764,969
)
Common stock retired

—

—

(520,258
)

(520
)

—

(1,764,449
)

(520,258
)

1,764,969

—

—

Initial fair value of forward contract

—

—

—

—

—

7,300

—

—

—

7,300

Balance at December 31, 2013

—

$
—

6,096,220

$
6,096

$
(308
)

$
8,674,129

—

$
—

$
(5,934,175
)

$
2,745,742

Comprehensive income, net of tax

—

—

—

—

(94
)

—

—

—

493,241

493,147

Share-based payment expense

—

—

—

—

—

78,212

—

—

—

78,212

Exercise of options and vesting of restricted
   stock units

—

—

15,960

16

—

315

—

—

—

331

Minimum withholding taxes on net share
   settlement of stock-based compensation

—

—

—

—

—

(37,320
)

—

—

—

(37,320
)
Conversion of Exchangeable Notes to
   common stock

—

—

272,856

273

—

502,097

—

—

—

502,370

Issuance of common stock upon exercise of
   warrants

—

—

99

—

—

—

—

—

—

—

Common stock repurchased

—

—

—

—

—

—

739,016

(2,472,645
)

—

(2,472,645
)
Common stock retired

—

—

(731,606
)

(732
)

—

(2,445,879
)

(731,606
)

2,446,611

—

—

Balance at December 31, 2014

—

$
—

5,653,529

$
5,653

$
(402
)

$
6,771,554

7,410

$
(26,034
)

$
(5,440,934
)

$
1,309,837

Comprehensive income, net of tax

—

—

—

—

(100
)

—

—

—

509,724

509,624

Share-based payment expense

—

—

—

—

—

84,310

—

—

—

84,310

Exercise of options and vesting of restricted
   stock units

—

—

19,740

20

—

240

—

—

—

260

Minimum withholding taxes on net share
   settlement of stock-based compensation

—

—

—

—

—

(54,575
)

—

—

—

(54,575
)
Issuance of common stock upon exercise of
   warrants

—

—

6,010

6

—

(6
)

—

—

—

—

Common stock repurchased

—

—

—

—

—

—

524,222

(2,015,947
)

—

(2,015,947
)
Common stock retired

—

—

(525,828
)

(526
)

—

(2,017,728
)

(525,828
)

2,018,254

—

—

Balance at December 31, 2015

—

$
—

5,153,451

$
5,153

$
(502
)

$
4,783,795

5,804

$
(23,727
)

$
(4,931,210
)

$
(166,491
)

During the year ended December 31, 2014, $502,370 in principal amount of the Exchangeable Notes were converted, resulting in the issuance of 272,856 shares of our common stock. No loss was recognized as a result of this conversion.

During the year ended December 31, 2013, we purchased $800,000 of our then outstanding 8.75% Senior Notes due 2015, for an aggregate purchase price, including premium and interest, of $927,860. We recognized $104,818 to Loss on extinguishment of debt and credit facilities, net, consisting primarily of unamortized discount, deferred financing fees and repayment premium, as a result of this transaction.

~~During the~~ ~~year endedDecember 31, 2013, we also purchased $700,000 of our then outstanding~~ ~~7.625%~~ Senior Notes due 2018, for an aggregate purchase price, including premium and interest, of $797,830. We recognized $85,759 to Loss on extinguishment of debt and credit facilities, net, consisting primarily of unamortized discount, deferred financing fees and repayment premium, as a result of this transaction.

~~We recognized share-based payment expense of $84,310, $78,212 and $68,876 for the years ended December 31, 2015, 2014 and 2013, respectively.~~

We account for equity instruments granted ~~to employees~~ in accordance with ASC 718, Compensation - Stock Compensation. ASC 718 requires all share-based compensation payments to be recognized in the financial statements based on fair value. ~~ASC 718 requires forfeitures to be estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from initial estimates.~~ We use the Black-Scholes-Merton option-pricing model to value stock option awards and have elected to treat awards with graded vesting as a single award. Share-based compensation expense is recognized ratably over the requisite service period, which is generally the vesting ~~period, net of forfeitures.~~period. We measure restricted stock awards and units using the fair market value of the restricted shares of common stock on the day the award is granted.

Stock-based awards granted to employees, non-employees and members of our board of directors include stock options and restricted stock units.

There were no options granted to third parties during the years ended December 31, 2014 and 2013. We do not intend to pay regular dividends on our common stock. Accordingly, the dividend yield used in the Black-Scholes-Merton option value was zero for all periods.

Deferred income taxes are recognized for the tax consequences related to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes at each year-end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. ~~In determining~~The ultimate realization of deferred tax assets is dependent upon the ~~period~~generation of future taxable income during the periods in which ~~related~~those temporary differences can be carried forward under tax ~~benefits are realized for book purposes, excess share-based compensation deductions included~~law. Our evaluation of the realizability of deferred tax assets considers both positive and negative evidence, including historical financial performance, scheduled reversal of deferred tax assets and liabilities, projected taxable income and tax planning strategies. The weight given to the potential

Our quarterly results of operations are summarized below:

For the Three Months Ended

March 31

June 30

September 30

December 31

2015

Total revenue
$
1,080,990

$
1,123,210

$
1,169,712

$
1,196,146

Cost of services
$
(406,370
)
$
(525,463
)
$
(440,808
)
$
(470,523
)
Income from operations
$
313,806

$
219,429

$
351,584

$
293,869

Net income
$
105,692

$
102,849

$
166,550

$
134,633

Net income per common share--basic
$
0.02

$
0.02

$
0.03

$
0.03

Net income per common share--diluted
$
0.02

$
0.02

$
0.03

$
0.03

2014

Total revenue
$
997,711

$
1,035,345

$
1,057,087

$
1,090,952

Cost of services
$
(390,534
)
$
(393,185
)
$
(403,519
)
$
(421,098
)
Income from operations
$
247,407

$
284,578

$
294,028

$
293,657

Net income
$
93,988

$
119,961

$
136,170

$
143,122

Net income per common share--basic
$
0.02

$
0.02

$
0.02

$
0.03

Net income per common share--diluted ⁽¹⁾
$
0.02

$
0.02

$
0.02

$
0.03



	For the Three Months Ended
	March 31			June 30			September 30			December 31
2018
Total revenue	$	1,375,102		$	1,432,299		$	1,467,383		$	1,495,908
Cost of services	$	(534,652	)	$	(636,668	)	$	(564,735	)	$	(572,551	)
Income from operations	$	423,591		$	361,627		$	482,557		$	459,173
Net income	$	289,441		$	292,352		$	343,048		$	251,052
Net income per common share--basic ⁽¹⁾	$	0.06		$	0.07		$	0.08		$	0.06
Net income per common share--diluted ⁽¹⁾	$	0.06		$	0.06		$	0.07		$	0.06
2017
Total revenue	$	1,294,066		$	1,347,569		$	1,379,596		$	1,403,898
Cost of services	$	(497,107	)	$	(513,446	)	$	(519,024	)	$	(572,405	)
Income from operations	$	393,840		$	416,353		$	433,965		$	396,706
Net income (loss)	$	207,073		$	202,109		$	275,722		$	(36,996	)
Net income (loss) per common share--basic⁽¹⁾	$	0.04		$	0.04		$	0.06		$	(0.01	)
Net income (loss) per common share--diluted⁽¹⁾	$	0.04		$	0.04		$	0.06		$	(0.01	)

~~(1)~~
(1)	The sum of quarterly net income per share applicable to common stockholders ~~(diluted)~~ does not necessarily agree to the net income per share for the year due to ~~the timing of common stock issuances.~~ rounding.

~~F-31~~

~~Table of Contents~~

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

Schedule II - Schedule of Valuation and Qualifying Accounts

(in thousands)

Description
Balance January 1,

Charged to
Expenses (Benefit)

Write-offs/
Payments/ Other

Balance December 31,

2013

Allowance for doubtful accounts
$
11,711

39,016

(41,649
)

$
9,078

Deferred tax assets—valuation allowance
$
9,835

(4,228
)

2,224

$
7,831

Allowance for obsolescence
$
16,159

(773
)

(1,168
)

$
14,218

2014

Allowance for doubtful accounts
$
9,078

44,961

(46,224
)

$
7,815

Deferred tax assets—valuation allowance
$
7,831

(2,836
)

—

$
4,995

Allowance for obsolescence
$
14,218

(335
)

(3,159
)

$
10,724

2015

Allowance for doubtful accounts
$
7,815

47,187

(48,884
)

$
6,118

Deferred tax assets—valuation allowance
$
4,995

44,100

—

$
49,095

Allowance for obsolescence
$
10,724

(34
)

(741
)

$
9,949

~~F-32~~

~~Table of Contents~~

~~EXHIBIT INDEX~~

~~Exhibit~~		~~Description~~

~~2.1~~		Certificate of Ownership and Merger, dated as of January 12, 2011, merging XM Satellite Radio Inc. with and into Sirius XM Radio Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on January 12, 2011 (File No. 001-34295)).

~~2.2~~		Agreement and Plan of Merger, dated as of November 14, 2013, by and among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Sirius XM Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

~~3.1~~		Amended and Restated Certificate of Incorporation of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

~~3.2~~		Amended and Restated By-Laws of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

~~4.1~~		Form of certificate for shares of Sirius XM Holdings Inc.’s common stock (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

~~4.2~~		Indenture, dated as of August 13, 2012, among Sirius XM Radio Inc., the guarantors thereto and U.S. Bank National Association, as trustee, relating to Sirius XM Radio Inc.’s 5.25% Senior Secured Notes due 2022 (incorporated by reference to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on August 14, 2012 (File No. 001-34295)).

~~4.3~~		Supplemental Indenture, dated as of April 10, 2014, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.25% Senior Secured Notes due 2022 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 10, 2014 (File No. 001-34295)).

~~4.4~~		Indenture, dated as of May 16, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 4.25% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on May 20, 2013 (File No. 001-34295)).

~~4.5~~		Indenture, dated as of May 16, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 4.625% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on May 20, 2013 (File No. 001-34295)).

~~4.6~~		Indenture, dated as of August 1, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.75% Senior Notes due 2021 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on August 1, 2013 (File No. 001-34295)).

~~4.7~~		Indenture, dated as of September 24, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.875% Senior Notes due 2020 (incorporated by reference to Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on September 25, 2013 (File No. 001-34295)).

~~4.8~~		Indenture, dated as of May 6, 2014, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 6.00% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on May 7, 2014 (File No. 001-34295)).

~~4.9~~		Indenture, dated as of March 6, 2015, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association as trustee, relating to the 5.375% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on March 6, 2015 (File No. 001-34295)).

~~4.10~~		Form of Common Stock Purchase Warrant, dated as of January 27, 2009, issued by Sirius XM Radio Inc. to NFL Enterprises LLC (incorporated by reference to Exhibit 4.48 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-34295)).

~~4.11~~		Sirius XM Holdings Inc.’s Assumption of NFL Enterprises LLC Warrant, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.13 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

~~4.12~~		Amendment No. 1, dated as of March 30, 2015, to the Common Stock Purchase Warrants, each dated January 27, 2009, issued by Sirius XM Holdings Inc., the successor to Sirius XM Radio Inc., to NFL Enterprises LLC (incorporated by reference to Exhibit 4.2 to Sirius XM Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. (File No. 001-34295))

~~4.13~~		Investment Agreement, dated as of February 17, 2009, between Sirius XM Radio Inc. and Liberty Radio LLC (incorporated by reference to Exhibit 4.55 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-34295)).

~~4.14~~		Assignment and Assumption of Investment Agreement among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Liberty Radio LLC, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.15 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

~~E-1~~

~~Table of Contents~~

~~Exhibit~~		~~Description~~

~~10.1~~		Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A. as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on December 10, 2012 (File No. 001-34295)).

~~10.2~~		Amendment No. 1, dated as of April 22, 2014, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders, as collateral agent for the Secured Parties and as an Issuing Bank (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 22, 2014 (File No. 001-34295)).

~~10.3~~		Amendment No. 2, dated as of June 16, 2015, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 19, 2015 (File No. 001-34295)).

**10.4		Technology Licensing Agreement among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc., WorldSpace Management Corporation and American Mobile Satellite Corporation, dated as of January 1, 1998, amended by Amendment No. 1 to Technology Licensing Agreement (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 000-27441)).

**10.5		Third Amended and Restated Distribution and Credit Agreement, dated as of February 6, 2008, among General Motors Corporation, XM Satellite Radio Holdings Inc. and XM Satellite Radio Inc. (incorporated by reference to Exhibit 10.63 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007 (File No. 000-27441)).

**10.6		Third Amended and Restated Satellite Purchase Contract for In-Orbit Delivery, dated as of May 15, 2001, between XM Satellite Radio Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.36 to Amendment No. 1 to XM Satellite Radio Holdings Inc.’s Registration Statement on Form S-3 (File No. 333-89132)).

**10.7		Amended and Restated Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated May 22, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.53 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (File No. 000-27441)).

**10.8		Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated July 31, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.54 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (File No. 000-27441)).

**10.9		Amendment to the Satellite Purchase Contract for In-Orbit Delivery, dated December 19, 2003, among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc. and Boeing Satellite Systems International, Inc. (incorporated by reference to Exhibit 10.57 to XM Satellite Radio Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 000-27441)).

*10.10		Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (File No. 001-34295)).

*10.11		Form of Stock Option Agreement between CD Radio Inc. and each Optionee (incorporated by reference to Exhibit 10.16.2 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 001-34295)).

*10.12		XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 000-27441)).

*10.13		Form of Non-Qualified Stock Option Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)).

*10.14		Form of Restricted Stock Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)).

*10.15		Sirius XM Radio 401(k) Savings Plan, January 1, 2009 Restatement (incorporated by reference to Exhibit 10.30 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-34295)).

*10.16		~~Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 4.9 to Sirius XM Radio Inc.’s Registration Statement on Form S-8 (File No. 333-160386)).~~

*10.17		Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Appendix A to Sirius XM Holdings Inc.’s definitive Proxy Statement on Schedule 14A filed on April 6, 2015 (File No. 001-34295)).

~~E-2~~

~~Table of Contents~~

~~Exhibit~~		~~Description~~

*10.18		Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)).

*10.19		Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.18 to Sirius XM Holdings Inc.’s Annual Report filed for the year ended December 31, 2014 (File No. 001-34295)).

*10.20		Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.35 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)).

*10.21		Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to Sirius XM Holdings Inc.’s Annual Report filed for the year ended December 31, 2014 (File No. 001-34295)).

*10.22		~~Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (filed herewith).~~

*10.23		~~Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (filed herewith).~~
*10.24		Form of Option Award Agreement between Sirius XM Radio Inc. and James E. Meyer (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed October 16, 2009 (File No. 001-34295)).

*10.25		Employment Agreement, dated as of June 19, 2015, between Sirius XM Radio Inc. and Dara F Altman (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 23, 2015 (File No. 001-34295)).

*10.26		Employment Agreement, dated as of June 29, 2015, between Sirius XM Radio Inc. and James A. Cady (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 30, 2015 (File No. 001-34295)).

*10.27		Employment Agreement, dated as of July 3, 2015, between Sirius XM Radio Inc. and David J. Frear (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on July 8, 2015 (File No. 001-34295)).

*10.28		Employment Agreement, dated August 11, 2015, between Sirius XM Radio Inc. and James E. Meyer (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on August 13, 2015 (File No. 001-34295)).

*10.29		~~Employment Agreement, dated December 11, 2015, between Sirius XM Radio Inc. and Joseph A. Verbrugge (filed herewith).~~

*10.30		Assignment and Assumption Agreement, dated as of November 15, 2013, among Sirius XM Holdings Inc. and Sirius XM Radio Inc. (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

*10.31		Omnibus Amendment, dated November 15, 2013, to the XM Satellite Radio Holdings Inc. Talent Option Plan, the XM Satellite Radio Holdings Inc. 1998 Shares Award Plan, as amended, the Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan, the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan and the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan and their Related Stock Option Agreements, Restricted Stock Agreements and Restricted Stock Unit Agreements (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

*10.32		~~Sirius XM Holdings Inc. Deferred Compensation Plan (incorporated by reference to Exhibit 10.2 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 30, 2015 (File No. 001-34295)).~~

~~21.1~~		~~List of Subsidiaries (filed herewith).~~

~~23.1~~		~~Consent of KPMG LLP (filed herewith).~~

~~31.1~~		~~Certificate of James E. Meyer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~31.2~~		~~Certificate of David J. Frear, Senior Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~32.1~~		~~Certificate of James E. Meyer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~32.2~~		Certificate of David J. Frear, Senior Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

~~E-3~~

~~Table of Contents~~

~~Exhibit~~		~~Description~~

~~99.1~~		Amended and Restated Certificate of Incorporation of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.3 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

~~99.2~~		Amended and Restated By-Laws of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.4 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

~~101.1~~		The following financial information from our Annual Report on Form 10-K for the year ended December 31, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2014 and 2013; (ii) Consolidated Balance Sheets as of December 31, 2015 and 2014; (iii) Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2015, 2014 and 2013; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013; and (v) Combined Notes to Consolidated Financial Statements.

*	~~This document has been identified as a management contract or compensatory plan or arrangement.~~

**	Pursuant to the Commission’s Orders Granting Confidential Treatment under Rule 406 of the Securities Act of 1933 or Rule 24(b)-2 under the Securities Exchange Act of 1934, certain confidential portions of this Exhibit were omitted by means of redacting a portion of the text.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

~~E-4~~



(in thousands)
Description	Balance January 1,		Charged to Expenses (Benefit)		Write-offs/ Payments/ Other		Balance December 31,
2018
Allowance for doubtful accounts	$	9,500	50,824		(53,706	)	$	6,618
Deferred tax assets—valuation allowance	$	52,883	13,346		—		$	66,229
2017
Allowance for doubtful accounts	$	8,658	55,715		(54,873	)	$	9,500
Deferred tax assets—valuation allowance	$	47,682	4,395		806		$	52,883
2016
Allowance for doubtful accounts	$	6,118	55,941		(53,401	)	$	8,658
Deferred tax assets—valuation allowance	$	49,095	(1,019	)	(394	)	$	47,682

F-36

~~Delaware~~		~~38-3916511~~

Delaware	38-3916511
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

~~1221~~1290 Avenue of the Americas, ~~36th~~11th Floor
New York, New York	~~10020~~ 10104
(Address of principal executive offices)	(Zip Code)



Title of Each Class:		Name of Each Exchange on Which Registered:
Common Stock, par value $0.001 per share		The Nasdaq Global Select Market



Large accelerated filer þ	Accelerated filer o		Non-accelerated filer o

Smaller reporting company o
	Emerging growth company o
		~~(Do not check if a smaller reporting company)~~

~~Item No.~~			~~Description~~

Item No.	Description

	PART I

Item 1.	Business	2
Item 1A.	Risk Factors	10 12
Item 1B.	Unresolved Staff Comments	16 20
Item 2.	Properties	17 20
Item 3.	Legal Proceedings	17 20
Item 4.	Mine Safety Disclosures	18 21

	PART II

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19 22
Item 6.	Selected Financial Data	21 24
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22 26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	40 45
Item 8.	Financial Statements and Supplementary Data	40 45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	40 45
Item 9A.	Controls and Procedures	41 46
Item 9B.	Other Information	41 46

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance	41 46
Item 11.	Executive Compensation	42 47
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	42 47
Item 13.	Certain Relationships and Related Transactions and Director Independence	42 47
Item 14.	Principal ~~Accountant~~Accounting Fees and Services	42 47

	~~PART~~Part IV

Item 15.	Exhibits and Financial Statement Schedules	42 48
Item 16.	Form 10-K Summary	48
	Signatures	43 53



	As of December 31,			2018 vs 2017 Change				2017 vs 2016 Change
	2018	2017	2016	Amount		%		Amount		%
Self-pay subscribers	28,915	27,513	25,951	1,402		5	%	1,562		6	%
Paid promotional subscribers	5,124	5,223	5,395	(99	)	(2	)%	(172	)	(3	)%
Ending subscribers	34,039	32,736	31,346	1,303		4	%	1,390		4	%



þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, ~~2015~~ 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO ________

	High		Low
Year Ended December 31, 2014
First Quarter	$	3.89	$	3.09
Second Quarter	$	3.49	$	2.98
Third Quarter	$	3.65	$	3.28
Fourth Quarter	$	3.63	$	3.14
Year Ended December 31, 2015
First Quarter	$	4.04	$	3.33
Second Quarter	$	4.00	$	3.70
Third Quarter	$	4.01	$	3.31
Fourth Quarter	$	4.20	$	3.69

Period	Total Number of Shares Purchased		Average Price Paid Per Share (a)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
October 1, 2015 - October 31, 2015		29,667,244	$	3.93		29,667,244	$	1,951,440,398
November 1, 2015 - November 30, 2015		19,121,892	$	4.12		19,121,892	$	1,872,689,142
December 1, 2015 - December 31, 2015		42,816,509	$	4.06		42,816,509	$	1,698,860,143
Total		91,605,645	$	4.03		91,605,645

Plan Category (shares in thousands)	Column (a) Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights		Column (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights⁽¹⁾		Column (c) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding Securities Reflected in Column (a))
Equity compensation plans approved by security holders		354,569	$	3.29		246,778
Equity compensation plans not approved by security holders		—		—		—
Total		354,569	$	3.29		246,778

	For the Years Ended December 31,									2015 vs 2014 Change						2014 vs 2013 Change
	2015			2014			2013			Amount			%			Amount			%
Revenue:
Subscriber revenue	$	3,824,793		$	3,554,302		$	3,284,660		$	270,491			8	%	$	269,642			8	%
Advertising revenue		122,292			100,982			89,288			21,310			21	%		11,694			13	%
Equipment revenue		110,923			104,661			80,573			6,262			6	%		24,088			30	%
Other revenue		512,050			421,150			344,574			90,900			22	%		76,576			22	%
Total revenue		4,570,058			4,181,095			3,799,095			388,963			9	%		382,000			10	%
Operating expenses:
Cost of services:
Revenue share and royalties		1,034,832			810,028			677,642			224,804			28	%		132,386			20	%
Programming and content		293,091			297,313			290,323			(4,222	)		(1	%)		6,990			2	%
Customer service and billing		377,908			370,585			320,755			7,323			2	%		49,830			16	%
Satellite and transmission		94,609			86,013			79,292			8,596			10	%		6,721			8	%
Cost of equipment		42,724			44,397			26,478			(1,673	)		(4	%)		17,919			68	%
Subscriber acquisition costs		532,599			493,464			495,610			39,135			8	%		(2,146	)		0	%
Sales and marketing		354,189			336,480			291,024			17,709			5	%		45,456			16	%
Engineering, design and development		64,403			62,784			57,969			1,619			3	%		4,815			8	%
General and administrative		324,801			293,938			262,135			30,863			10	%		31,803			12	%
Depreciation and amortization		272,214			266,423			253,314			5,791			2	%		13,109			5	%
Total operating expenses		3,391,370			3,061,425			2,754,542			329,945			11	%		306,883			11	%
Income from operations		1,178,688			1,119,670			1,044,553			59,018			5	%		75,117			7	%
Other income (expense):
Interest expense, net of amounts capitalized		(299,103	)		(269,010	)		(204,671	)		(30,093	)		(11	%)		(64,339	)		(31	%)
Loss on extinguishment of debt and credit facilities, net		—			—			(190,577	)		—			0	%		190,577			100	%
Loss on change in value of derivatives		—			(34,485	)		(20,393	)		34,485			100	%		(14,092	)		(69	%)
Other income		12,379			14,611			8,180			(2,232	)		(15	%)		6,431			79	%
Total other expense		(286,724	)		(288,884	)		(407,461	)		2,160			1	%		118,577			29	%
Income before income taxes		891,964			830,786			637,092			61,178			7	%		193,694			30	%
Income tax expense		(382,240	)		(337,545	)		(259,877	)		(44,695	)		(13	%)		(77,668	)		(30	%)
Net income	$	509,724		$	493,241		$	377,215		$	16,483			3	%	$	116,026			31	%

	Unaudited
	For the Years Ended December 31,
	2015			2014			2013
Self-pay subscribers		24,288			22,523			21,082
Paid promotional subscribers		5,306			4,788			4,477
Ending subscribers		29,594			27,311			25,559
Self-pay subscribers		1,765			1,441			1,512
Paid promotional subscribers		517			311			147
Net additions (a)		2,283			1,752			1,659
Daily weighted average number of subscribers		28,337			26,284			24,886
Average self-pay monthly churn		1.8	%		1.9	%		1.8	%
New vehicle consumer conversion rate		40	%		41	%		44	%

ARPU	$	12.53		$	12.38		$	12.23
SAC, per installation	$	33		$	34		$	43
Customer service and billing expenses, per average subscriber	$	1.01		$	1.07		$	1.06
Free cash flow	$	1,315,193		$	1,155,776		$	927,496
Adjusted EBITDA	$	1,657,617		$	1,467,775		$	1,166,140

	Unaudited For the Year Ended December 31, 2015
	As Reported		Purchase Price Accounting Adjustments		Allocation of Share-based Payment Expense			Adjusted
Revenue:
Subscriber revenue	$	3,824,793	$	—	$	—		$	3,824,793
Advertising revenue		122,292		—		—			122,292
Equipment revenue		110,923		—		—			110,923
Other revenue		512,050		7,251		—			519,301
Total revenue	$	4,570,058	$	7,251	$	—		$	4,577,309
Operating expenses
Cost of services:
Revenue share and royalties	$	1,034,832	$	—	$	—		$	1,034,832
Programming and content		293,091		1,394		(10,325	)		284,160
Customer service and billing		377,908		—		(2,982	)		374,926
Satellite and transmission		94,609		—		(4,147	)		90,462
Cost of equipment		42,724		—		—			42,724
Subscriber acquisition costs		532,599		—		—			532,599
Sales and marketing		354,189		—		(17,985	)		336,204
Engineering, design and development		64,403		—		(9,470	)		54,933
General and administrative		324,801		—		(39,401	)		285,400
Depreciation and amortization (a)		272,214		—		—			272,214
Share-based payment expense		—		—		84,310			84,310
Total operating expenses	$	3,391,370	$	1,394	$	—		$	3,392,764



Exhibit			Description

2.1			Certificate of Ownership and Merger, dated as of January 12, 2011, merging XM Satellite Radio Inc. with and into Sirius XM Radio Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on January 12, 2011 (File No. 001-34295)).

2.2			Agreement and Plan of Merger, dated as of November 14, 2013, by and among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Sirius XM Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

2.3			Agreement and Plan of Merger and Reorganization by and among Sirius XM Holdings Inc., Pandora Media, Inc. and White Oaks Acquisition Corp., dated as of September 23, 2018 (incorporated by reference to Exhibit 2.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on September 24, 2018 (File No. 001-34295)).

3.1			Amended and Restated Certificate of Incorporation of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

3.2			Amended and Restated By-Laws of Sirius XM Holdings Inc. (incorporated by reference to Exhibit 3.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on November 15, 2013 (File No. 001-34295)).

4.1			Form of certificate for shares of Sirius XM Holdings Inc.’s common stock (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

4.2			Indenture, dated as of May 16, 2013, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 4.625% Senior Notes due 2023 (incorporated by reference to Exhibit 4.2 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on May 20, 2013 (File No. 001-34295)).

4.3			Indenture, dated as of May 6, 2014, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 6.00% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on May 7, 2014 (File No. 001-34295)).

4.4			Indenture, dated as of March 6, 2015, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association as trustee, relating to the 5.375% Senior Notes due 2025 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on March 6, 2015 (File No. 001-34295)).

4.5			Indenture, dated as of May 23, 2016, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as a trustee, relating to the 5.375% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on May 24, 2016 (File No. 001-34295)).

4.6			Indenture, dated as of July 5, 2017, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 3.875% Senior Notes due 2022 (incorporated by reference to Exhibit 4.1 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on July 5, 2017 (File No. 001-34295)).

4.7			Indenture, dated as of July 5, 2017, among Sirius XM Radio Inc., the guarantors named therein and U.S. Bank National Association, as trustee, relating to the 5.000% Senior Notes due 2027 (incorporated by reference to Exhibit 4.2 to Sirius XM Holdings Inc.'s Current Report on Form 8-K filed on July 5, 2017 (File No. 001-34295)).

4.8			Investment Agreement, dated as of February 17, 2009, between Sirius XM Radio Inc. and Liberty Radio LLC (incorporated by reference to Exhibit 4.55 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2008 (File No. 001-34295)).

4.9			Assignment and Assumption of Investment Agreement among Sirius XM Radio Inc., Sirius XM Holdings Inc. and Liberty Radio LLC, dated as of November 15, 2013 (incorporated by reference to Exhibit 4.15 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

10.1			Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A. as administrative agent, and the other agents and lenders party thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on December 10, 2012 (File No. 001-34295)).

10.2			Amendment No. 1, dated as of April 22, 2014, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A. as administrative agent for the Lenders, as collateral agent for the Secured Parties and as an Issuing Bank (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on April 22, 2014 (File No. 001-34295)).

10.3			Amendment No. 2, dated as of June 16, 2015, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on June 19, 2015 (File No. 001-34295)).



Exhibit			Description


10.4			Amendment No. 3, dated as of June 29, 2018, to the Credit Agreement, dated as of December 5, 2012, among Sirius XM Radio Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and lenders parties thereto (incorporated by reference to Exhibit 10.1 to Sirius XM Holdings Inc.’s Current Report on Form 8-K filed on July 3, 2018 (File No. 001-34295)).

**10.5			Technology Licensing Agreement among XM Satellite Radio Inc., XM Satellite Radio Holdings Inc., WorldSpace Management Corporation and American Mobile Satellite Corporation, dated as of January 1, 1998, amended by Amendment No. 1 to Technology Licensing Agreement (incorporated by reference to Exhibit 10.4 to Amendment No. 1 to XM Satellite Radio Holdings Inc.’s Registration Statement on Form S-1 (File No. 333-83619)).

*10.6			Amended and Restated Sirius Satellite Radio 2003 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.10 to Sirius XM Radio Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004 (File No. 001-34295)).

*10.7			XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to XM Satellite Radio Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 (File No. 000-27441)).

*10.8			Form of Non-Qualified Stock Option Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)).

*10.9			Form of Restricted Stock Agreement pursuant to the XM Satellite Radio Holdings Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to XM Satellite Radio Holdings Inc.’s Current Report on Form 8-K filed June 1, 2007 (File No. 000-27441)).

*10.10			Sirius XM Radio 401(k) Savings Plan, January 1, 2009 Restatement (incorporated by reference to Exhibit 10.30 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2009 (File No. 001-34295)).

*10.11			Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 4.9 to Sirius XM Radio Inc.’s Registration Statement on Form S-8 (File No. 333-160386)).

*10.12			Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Appendix A to Sirius XM Holdings Inc.’s definitive Proxy Statement on Schedule 14A filed on April 6, 2015 (File No. 001-34295)).

*10.13			Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.34 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)).

*10.14			Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.18 to Sirius XM Holdings Inc.’s Annual Report for the year ended December 31, 2014 (File No. 001-34295)).

*10.15			Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.35 to Sirius XM Radio Inc.’s Annual Report on Form 10-K for the year ended December 31, 2011 (File No. 001-34295)).

*10.16			Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2009 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.20 to Sirius XM Holdings Inc.’s Annual Report filed for the year ended December 31, 2014 (File No. 001-34295)).

*10.17			Form of Director Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to Sirius XM Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34295)).

*10.18			Form of Non-Qualified Stock Option Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.23 to Sirius XM Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2015 (File No. 001-34295)).

*10.19			Form of SVP Restricted Stock Unit Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 (001-34295)).

*10.20			Form of Performance-Based Restricted Stock Unit Agreement pursuant to the Sirius XM Holdings Inc. 2015 Long-Term Stock Incentive Plan (incorporated by reference to Exhibit 10.25 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016 (001-34295)).


ITEM 1.	BUSINESS



Exhibit			Description

31.1			Certificate of James E. Meyer, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2			Certificate of David J. Frear, Senior Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1			Certificate of James E. Meyer, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.2			Certificate of David J. Frear, Senior Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99.1			Amended and Restated Certificate of Incorporation of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.3 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

99.2			Amended and Restated By-Laws of Sirius XM Radio Inc., as amended (incorporated by reference to Exhibit 3.4 to Sirius XM Holdings Inc.'s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 001-34295)).

101.1			The following financial information from our Annual Report on Form 10-K for the year ended December 31, 2018 formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Statements of Comprehensive Income for the years ended December 31, 2018, 2017 and 2016; (ii) Consolidated Balance Sheets as of December 31, 2018 and 2017; (iii) Consolidated Statements of Stockholders’ (Deficit) Equity for the years ended December 31, 2018, 2017 and 2016; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016; and (v) Combined Notes to Consolidated Financial Statements.



*	This document has been identified as a management contract or compensatory plan or arrangement.



SIRIUS XM HOLDINGS INC.

By:		/s/ DAVID J. FREAR
		David J. Frear
		Senior Executive Vice President and
		Chief Financial Officer
		(Principal Financial Officer and Authorized Officer)

~~Signature~~				~~Title~~	~~Date~~

Signature	Title	Date

/s/ GREGORY B. MAFFEI	Chairman of the Board of Directors and Director	~~February 2, 2016~~ January 30, 2019
(Gregory B. Maffei)

/s/ JAMES E. MEYER	Chief Executive Officer and Director (Principal Executive Officer)	~~February 2, 2016~~ January 30, 2019
(James E. Meyer)

/s/ DAVID J. FREAR	Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)	~~February 2, 2016~~ January 30, 2019
(David J. Frear)

/s/ THOMAS D. BARRY	Senior Vice President and Controller (Principal Accounting Officer)	~~February 2, 2016~~ January 30, 2019
(Thomas D. Barry)
/s/ JOAN L. AMBLE	Director	January 30, 2019
~~/s/ JOAN~~ ~~L. AMBLE~~			~~Director~~	~~February 2, 2016~~
(Joan L. Amble)
/s/ GEORGE W. BODENHEIMER	Director	January 30, 2019
~~/s/ ANTHONY~~ ~~J. BATES~~			~~Director~~	~~February 2, 2016~~
~~(Anthony J. Bates)~~

~~/s/ GEORGE~~ ~~W. BODENHEIMER~~	~~Director~~	~~February 2, 2016~~
(George W. Bodenheimer)
/s/ MARK D. CARLETON	Director	January 30, 2019
~~/s/ MARK~~ ~~D. CARLETON~~			~~Director~~	~~February 2, 2016~~
(Mark D. Carleton)
/s/ EDDY W. HARTENSTEIN	Director	January 30, 2019
~~/s/ EDDY~~ ~~W. HARTENSTEIN~~			~~Director~~	~~February 2, 2016~~
(Eddy W. Hartenstein)
/s/ JAMES P. HOLDEN	Director	January 30, 2019
~~/s/ JAMES~~ ~~P. HOLDEN~~			~~Director~~	~~February 2, 2016~~
(James P. Holden)
/s/ EVAN D. MALONE	Director	January 30, 2019
~~/s/ EVAN~~ ~~D. MALONE~~			~~Director~~	~~February 2, 2016~~
(Evan D. Malone)
/s/ JAMES F. MOONEY	Director	January 30, 2019
~~/s/ JAMES~~ ~~F. MOONEY~~			~~Director~~	~~February 2, 2016~~
(James F. Mooney)
/s/ MICHAEL RAPINO	Director	January 30, 2019
(Michael Rapino)
/s/ KRISTINA M. SALEN	Director	January 30, 2019
(Kristina M. Salen)
/s/ CARL E. VOGEL	Director	~~February 2, 2016~~ January 30, 2019
(Carl E. Vogel)
/s/ DAVID M. ZASLAV	Director	January 30, 2019
~~/s/ VANESSA~~ ~~A. WITTMAN~~			~~Director~~	~~February 2, 2016~~
~~(Vanessa A. Wittman)~~

~~/s/ DAVID~~ ~~M. ZASLAV~~	~~Director~~	~~February 2, 2016~~
(David M. Zaslav)



Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Comprehensive Income for the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013~~2016	F-4
Consolidated Balance Sheets as of December 31, ~~2015~~2018 and ~~2014~~2017	F-5
Consolidated Statements of Stockholders' (Deficit) Equity for the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013~~2016	F-6
Consolidated Statements of Cash Flows for the years ended December 31, ~~2015, 2014~~2018, 2017 and ~~2013~~2016	F-7
Notes to Consolidated Financial Statements	F-9
Schedule II - Schedule of Valuation and Qualifying Accounts	~~F-32~~ F-36

	Convertible Perpetual Preferred Stock, Series B-1						Common Stock												Treasury Stock
(in thousands)	Shares			Amount			Shares			Amount			Accumulated Other Comprehensive Income (Loss)			Additional Paid-in Capital			Shares			Amount			Accumulated Deficit			Total Stockholders’ (Deficit) Equity
Balance at January 1, 2013		6,250		$	6			5,262,440		$	5,263		$	120		$	10,345,566			—		$	—		$	(6,311,390	)	$	4,039,565
Comprehensive income, net of tax		—			—			—			—			(428	)		—			—			—			377,215			376,787
Share-based payment expense		—			—			—			—			—			68,876			—			—			—			68,876
Exercise of options and vesting of restricted stock units		—			—			32,841			32			—			19,396			—			—			—			19,428
Minimum withholding taxes on net share settlement of stock-based compensation		—			—			—			—			—			(46,342	)		—			—			—			(46,342	)
Conversion of preferred stock to common stock		(6,250	)		(6	)		1,293,509			1,293			—			(1,287	)		—			—			—			—
Conversion of Exchangeable Notes to common stock		—			—			27,688			28			—			45,069			—			—			—			45,097
Common stock repurchased		—			—			—			—			—			—			520,258			(1,764,969	)		—			(1,764,969	)
Common stock retired		—			—			(520,258	)		(520	)		—			(1,764,449	)		(520,258	)		1,764,969			—			—
Initial fair value of forward contract		—			—			—			—			—			7,300			—			—			—			7,300
Balance at December 31, 2013		—		$	—			6,096,220		$	6,096		$	(308	)	$	8,674,129			—		$	—		$	(5,934,175	)	$	2,745,742
Comprehensive income, net of tax		—			—			—			—			(94	)		—			—			—			493,241			493,147
Share-based payment expense		—			—			—			—			—			78,212			—			—			—			78,212
Exercise of options and vesting of restricted stock units		—			—			15,960			16			—			315			—			—			—			331
Minimum withholding taxes on net share settlement of stock-based compensation		—			—			—			—			—			(37,320	)		—			—			—			(37,320	)
Conversion of Exchangeable Notes to common stock		—			—			272,856			273			—			502,097			—			—			—			502,370
Issuance of common stock upon exercise of warrants		—			—			99			—			—			—			—			—			—			—
Common stock repurchased		—			—			—			—			—			—			739,016			(2,472,645	)		—			(2,472,645	)
Common stock retired		—			—			(731,606	)		(732	)		—			(2,445,879	)		(731,606	)		2,446,611			—			—
Balance at December 31, 2014		—		$	—			5,653,529		$	5,653		$	(402	)	$	6,771,554			7,410		$	(26,034	)	$	(5,440,934	)	$	1,309,837
Comprehensive income, net of tax		—			—			—			—			(100	)		—			—			—			509,724			509,624
Share-based payment expense		—			—			—			—			—			84,310			—			—			—			84,310
Exercise of options and vesting of restricted stock units		—			—			19,740			20			—			240			—			—			—			260
Minimum withholding taxes on net share settlement of stock-based compensation		—			—			—			—			—			(54,575	)		—			—			—			(54,575	)
Issuance of common stock upon exercise of warrants		—			—			6,010			6			—			(6	)		—			—			—			—
Common stock repurchased		—			—			—			—			—			—			524,222			(2,015,947	)		—			(2,015,947	)
Common stock retired		—			—			(525,828	)		(526	)		—			(2,017,728	)		(525,828	)		2,018,254			—			—
Balance at December 31, 2015		—		$	—			5,153,451		$	5,153		$	(502	)	$	4,783,795			5,804		$	(23,727	)	$	(4,931,210	)	$	(166,491	)



	Common Stock					Accumulated Other Comprehensive Income (Loss)			Additional Paid-in Capital			Treasury Stock					Accumulated Deficit			Total Stockholders’ (Deficit) Equity
(in thousands)	Shares		Amount			Accumulated Other Comprehensive Income (Loss)			Additional Paid-in Capital			Shares		Amount			Accumulated Deficit			Total Stockholders’ (Deficit) Equity
Balance at January 1, 2016	5,153,451		$	5,153		$	(502	)	$	4,783,795		5,804		$	(23,727	)	$	(4,931,210	)	$	(166,491	)
Cumulative effect of change in accounting principle	—		—			—			—			—		—			293,896			293,896
Comprehensive income, net of tax	—		—			363			—			—		—			745,933			746,296
Share-based payment expense	—		—			—			97,539			—		—			—			97,539
Exercise of options and vesting of restricted stock units	13,411		13			—			335			—		—			—			348
Minimum withholding taxes on net share settlement of stock-based compensation	—		—			—			(42,827		)	—		—			—			(42,827		)
Cash dividends paid on common shares	—		—			—			(48,079		)	—		—			—			(48,079		)
Common stock repurchased	—		—			—			—			420,111		(1,672,697		)	—			(1,672,697		)
Common stock retired	(420,815	)	(421		)	—			(1,673,097		)	(420,815	)	1,673,518			—			—
Balance at December 31, 2016	4,746,047		$	4,745		$	(139	)	$	3,117,666		5,100		$	(22,906	)	$	(3,891,381	)	$	(792,015	)
Comprehensive income, net of tax	—		—			18,546			—			—		—			647,908			666,454
Issuance of common stock as part of recapitalization of Sirius XM Canada	35,000		35			—			178,815			—		—			—			178,850
Share-based payment expense	—		—			—			108,871			—		—			—			108,871
Exercise of options and vesting of restricted stock units	22,322		22			—			752			—		—			—			774
Minimum withholding taxes on net share settlement of stock-based compensation	—		—			—			(93,283		)	—		—			—			(93,283		)
Cash dividends paid on common stock	—		—			—			(190,242		)	—		—			—			(190,242		)
Common stock repurchased	—		—			—			—			270,527		(1,403,283		)	—			(1,403,283		)
Common stock retired	(272,441	)	(272		)	—			(1,408,763		)	(272,441	)	1,409,035			—			—
Balance at December 31, 2017	4,530,928		$	4,530		$	18,407		$	1,713,816		3,186		$	(17,154	)	$	(3,243,473	)	$	(1,523,874	)
Cumulative effect of change in accounting principles	—		—			4,013			30,398			—		—			10,271			44,682
Comprehensive income, net of tax	—		—			(28,613		)	—			—		—			1,175,893			1,147,280
Share-based payment expense	—		—			—			133,175			—		—			—			133,175
Exercise of options and vesting of restricted stock units	26,837		28			—			(21		)	—		—			—			7
Minimum withholding taxes on net share settlement of stock-based compensation	—		—			—			(119,625		)	—		—			—			(119,625		)
Cash dividends paid on common stock	—		—			—			(201,434		)	—		—			—			(201,434		)
Common stock repurchased	—		—			—			—			208,973		(1,297,132		)	—			(1,297,132		)
Common stock retired	(212,159	)	(212		)	—			(1,314,074		)	(212,159	)	1,314,286			—			—
Balance at December 31, 2018	4,345,606		$	4,346		$	(6,193	)	$	242,235		—		$	—		$	(2,057,309	)	$	(1,816,921	)


(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.



Significant Accounting Policy	Note #	Page #
Fair Value Measurements	4	F-F-1612
Goodwill	8	F-F-1814
Intangible Assets	9	F-F-1815
Property and Equipment	10	F-F-1916
Equity Method Investments	11	F-F-2118
Share-Based Compensation	15 14	F-F-2623
Legal ~~Costs~~ Reserves	16 15	F-F-3026
Income Taxes	17 16	F-F-3128



	Balance at December 31, 2017			Adjustments Due to ASU 2014-09			Adjustments Due to ASU 2018-02			Adjustments Due to ASU 2018-07			Balance at January 1, 2018
Balance Sheet
Assets
Prepaid expenses and other current assets	$	129,669		$	8,262		$	—		$	—		$	137,931
Other long-term assets	118,671			2,576			—			—			121,247
Deferred tax assets	505,528			(5,915		)	—			—			499,613

Liabilities:
Accounts payable and accrued expenses	794,341			32,399			—			(26,266		)	800,474
Current portion of deferred revenue	1,881,825			(41,902		)	—			—			1,839,923
Long-term deferred revenue	174,579			(3,990		)	—			—			170,589

Equity:
Additional paid-in capital	1,713,816			—			—			30,398			1,744,214
Accumulated deficit	(3,243,473		)	18,416			(4,013		)	(4,132		)	(3,233,202		)
AOCI, net of tax	18,407			—			4,013			—			22,420


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.

	December 31, 2015								December 31, 2014
	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Assets:
Sirius XM Canada Holdings Inc. (“Sirius XM Canada”) - investment (a)	$	141,850		—		—	$	141,850	$	246,500		—		—	$	246,500
Liabilities:
Debt (b)		—	$	5,649,173		—	$	5,649,173		—	$	4,613,044		—	$	4,613,044

~~(a)~~	~~This amount approximates fair value. The carrying value of our~~
(a)	During the year ended December 31, 2017, Sirius XM completed a $480,000investment in ~~Sirius XM Canada was~~ $0Pandora. We have elected the fair value option to account for this investment. Refer to Note 11 for information on this transaction. ~~and~~ ~~$2,654~~ ~~as of December 31, 2015 and 2014, respectively.~~

~~(b)~~
(b)	The fair value for non-publicly traded instruments is based upon estimates from a market maker and brokerage firm. Refer to Note 1312 for information related to the carrying value of our debt as of December 31, ~~2015~~2018 and ~~2014.~~ 2017.



	For the Years Ended December 31,
	2018		2017⁽¹⁾		2016
Numerator:
Net income available to common stockholders for basic and diluted net income per common share	$	1,175,893	$	647,908	$	745,933
Denominator:
Weighted average common shares outstanding for basic net income per common share	4,461,827		4,637,553		4,917,050
Weighted average impact of dilutive equity instruments	98,893		85,982		47,678
Weighted average shares for diluted net income per common share	4,560,720		4,723,535		4,964,728
Net income per common share:
Basic	$	0.26	$	0.14	$	0.15
Diluted	$	0.26	$	0.14	$	0.15

~~(a)~~	The 7% Exchangeable Senior Subordinated Notes due 2014 (the “Exchangeable Notes”) were fully converted into shares of our common stock as of December 1, 2014. During the year ended December 31, 2013, the common stock reserved for conversion in connection with the Exchangeable Notes were considered to be anti-dilutive in our calculation of diluted
(1)	Our net income per ~~share.~~ basic and diluted share includes the impact of $184,599 in income tax expense, or a decrease of approximately $0.04 per share due to the reduction in our net deferred tax asset balance as a result of the Tax Act.

	December 31, 2015			December 31, 2014
Gross customer accounts receivable	$	98,740		$	101,634
Allowance for doubtful accounts		(6,118	)		(7,815	)
Customer accounts receivable, net	$	92,622		$	93,819
Receivables from distributors		120,012			105,731
Other receivables		22,148			21,029
Total receivables, net	$	234,782		$	220,579

	December 31, 2015			December 31, 2014
Raw materials	$	11,085		$	12,150
Finished goods		21,159			17,971
Allowance for obsolescence		(9,949	)		(10,724	)
Total inventory, net	$	22,295		$	19,397