What changed in this filing

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Item 1A. Risk Factors

2024-02-01 compared with 2023-02-02 · 114 added, 100 removed, 311 unchanged (41% of the section changed)

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Risks Relating to our Business and Operations

We have been, and may continue to be, adversely affected by supply chain issues.

The issues associated with the global supply chain for parts and components is having wide-ranging effects across multiple industries, including direct and indirect effects on our business.

Automakers are experiencing, and may continue to experience, delays in securing certain components that are essential to the production of new vehicles for a variety of reasons, including due to the global semiconductor supply shortage and the war in Ukraine.

These affected automakers manufacture and sell vehicles that include our satellite radios.

For example, some automobile plants in North America and elsewhere have at times halted or reduced vehicle production due to the shortage of certain components used in the production of their vehicles.

As a result, these supply chain shortages have had, and may continue to have, an impact on new vehicle production and deliveries, which in turn may affect our subscriber acquisition efforts.

We also have experienced, and may continue to experience, delays in securing certain application specific integrated circuits (which are commonly referred to as “chipsets”) that are essential components of our satellite radios.

Delays or the unavailability of these components could have an adverse impact on our operations and financial conditions.

We may be adversely affected by the war in Ukraine.

The war in Ukraine, and any expansion of the war in Ukraine to surrounding areas, could adversely affect our business and operations.

The war in Ukraine could affect the supply of certain components that we rely on in connection with our business and operations, such as software and certain subsystems that may be planned to be integrated as part of our satellites currently under construction for our system.

In addition, our AdsWizz subsidiary is headquartered in Romania and we rely on other contractors

in Eastern European countries, such as Poland.

An expansion of the war in Ukraine to other countries, particularly Romania, could materially affect our ability to deliver advertisements on our Pandora services and for third parties.

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

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As consumer tastes and preferences change on the internet and with mobile and other connected products, including cars, in-home, and wearable devices, we will need to enhance and improve our existing services, introduce new services and features, and attempt to maintain our competitive position with additional technological advances and adaptable platforms.

Neither the Sirius XM App nor the Pandora App has been significantly updated in several years.

The Pandora App has not been significantly updated in several years.

If we fail to keep pace with technological advances or fail to offer compelling product offerings and state-of-the-art delivery platforms to meet consumer demands, our ability to grow or maintain the reach of our services, attract and retain users, and attract listeners and subscribers across our services will be adversely affected.

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Business - Competition” of this Annual Report on Form 10-K.

Our subscribers and listeners can obtain similar content for free through terrestrial radio stations, YouTube and other internet services.

Our subscribers and listeners can obtain similar content for free through terrestrial radio stations, Spotify, YouTube and other internet services.

We also compete for the time and attention of our listeners with providers of other in-home and mobile entertainment services, and we compete for advertising sales with large scale online advertising platforms, such as Amazon, Facebook and Google, and with traditional media outlets.

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

• the price of our service;

• the ease of use of our service;

• the price of our services;

• the ease of use of our services;

• the effectiveness of our marketing programs;

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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, call blocking technologies, consumer privacy regulations or "do-not-call" or other marketing regulations, our marketing efforts will be adversely affected.

Our ability to reach consumers with radio and television advertising, performance and digital media, direct mail materials, email solicitations and telephone calls is an important part of our efforts and a significant factor in the effectiveness of our marketing.

If we are unable to reach consumers through email solicitations or telemarketing, including as a result of “spam” and email filters, call blocking technologies, restriction in digital media on identifying users, such as limits on “cookies,” consumer privacy regulations or “do-not-call” or other marketing regulations, our marketing efforts will be adversely affected.

A decline in the effectiveness of our marketing efforts could have an adverse impact on our operations and financial condition.

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

• creators and licensors of software that support our apps and services;

• programming providers, including agreements with owners of various copyrights in music, and on-air talent;

• manufacturers that build and distribute satellite radios;

• companies that manufacture and sell integrated circuits for satellite radios;

• third-party software that supports our apps and services;

• programming providers, including agreements with owners of various copyrights in music, and on-air talent;

• vendors that operate our call centers;

• vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites and cloud-based systems we use;

• Apple, who distributes our apps through its App Store and who, in the case of our Pandora service, we rely on to collect fees and approve the terms of our consumer offers;

• Google, who distributes our apps through its App Store and who, in the case of our Pandora service, we rely on to collect fees and approve the terms of our consumer offers, and who plays an important role in the fulfillment of the ads we sell on our Pandora platform.

• vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites and the cloud-based systems we use;

• Apple, who distributes our apps through its App Store and who we rely on to collect fees and approve the terms of our consumer offers;

• Google, who distributes our apps through its App Store and who we rely on to collect fees and approve the terms of our consumer offers, and who plays an important role in the fulfillment of the ads we sell on our Pandora platform.

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 and cybersecurity, our business could be adversely affected.

The operation of our apps and service offerings could be impaired if errors occur in the third party software that supports our apps and services.

It is difficult for us to correct any defects in third party software because the development and maintenance of the software is not within our control.

It may be difficult for us to correct any defects in third party software because the development and maintenance of the software is not within our control.

Our third party licensors may not continue to make their software available to us on acceptable terms, invest the appropriate levels of resources in their software to maintain and enhance its capabilities, or remain in business.

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Such third parties may not be able to perform their obligations to us in a timely manner, if at all, as a result of their financial condition or may be relieved of their obligations to us as part of seeking bankruptcy protection.

We are migrating our billing system and payment processing functions to a new service provider.

We are migrating our payment processing and related billing functions from a large multinational bank to a private company that offers online payment processing and commerce solutions for digital and internet businesses.

Our new vendor is not a bank, bank holding company or affiliated with a large multinational bank.

In addition, financial statements for our new payment processor are not publicly available and nationally recognized statistical rating organizations (such as Standard & Poor’s) have not issued ratings evaluating its creditworthiness and ability to pay.

We are subject to various risks associated with our new payment processor, including the risks of being an unsecured creditor, actions by credit card issuers (such as Visa, MasterCard and American Express) that could adversely affect its operations and payment processing functions, actions by government authorities that regulate financial transactions that may affect our new vendor's business, operations and financial condition, and general data privacy and cybersecurity risks associated with its systems and operations.

Our new payment processor commingles our funds arising from credit and debit card transactions with other amounts owing to third parties and those commingled accounts are subject to the claims of third parties, it does not pay us interest on amounts it holds for our benefit, including funds held overnight, and it has broad rights to establish reserves and debit our bank accounts to pay itself fees and reimburse itself and customers in the event of disputes.

In addition, we are subject to the general risk that it may not comply with its obligations relating to the settlement of transactions or the investment of our funds held on an intra-day and overnight basis.

If our new payment processing and commerce solution does not function as provided in our agreement or access to these new systems are disrupted, our business could be adversely affected.

Failure to successfully monetize and generate revenues from podcasts and other non-music content could adversely affect our business, operating results, and financial condition.

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Given the multiple-year duration and largely fixed-cost nature of such commitments, if the attractiveness of such podcast content to our listeners and subscribers do not meet our expectations, our margins could be adversely impacted.

In addition, the advertising market for podcasts is still developing, including the advertising technology necessary to efficiently sell podcast advertising at scale.

In addition, the advertising market for podcasts is still developing, including the advertising technology necessary to efficiently sell audio advertising within podcasts at scale.

As a result, our ability to profitably monetize the available advertising opportunities in podcasts remains uncertain.

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

Our strategy includes selective acquisitions, other strategic investments and initiatives in an effort to expand our business.

Our strategy has included and may include selective acquisitions, other strategic investments and initiatives to expand our business.

The success of any acquisition depends upon effective integration, cultural assimilation and management of acquired businesses and assets into our operations, which is subject to risks and uncertainties, including 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 integration process could distract our management, disrupt our ongoing business or result in inconsistencies in our services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the acquisition.

The ongoing COVID-19 pandemic has introduced significant uncertainty to our business.

The COVID-19 pandemic has introduced uncertainties to our business.

The extent to which the COVID-19 pandemic may impact our results depends on future developments, which are highly uncertain and cannot be predicted with certainty, including the resurgence of COVID-19 and its variants that may be occurring.

Another broad shutdown of businesses, either in the United States or globally, as a result of the COVID-19 pandemic would have an adverse effect on our business.

The impact of economic conditions may adversely affect our business, operating results, and financial condition.

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The demand for entertainment generally is sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending.

Any actual or perceived deterioration or weakness in general, regional or local economic conditions, as well as other adverse economic or market conditions due to COVID-19 or otherwise, could reduce our subscribers’ or potential subscribers’ discretionary income.

Any actual or perceived deterioration or weakness in general, regional or local economic conditions, as well as other adverse economic or market conditions, could reduce our subscribers’ or potential subscribers’ discretionary income.

To the extent that overall economic conditions reduce spending on discretionary items, our ability to attract and retain subscribers could be hindered, which could reduce our subscription revenue and negatively impact our business.

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See “ Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business .

We may be adversely affected by the war in Ukraine.

The war in Ukraine, and any expansion of the war in Ukraine to surrounding areas, could adversely affect our business and operations.

Our AdsWizz subsidiary is headquartered in Romania and we rely on other contractors in Eastern European countries, such as Poland.

An expansion of the war in Ukraine to other countries, particularly Romania, could materially affect our ability to deliver advertisements on our Pandora services and for third parties.

Risks Relating to our Sirius XM Business

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As part of our business, we experience, and expect to experience in the future, subscriber turnover (i.e., churn).

The number of subscribers to our Sirius XM service declined in 2023 and may further contract in the future.

If we are unable to retain current subscribers at expected rates, or the costs of retaining subscribers are higher than expected, our financial performance and operating results could be adversely affected.

We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our Sirius XM service.

A substantial percentage of our Sirius XM subscribers are on discounted pricing plans

and our ability to retain these subscribers or migrate them to higher priced plans is uncertain.

Our discounted pricing strategy is widely known, and this may interfere with our ability to collect our ordinary subscription prices.

A substantial percentage of our Sirius XM subscribers are on promotional pricing plans and our ability to retain these subscribers or migrate them to higher priced plans is uncertain.

Our promotional pricing strategy is widely known, and this may interfere with our ability to collect our ordinary subscription prices.

In addition, a substantial number of those subscribers periodically cancel their subscriptions when offered a subscription at a higher price.

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A number of factors may affect our ability to attract and retain subscribers to our Sirius XM service.

Over time the changing demographics of our subscriber base, such as the increase in “Millennial generation customers,” may increase the number of subscribers accustomed to consuming entertainment through ad-supported products.

The changing demographics of trialers to our service, such as the increase in “Millennial generation customers,” may increase the number of subscribers accustomed to consuming entertainment through ad-supported products.

These changing demographics may affect our ability to convert trial subscribers into self-paying subscribers.

Similarly, our efforts to acquire subscribers purchasing or leasing used vehicles may attract price sensitive consumers.

Consumers purchasing or leasing used vehicles may be more price sensitive than consumers purchasing or leasing new vehicles, may convert from trial subscribers to self-paying subscribers at a lower rate, and may cancel their subscriptions more frequently than consumers purchasing or leasing new vehicles.

Consumers purchasing or leasing used vehicles may be more price sensitive than consumers purchasing or leasing new vehicles, convert from trial subscribers to self-paying subscribers at a lower rate, and cancel their subscriptions more frequently than consumers purchasing or leasing new vehicles.

Some of our marketing efforts may also attract more price sensitive subscribers, and our efforts to increase the penetration of satellite radios in new, lower-priced vehicle lines may result in the growth of more economy-minded subscribers.

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

These agreements also require automakers to provide us data on sales of satellite radio enabled vehicles, including in many cases the consumer’s name and address.

Many of these agreements also require automakers to provide us data on sales of satellite radio enabled vehicles, including in many cases the consumer’s name and address.

Our business could be adversely affected if automakers do not continue to include our Sirius XM service in their products or provide us with such data.

Automotive production and sales are dependent on many factors, including the availability of vehicle components, consumer credit, general economic conditions, consumer confidence and fuel costs.

To the extent vehicle sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, subscriber growth for our satellite radio service may be adversely impacted.

Automotive production and sales are dependent on many factors, including labor relations matters, the availability of vehicle components, consumer credit, general economic conditions, consumer confidence and fuel costs.

To the extent vehicle sales by automakers decline, or the penetration of factory-installed satellite radios in those vehicles is reduced, our satellite radio service may be adversely impacted.

Sales of used vehicles represent a significant source of new subscribers for our satellite radio service.

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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.

In addition, we have entered into agreements for the construction and launch of four new satellites that are expected to be launched over the next four years, and material delays in the deployment of these satellites could be harmful to our business.

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.

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 operating satellites could cause us to lose customers for our Sirius XM service and could materially harm our reputation and our operating results.

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The development of applications and services in spectrum adjacent to the frequencies licensed to us, as well as the combination of signals in other frequencies, may cause harmful interference to our satellite radio service in certain areas of the United States.

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.

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In certain cases, we are dependent on the FCC to assist us in preventing harmful interference to our service.

Risks Relating to our Pandora Business

Our Pandora ad-supported business has suffered a substantial and consistent loss of monthly active users, which may adversely affect our Pandora business.

The number of monthly active users to our ad-supported Pandora business has declined consistently for several years, including in 2022, and is likely to further contract in the future.

The size of our ad-supported listener base is an important element of our Pandora business.

The decline in our listener base has resulted in fewer listener hours and available advertising spots on our Pandora service, which ultimately may result in declines in our advertising revenue, and adversely affect our Pandora business.

Risks Relating to our Pandora and Off-platform Business

Our Pandora ad-supported service has suffered a substantial and consistent loss of monthly active users, which may adversely affect our Pandora and Off-platform business.

The number of monthly active users to our ad-supported Pandora service has declined consistently for several years, including in 2023, and is likely to further contract in the future.

The size of our ad-supported listener base is an important element of our Pandora service.

The contraction of our ad-supported listener base also decreases the size of demographic groups targeted by advertisers, which may hurt our ability to deliver advertising in a manner that maximizes advertisers’ return on investment and compete with other streaming advertising platforms.

Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business.

Our Pandora business currently generates a majority of its revenues from third parties advertising on its ad-supported service.

As is common in the audio entertainment industry, Pandora’s advertisers do not have long-term advertising commitments with us and can terminate their contracts at any time.

Our Pandora and Off-platform business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business.

Our Pandora and Off-platform business currently generates a majority of its revenues from third parties advertising on the Pandora ad-supported service and other platforms.

As is common in the audio entertainment industry, these advertisers do not have long-term advertising commitments with us and can terminate their contracts at any time.

Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns.

Adverse macroeconomic conditions have affected, and may in the future affect, the demand for audio advertising, resulting in fluctuations in the amounts advertisers spend on advertising, which could harm our financial condition and operating results.

Adverse macroeconomic conditions have affected, and may continue to affect, the demand for audio advertising, resulting in fluctuations in the amounts advertisers spend on advertising, which could harm our financial condition and operating results.

Our failure to convince advertisers of the benefits of our Pandora ad-supported service could harm our business.

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• keeping pace with changes in technology and our competitors, some of which have significant influence over the distribution of our Pandora app;

• competing effectively for advertising with other dominant online services, such as Spotify, Google and Facebook, as well as other marketing and media outlets;

• competing effectively for advertising with other dominant online services, such as Spotify, Google, Facebook and YouTube, as well as other marketing and media outlets;

• successfully competing for local radio advertising;

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Federal and state consumer protection laws, rules and regulations 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 consumers.

A number of governmental authorities have commenced investigations into our consumer practices, including the manner in which we allow consumers to cancel subscriptions to our services.

The State of New York has filed a suit against us relating to our subscription cancellation practices, and other governmental authorities have commenced investigations into our consumer practices, including the manner in which we allow consumers to cancel subscriptions to our services.

The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with consumer protection laws, including laws relating to telemarketing activities and privacy.

These efforts may not be successful, and we may have to expend even greater resources in our compliance efforts.

Modifications to consumer protection laws, including decisions by courts and administrative agencies interpreting these laws, could have an adverse impact on our ability to attract and retain subscribers and listeners to our services.

Modifications to consumer protection laws, including laws regarding the pricing of our services and the manner in which consumers can cancel our services as well as decisions by courts and administrative agencies interpreting these laws, could have an adverse impact on our ability to attract and retain subscribers and listeners to our services.

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 operations will comply with all applicable laws, which could have an adverse impact on our operations and financial condition.

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Any assignment or transfer of control of any of our FCC licenses or authorizations must be approved in advance by the FCC.

The transactions described under the heading “Business - Liberty Media Split-Off Transaction” involve a transfer of our FCC licenses and must be approved by the FCC.

The operation of our satellite radio systems is subject to significant regulation by the FCC under authority granted through the Communications Act of 1934 and related federal law.

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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 an adverse impact on our operations.

Environmental, social and governance expectations and related reporting obligations may expose us to potential liabilities, increased costs, reputational harm, and other adverse effects.

Many governments, regulators, investors, employees, customers and other stakeholders are focused on environmental, social and governance (or “ESG”) considerations, including climate change and greenhouse gas emissions;

human capital management, including diversity, equity and inclusion;

cybersecurity;

content moderation;

and human and civil rights.

Our reporting and disclosures in response to these expectations may require additional investments and reporting processes, introduce additional compliance risk, and depend in part on third-party performance or data that is outside our control.

Related initiatives, and implementation of these initiatives, also involve risks and uncertainties, and we cannot guarantee that we will achieve any announced environmental, social and governance objectives.

In addition, some stakeholders may disagree with our initiatives and objectives.

Any failure, or perceived failure, to further our initiatives, adhere to public statements, comply with

federal or state ESG laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and adversely affect our business, reputation, financial condition, and operations results.

We may face lawsuits, incur liability or suffer reputational harm as a result of content published or made available through our services.

The nature of our business could expose us to claims or public criticism related to defamation, illegal content, misinformation, and content regulation.

We could incur costs investigating and defending any such claims.

In addition, some stakeholders may disagree with third-party content provided through our services, and negative public criticism of this content could damage our reputation and brands.

If we incur material costs, liability, or negative consumer reaction as a result of these occurrences, our business, financial condition and operating results could be adversely impacted.

Risks Associated with Data and Cybersecurity and the Protection of Consumer Information

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 and listeners including, in many cases, credit and debit card information.

The nature of our business involves the receipt and storage of personal information about our subscribers and listeners including credit and debit card information.

We have a program in place to detect and respond to data security incidents.

However, the techniques used to gain unauthorized access to data systems are constantly evolving and may be difficult to detect for long periods of time.

However, the techniques used to gain unauthorized access to data systems are constantly evolving and may not be detected for long periods of time.

We may be unable to anticipate or prevent unauthorized access to data pertaining to our customers, including credit card and debit card information and other personally identifiable information.

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We may not be able to effectively control the unauthorized actions of third parties who may have access to the data we collect.

We may integrate the Pandora service with apps provided by third parties.

In such case, we may not be able to control such third parties’ use of listeners’ data, ensure their compliance with the terms of our contracts and our privacy policies, or prevent unauthorized access to, or use or disclosure of, information, any of which could expose us to potential liability and negative publicity and could cause our listeners and advertisers to discontinue use of our services.

To date, we are not aware that we have had a significant cyber-attack or breach that has had a material impact on our business or results of operations.

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Further, the development and maintenance of these measures are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.

We use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations.

We incorporate artificial intelligence (“AI”) solutions into our digital infrastructure, services, offerings and features, and these applications may become important in our operations over time.

Our competitors or other third parties may incorporate

AI into their products more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

Additionally, if the content, analyses, search results or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, or biased, our business, reputation, financial condition, and results of operations could be adversely affected.

The use of AI applications may result in cybersecurity incidents that implicate the personal data of consumers.

Any such cybersecurity incidents related to our use of AI applications could adversely affect our reputation and results of operations.

AI also presents emerging ethical issues, such as the proper use of copyrighted material with AI applications, and if our use of AI becomes controversial, we may experience brand or reputational harm, competitive harm, or legal liability.

The rapid evolution of AI, including potential government regulation of AI, will require significant resources to develop, test and maintain our platform, offerings, services, and features to help us implement AI ethically in order to minimize unintended, harmful impact.

Interruption or failure of our information technology and communications systems could impair the delivery of our service and harm our business.

We rely on systems housed at our own premises and at those of third party vendors to enable subscribers and listeners to access our Pandora and Sirius XM services in a dependable and efficient manner.

We rely on our own systems and systems of third party vendors to enable subscribers and listeners to access our Pandora and Sirius XM services in a dependable and efficient manner.

Any degradation in the quality, or any failure, of our systems could reduce our revenues, cause us to lose customers and damage our brands.

Although we have implemented practices designed to maintain the availability of the information technology systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities.

We occasionally experience unplanned outages or

technical difficulties.

Although we have implemented practices designed to maintain the availability of the information technology and service delivery systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities.

We occasionally experience unplanned outages or technical difficulties.

We could also experience loss of data or processing capabilities, which could cause us to lose customers and could harm our reputation and operating results.

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The occurrence of any of these events could result in interruptions in our services and unauthorized access to, or alteration of, the content and data contained on our systems and that these third party vendors store and deliver on our behalf.

Damage or interruption to our data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.

Damage or interruption to data centers and information technology and communications centers could expose us to data loss or manipulation, disruption of service, monetary and reputational damages, competitive disadvantage and significant increases in compliance costs and costs to improve the security and resiliency of our computer systems.

The compromise of personal, confidential or proprietary information could also subject us to legal liability or regulatory action under evolving cybersecurity, data protection and privacy laws and regulations enacted by the U.S.

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Those royalty rates may be established through negotiation or, if negotiation is unsuccessful, by the Copyright Royalty Board.

Owners of copyrights in sound recordings have created SoundExchange, a collective organization, to collect and distribute royalties.

Owners of copyrights in sound recordings have created SoundExchange, an organization which negotiates licenses and collects and distributes royalties on behalf of record companies and performing artists.

SoundExchange is exempt by statute from certain U.S.

antitrust laws and exercises significant market power in the licensing of sound recordings.

Under the terms of the Copyright Royalty Board’s existing decision governing sound recording royalties for satellite radio, we are required to pay a royalty based on our gross revenues associated with our satellite radio service, subject to certain exclusions, of 15.5% per year through December 31, 2027.

Under the terms of the Copyright Royalty Board’s existing decision governing

sound recording royalties for satellite radio, we are required to pay a royalty based on our gross revenues associated with our satellite radio service, subject to certain exclusions, of 15.5% per year through December 31, 2027.

Our Pandora services depend upon maintaining complex licenses with copyright owners, and these licenses contain onerous terms.

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These provisions have caused, and may in the future cause, our payments under those agreements to escalate substantially.

In addition, many record labels, music publishers and performing rights organizations have the right to audit our royalty payments, and these audits often result in disputes over whether we have paid the proper amounts.

In addition, SoundExchange, many record labels, music publishers and performing rights organizations have the right to audit our royalty payments, and these audits often result in disputes over whether we have paid the proper amounts.

As a result of such audits, we could be required to pay additional amounts, audit fees and interest or penalties, and the amounts involved could adversely affect our business, financial condition and results of operations.

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If we are unable to secure and maintain direct licenses for the rights to provide music on our Pandora services on terms similar to those under our current direct licenses, our content costs could rise and adversely affect our business, financial condition and results of operations.

The rates we must pay for “mechanical rights” to use musical works on our Pandora service have increased substantially and these rates may adversely affect our business.

Pandora has direct licenses with thousands of music publishers.

Those licenses provide that the royalty rate for “reproduction rights” or “mechanical rights”, which are required to offer the interactive features of our Pandora services, are determined by the rate formula set by the CRB for the compulsory license made available by Section 115 of the Copyright Act.

These royalty rates also apply to Pandora’s use of musical works for which we do not have a direct license with the copyright owners.

The CRB significantly increased the rates for these rights for the period commencing January 1, 2018 through December 31, 2022, and the participating music publishers and digital music services, including Pandora, have reached a settlement for the period commencing January 1, 2023 through December 31, 2027 which will further significantly increase these rates.

These higher rates for mechanical rights may have an adverse effect the business, financial condition and results of operations of Pandora.

For additional information on these mechanical royalty rates, See “Business – Copyrights to Programming – Sound Recordings – Pandora Business.”

Failure to protect our intellectual property or actions by third parties to enforce their intellectual property rights could substantially harm our business and operating results.

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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 be costly, divert our efforts from our business, subject us to significant liabilities to third parties, require us to seek licenses from third parties, block our ability to operate our services or license our technology, or otherwise adversely affect our ability to successfully develop and market our services.

Any such litigation could be costly, divert our efforts from our business, subject us to significant liabilities to third parties, require us to seek licenses from third parties, block our ability to

operate our services or license our technology, or otherwise adversely affect our ability to successfully develop and market our services.

Some of our services and technologies may use “open source” software, which may restrict how we use or distribute our services or require that we release the source code subject to those licenses.

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and may limit our flexibility in planning for, or reacting to, changes in our business and the audio entertainment industry.

In addition, our borrowings under our Senior Secured Revolving Credit Facility carry a variable interest rate based on London Inter-bank Offered Rate (“LIBOR”) as a benchmark for establishing the rate of interest (except for the Incremental Term Loan which carries a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”)).

LIBOR is the subject of national, international and other regulatory guidance and proposals for reform.

On July 27, 2017, the United Kingdom's Financial Conduct Authority (“FCA”), which regulates LIBOR, announced that it intends to phase out LIBOR.

On March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or no longer be representative:

(a) immediately after December 31, 2021, in the case of the one week and two month U.S.

dollar settings;

and (b) immediately after June 30, 2023, in the case of the remaining U.S.

dollar settings.

The United States Federal Reserve has also advised banks to cease entering into new contracts that use USD LIBOR as a reference rate.

The Alternative Reference Rate Committee, a committee convened by the Federal Reserve that includes major market participants, has identified SOFR, a new index calculated by short-term repurchase agreements, backed by Treasury securities, as its preferred alternative rate for LIBOR.

At this time, it is not possible to predict how markets will respond to SOFR or other alternative reference rates as the transition away from the LIBOR benchmarks is anticipated in coming years.

Accordingly, the outcome of these reforms is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout could cause LIBOR to perform differently than in the past or cease to exist.

The consequences of these developments cannot be entirely predicted, but could include an increase in the cost of our borrowings under the Credit Facility.

In addition, we may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products.

In addition, our borrowings under our Senior Secured Revolving Credit Facility carry a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).

We may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products.

These instruments may be used to selectively manage risks, but there can be no assurance that we will be fully protected against material interest rate fluctuations.

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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.

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 considering 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.

Following the consummation of the Transactions, we will no longer be a “controlled company” for the purposes of the NASDAQ corporate governance requirements and will be unable to qualify for, and rely on, exemptions from certain NASDAQ corporate governance requirements.

See “Business - Liberty Media Split-Off Transaction.”

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

As of December 31, 2022, Liberty Media beneficially owned approximately 82% of Holdings’ common stock and has the ability to influence our affairs, policies and operations.

As of December 31, 2023, Liberty Media beneficially owned 83.4% of Holdings’ common stock and has the ability to influence our affairs, policies and operations.

Three Liberty Media executives and one other member of the board of directors of Liberty Media are members of our board of directors.

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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.

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.

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In certain cases, the interests of Liberty Media may not be aligned with the interests of other stockholders of Holdings.

Following the consummation of the Transactions, Liberty Media will no longer beneficially own Holdings’ common stock.

See “Business - Liberty Media Split-Off Transaction.”

The Transactions may adversely affect our business and financial condition.

The Transactions and our efforts to consummate the Transactions have required, and may continue to require, our management to divert a disproportionate amount of attention away from their respective day-to-day activities and operations in order to devote time and effort to consummating the Transactions.

The risks, and adverse effects, of such disruptions and diversions could be exacerbated by a delay in the completion of the Transactions.

Any such disruptions or diversions could adversely affect our financial position or results of operations, regardless of whether the Transactions are completed.

Moreover, the Transactions impose certain restrictive interim covenants on us during the pendency of the Transactions.

These restrictions may prevent us from taking certain actions during the relevant period, including repurchasing our stock, making certain acquisitions or otherwise pursuing certain business opportunities that our board of directors may deem beneficial.

Further, we have incurred, and expect to further incur, certain nonrecurring costs in connections with the Transactions, which may adversely affect our short-term operating results and cash flows.

Although we expect that the realization of benefits related to the Transactions will offset such costs and expenses over time, we cannot assure that the net benefits will be achieved in the near term, or at all.

Additionally, while we anticipate the realization of strategic and financial benefits to our stockholders as a result of the consummation of the Transactions, including the creation of stockholder value because, among other things, there will be a single class of “one share, one vote” common stock following the consummation of the Transactions, Holdings will no longer have a controlling stockholder, and the Transactions will result in more trading liquidity for our common stock and the potential for future eligibility for inclusion in stock market indexes, there can be no assurance that these benefits will be realized and to what exact impact will they have on stockholder value.

See “Business - Liberty Media Split-Off Transaction.”

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.

Other Operational Risks

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Our facilities could be damaged by natural catastrophes or terrorist activities.

An earthquake, hurricane, tornado, flood, cyber-attack, terrorist attack, civil unrest or other catastrophic event could damage our data centers, studios, terrestrial repeater networks or satellite uplink facilities, interrupt our services and harm our business.

We also have significant operations in the San Francisco Bay Area, a region known for seismic activity.

Natural disasters and adverse weather conditions can be caused or exacerbated by climate change.

Natural disasters and extreme weather conditions can be caused or exacerbated by climate change.

Any damage to the satellites that transmit to our terrestrial repeater networks would likely result in degradation of the affected service for some Sirius XM subscribers and could result in complete loss of Sirius XM satellite service in certain or all areas.

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

We are parties to several legal proceedings arising out of various aspects of our business, including possible class actions arising out of our marketing practices.

We are parties to several legal proceedings arising out of various aspects of our business, including possible class actions arising out of our marketing practices and governmental actions and possible class actions and mass arbitrations arising from our pricing and cancellation practices.

The outcome of these proceedings may not be favorable, and one or more unfavorable outcomes could have an adverse impact on our financial condition.

Legal Proceedings" of this Annual Report on Form 10-K for information on our material legal proceedings.

We may be exposed to liabilities that other entertainment service providers would not customarily be subject to.

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We undertake no obligation to update publicly or revise any forward-looking statements, except as required by law.

UNRESOLVED STAFF COMMENTS

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What changed 10-K

Item 1A. Risk Factors