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Business “Competition,” the following risk factors should be considered carefully in evaluating us and our business.
−Removed: This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
−Removed: 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.
−Removed: See “Special Note About Forward-Looking Statements” following this Item 1A.
−Removed: Risk Factors.
Risks Relating to our Business and Operations
−Removed: We face substantial competition and that competition is likely to increase over time.
+Added: We face substantial competition and that competition has increased over time.
We compete for the time and attention of our listeners with other content providers on the basis of a number of factors, including quality of experience, relevance, acceptance and perception of content quality, ease of use, price, accessibility, brand awareness, reputation and, in the case of our ad-supported Pandora service, perception of ad load, features and functionality.
−Removed: 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.
−Removed: The Pandora App has not been significantly updated in several years.
−Removed: 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.
+Added: 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 products and services, introduce new services and features, and attempt to maintain our competitive position with additional technological advances and adaptable platforms.
+Added: 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 maintain the reach of our services and attract and retain users and subscribers across our services will be adversely affected.
Our ability to attract and retain subscribers and listeners also depends on our success in creating and providing popular or unique programming.
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Business - Competition” of this Annual Report on Form 10-K.
−Removed: Our subscribers and listeners can obtain similar content for free through terrestrial radio stations, Spotify, YouTube and other internet services.
−Removed: 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.
+Added: Our subscribers and listeners can obtain similar content for free through Spotify, YouTube and other internet services as well as terrestrial radio stations.
+Added: 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 YouTube, Amazon, Facebook and Google, and with traditional media outlets.
Our streaming services also compete for listeners on the basis of the presence and visibility of our apps, which are distributed via app stores operated by Apple and Google.
We face significant competition for listeners from these companies, which also promote their own music and content.
−Removed: In addition, our competitors’ streaming products may be pre-loaded or integrated into consumer electronics products or automobiles more broadly than our streaming products, creating a visibility advantage.
+Added: In addition, our competitors’ streaming products may be pre-loaded or integrated into consumer electronics products or automobiles more broadly than our streaming products, creating a significant advantage.
If we are unable to compete successfully for listeners against other media providers, then our business may suffer.
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We cannot assure you we will be able to compete successfully with our existing or future competitors or that competition will not have an adverse impact on our operations and financial condition.
+Added: Our SiriusXM service has suffered a loss of subscribers and our Pandora ad-supported service has similarly experienced a loss of monthly active users.
+Added: The number of subscribers to our SiriusXM service has declined for the past two years, including in 2024.
+Added: Similarly, the number of monthly active users to our ad-supported Pandora service has declined consistently for several years, including in 2024.
+Added: This loss of subscribers to our SiriusXM service and the decline in monthly active users to our Pandora ad-supported service is likely to continue in the future.
+Added: The number of subscribers to our SiriusXM service has declined due to a variety of factors, including a decline in the rate at which new car buyers convert their trial subscriptions into self-pay subscriptions.
+Added: The decline in the number of SiriusXM subscribers may have a number of collateral effects on our business.
+Added: The size of our ad-supported listener base is an important element of our Pandora service.
+Added: The decline in our listener base, including the shift of listening in connected homes and vehicles, has resulted in fewer listener hours and fewer available advertising spots on our Pandora service, which may contribute to declines in our advertising revenue and adversely affect our Pandora and Off-platform business.
+Added: The contraction of our ad-supported listener base also decreases the size of demographic groups targeted by advertisers, which hurts our ability to deliver advertising in a manner that maximizes advertisers’ return on investment and compete with other larger advertising platforms.
If our efforts to attract and retain subscribers and listeners, or convert listeners into subscribers, are not successful, our business will be adversely affected.
Our business will be adversely affected if we are unable to attract new subscribers and listeners and retain our current subscribers and listeners.
−Removed: 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:
+Added: Our ability to increase the number of subscribers and listeners to our services, retain our subscribers and listeners and convert listeners into subscribers, is uncertain and subject to many factors, including:
• the price of our services;
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• the effectiveness of our marketing programs;
−Removed: • with respect to our Sirius XM service, the sale or lease rate of new vehicles in the United States;
−Removed: • the rate at which our self-pay subscribers to our Sirius XM service buy and sell new and used vehicles in the United States;
−Removed: • our ability to convince owners and lessees of new and used vehicles that include satellite radios to purchase subscriptions to our Sirius XM service;
+Added: • with respect to our SiriusXM service, the sale or lease rate of new vehicles in the United States;
+Added: • the rate at which self-pay subscribers to our SiriusXM service buy and sell new and pre-owned vehicles in the United States;
+Added: • our ability to convince owners and lessees of new and used vehicles that include satellite radios to purchase subscriptions to our SiriusXM service;
• the perceived value of our programming and the packages and services we offer;
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• our ability to respond to evolving consumer tastes;
−Removed: • actions by our competitors, such as Spotify, Apple, Google, Amazon and other audio entertainment and information providers.
+Added: • actions by our competitors, such as Spotify, Apple, Google, Amazon, YouTube and other audio entertainment and information providers.
We engage in extensive marketing efforts and the continued effectiveness of those efforts is an important part of our business.
We engage in extensive marketing efforts across a broad range of media to attract and retain subscribers and listeners to our services.
−Removed: We employ a wide variety of communications tools as part of our marketing campaigns, including telemarketing efforts and email solicitations.
−Removed: The effectiveness of our marketing efforts is affected by a broad range of factors, including creative and execution factors.
−Removed: 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.
−Removed: 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.
+Added: We employ a wide variety of communications tools as part of our marketing campaigns, including telemarketing efforts, email solicitations and targeted and personalized digital outreach.
+Added: The effectiveness of our marketing efforts is affected by a broad range of factors, including creative and execution factors and effective targeting.
+Added: Our ability to reach consumers with radio and television advertising, performance and digital media, direct mail materials, email solicitations, telephone calls and digital campaigns is an important part of our efforts and a significant factor in the effectiveness of our marketing.
+Added: If we are unable to reach consumers through email solicitations or telemarketing, including as a result of “spam” and email filters, call blocking technologies, restrictions in digital media on identifying users, such as limits on “cookies,” consumer privacy regulations, “do-not-call” and 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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• manufacturers that build and distribute satellite radios;
+Added: • vendors that have designed or built, and vendors that support or operate, other important elements of our systems, including our satellites, marketing platforms, billing and payment processing, and the cloud-based systems we use;
• companies that manufacture and sell integrated circuits for satellite radios;
• vendors that operate our call centers;
−Removed: • 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;
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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.
−Removed: 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.
+Added: The operation of our apps and service offerings could be impaired if errors occur in the software, including third party software, that supports our apps and services.
It may be difficult for us to correct any defects in third party software because the development and maintenance of the software is not within our control.
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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.
−Removed: We are migrating our billing system and payment processing functions to a new service provider.
−Removed: 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.
−Removed: Our new vendor is not a bank, bank holding company or affiliated with a large multinational bank.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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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We have entered into multi-year commitments for original podcast content that is produced by third parties.
−Removed: These agreements generally provide us the right to distribute the content and act as the exclusive agent for the sale of advertising in the podcasts.
−Removed: Payment terms for certain podcast content typically requires more upfront cash payments, including minimum guarantees to the owner or creator of the podcast, than other content licenses or arrangements.
−Removed: 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.
+Added: These agreements generally provide us the right to distribute the content and act as the agent for the sale of advertising in the podcasts.
+Added: Payment terms for certain premium content typically requires more upfront cash payments, including minimum guarantees to the owner or creator of the podcast, than other content licenses or arrangements.
+Added: Given the multiple-year duration and largely fixed-cost nature of such commitments, if the attractiveness of such podcast or other non-music content to our listeners and subscribers does not meet our expectations, our margins could be adversely impacted.
In addition, the advertising market for podcasts is still developing, including the advertising technology necessary to efficiently sell audio advertising within podcasts at scale.
As a result, our ability to profitably monetize the available advertising opportunities in podcasts remains uncertain.
−Removed: Growing our podcasting business may require additional changes to our business model and cost structure, modifications to our infrastructure, and could expose us to new regulatory, legal and reputational risks, including infringement liability.
+Added: Growing our podcasting business may require additional changes to our business model, cost structure, and our infrastructure, and could expose us to new regulatory, legal and reputational risks.
There is no guarantee that we will be able to generate sufficient revenue from podcasts to offset the costs of creating or acquiring this content.
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We may not realize the benefits of acquisitions or other strategic investments and initiatives.
−Removed: Our strategy has included and may include selective acquisitions, other strategic investments and initiatives to expand our business.
+Added: Our strategy has included and may include selective acquisitions, other strategic investments and initiatives to expand or reorganize 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.
−Removed: 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.
+Added: 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 any such transaction or acquisition.
The impact of economic conditions may adversely affect our business, operating results, and financial condition.
Our success depends to a significant extent on discretionary consumer spending.
−Removed: Some of the factors that may influence consumer spending on entertainment include general economic conditions, the availability of discretionary income, consumer confidence, interest rates, inflationary pressure, and general uncertainty regarding the overall economic environment.
+Added: Some of the factors that may influence consumer spending on entertainment include general economic conditions, the availability of discretionary income, inflationary pressure, consumer confidence, interest rates, and general uncertainty regarding the overall economic environment.
The demand for entertainment generally is sensitive to downturns in the economy and the corresponding impact on discretionary consumer spending.
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Expenditures by advertisers generally tend to reflect overall economic conditions, and reductions in spending by advertisers could have an adverse impact on our revenue and business.
−Removed: See “ Our Pandora business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business .
−Removed: We may be adversely affected by the war in Ukraine.
−Removed: The war in Ukraine, and any expansion of the war in Ukraine to surrounding areas, could adversely affect our business and operations.
−Removed: Our AdsWizz subsidiary is headquartered in Romania and we rely on other contractors in Eastern European countries, such as Poland.
−Removed: 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.
−Removed: Risks Relating to our Sirius XM Business
−Removed: A substantial number of our Sirius XM service subscribers periodically cancel their subscriptions and we cannot predict how successful we will be at retaining customers.
+Added: See “ Our Pandora and Off-platform business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business .
+Added: Risks Relating to our SiriusXM Business
+Added: Changing consumer behavior and new technologies relating to our satellite radio business may reduce our subscribers and may cause our subscribers to purchase fewer services from us or to cancel our services altogether, resulting in less revenue to us.
+Added: New technologies, products and services are driving rapid changes in consumer behavior as consumers seek more control over when, where and how they consume audio content and access entertainment services.
+Added: In particular, through technological advancements, a significant amount of audio content has become available through online content providers for users to stream and, in some cases, view on their phones, personal computers, televisions, tablets, video game consoles and other devices, in some cases without a fee required to access the content.
+Added: For example, CarPlay, the Apple in-vehicle software, has become a near-ubiquitous feature in new cars, with most manufacturers integrating it into their infotainment systems, allowing iPhone users to readily access music and other audio entertainment while driving.
+Added: An increasing number of consumers are using mobile devices as the sole means of consuming audio entertainment, and an increasing number of providers are developing content and technologies to satisfy that demand.
+Added: These technological advancements, changes in consumer behavior, and the increasing number of choices available to consumers regarding the means by which consumers obtain audio entertainment may cause our subscribers to cancel our satellite radio services, downgrade to smaller, less expensive programming packages, or elect to purchase through online content providers a certain portion of the services that they would have historically purchased from us.
+Added: These technological advancements and changes in consumer behavior and/or our failure to effectively anticipate or adapt to such changes, could reduce our subscriber additions and increase our churn rate and could have a material adverse effect on our business, results of operations and financial condition.
+Added: A substantial number of our SiriusXM service subscribers periodically cancel their subscriptions, and we cannot predict how successful we will be at retaining customers.
As part of our business, we experience, and expect to experience in the future, subscriber turnover (i.e., churn).
−Removed: The number of subscribers to our Sirius XM service declined in 2023 and may further contract in the future.
+Added: The number of subscribers to our SiriusXM service declined in 2023 and 2024 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.
−Removed: 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.
−Removed: 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.
−Removed: Our promotional pricing strategy is widely known, and this may interfere with our ability to collect our ordinary subscription prices.
+Added: We cannot predict how successful we will be at retaining customers who purchase or lease vehicles that include a subscription to our SiriusXM service.
+Added: A substantial percentage of our SiriusXM subscribers are on promotional pricing plans and our ability to retain these subscribers is uncertain.
+Added: Historically, we have been unsuccessful in migrating a large portion of subscribers on promotional pricing plans to higher priced plans.
+Added: Our promotional pricing strategy is widely known, which
+Added: interferes 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.
−Removed: Our ability to profitably attract and retain subscribers to our Sirius XM service is uncertain.
+Added: Our ability to profitably attract and retain new subscribers to our SiriusXM service is uncertain.
A number of factors may affect our ability to attract and retain subscribers to our Sirius XM service.
The changing demographics of trialers to our service, such as the increase in “Millennial generation customers,” may increase the number of subscribers accustomed to consuming entertainment through ad-supported products.
−Removed: These changing demographics may affect our ability to convert trial subscribers into self-paying subscribers.
−Removed: Similarly, our efforts to acquire subscribers purchasing or leasing used vehicles may attract price sensitive consumers.
−Removed: 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.
+Added: These changing demographics have affected and may continue to affect our ability to convert trial subscribers into self-paying subscribers.
+Added: Similarly, our efforts to acquire subscribers purchasing or leasing pre-owned vehicles may attract price sensitive consumers.
+Added: Consumers purchasing or leasing pre-owned 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, or 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.
−Removed: Each of these factors may harm our revenue or require additional spending on marketing efforts to demonstrate the value of our Sirius XM service.
+Added: Each of these factors may harm our revenue or require additional spending on marketing efforts to demonstrate the value of our SiriusXM service.
Our business depends in part upon the auto industry.
−Removed: A substantial portion of the subscription growth for our satellite radio service has come from purchasers and lessees of new and used automobiles in the United States, and we expect this to be an important source of subscribers for our satellite radio service in the future.
+Added: A substantial portion of the subscription growth for our satellite radio service has come from purchasers and lessees of new and pre-owned automobiles in the United States, and we expect this to be an important source of subscribers for our satellite radio service in the future.
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.
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.
−Removed: 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.
−Removed: 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.
+Added: Our business could be adversely affected if a number of automakers do not continue to include our SiriusXM service in their products or provide us with such data.
+Added: Automotive production and sales are dependent on many factors, including labor relations matters, the availability of vehicle components, national trade policies, 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.
−Removed: Sales of used vehicles represent a significant source of new subscribers for our satellite radio service.
−Removed: We have agreements with auto dealers and companies operating in the used vehicle market to provide us with data on sales of used satellite radio enabled vehicles, including in many cases the consumer’s name and address.
−Removed: The continuing availability of this data is important, and the loss of such data may harm our revenue and business.
+Added: Sales of pre-owned vehicles represent a significant source of new subscribers for our satellite radio service.
+Added: We have agreements with auto dealers, companies operating in the pre-owned vehicle market and other third parties to provide us with data on sales of pre-owned satellite radio enabled vehicles, including in many cases the consumer’s name and address.
+Added: The continuing availability of this data is important, and the loss or additional restrictions on our use of such data may harm our revenue and business.
+Added: The imposition of tariffs by the United States government could have a major effect on the United States auto industry, upon which Sirius XM is dependent upon as a material source of new subscribers.
+Added: President Trump has announced plans to impose broad-based tariffs on imports from many countries, including China, countries of the European Union, Japan and even Mexico and Canada.
+Added: Significant tariffs on imports from European Union countries, Japan, Canada and Mexico, as have been proposed by President Trump, could have a major impact on the United States auto industry, which depends heavily on cross border trade.
+Added: New tariffs would likely affect retail auto prices in the United States, both directly and indirectly.
+Added: Tariffs would directly affect the price of finished vehicles.
+Added: More broadly, tariffs would have an indirect effect on the retail price of vehicles through its effect on auto parts, semi-finished products, components and raw materials.
+Added: The United States auto industry is reliant in large part on a worldwide supply chain, with dependencies on suppliers throughout the world.
+Added: New tariffs would also likely affect the costs of our chipsets, an essential element of satellite radios, and the satellite radio modules that are incorporated into vehicles by automakers.
+Added: It is impossible to predict with any precision the effects that new tariffs would have on the United States auto industry, and the resulting downstream effects on our Sirius XM business, although we expect the impact could be significant.
Failure of our satellites would significantly damage our business.
−Removed: The lives of the satellites required to operate our Sirius XM service vary depending on a number of factors, including:
+Added: The lives of the satellites required to operate our SiriusXM service vary depending on a number of factors, including:
• degradation and durability of solar panels;
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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.
−Removed: 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.
−Removed: Our Sirius network of terrestrial repeaters communicates with a single third party satellite.
−Removed: Our XM network of terrestrial repeaters communicates with a single XM satellite.
−Removed: If the satellites communicating with the applicable repeater network fail unexpectedly, the services would be disrupted for several hours or longer.
−Removed: 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.
−Removed: We do not have insurance for our in-orbit satellites.
+Added: In addition, we have entered into agreements for the construction and launch of three new satellites that are expected to be launched over the next three years, and material delays in the deployment of these satellites could be harmful to our business.
+Added: Any material failure of our operating satellites could cause us to lose customers for our SiriusXM service and could materially harm our reputation and our operating results.
+Added: We do not have insurance for many of our 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.
−Removed: Our Sirius XM service may experience harmful interference from wireless operations.
+Added: Our SiriusXM service may experience harmful interference from wireless operations.
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.
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Risks Relating to our Pandora and Off-platform Business
−Removed: 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.
−Removed: 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.
−Removed: The size of our ad-supported listener base is an important element of our Pandora service.
−Removed: The decline in our listener base has resulted in fewer listener hours and available advertising spots on our Pandora service, which ultimately may result in declines in our advertising revenue, and adversely affect our Pandora and Off-platform business.
−Removed: 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 and Off-platform business generates a significant portion of its revenues from advertising, and reduced spending by advertisers could harm our business.
−Removed: 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.
−Removed: 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.
+Added: Our Pandora and Off-platform business generates a majority of its revenues from third parties advertising on the Pandora ad-supported service and other platforms.
+Added: 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.
−Removed: 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.
+Added: Adverse macroeconomic conditions and new competitive product offerings 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.
+Added: Emerging industry trends may adversely impact our ability to generate revenue from advertising.
+Added: There are no uniform methods by which our advertiser-clients measure advertising effectiveness.
+Added: As a result, new methods are regularly created and used by different advertiser-clients.
+Added: We cannot integrate with all possible technological standards to measure advertising effectiveness and there is no guarantee that the standards with which we choose to integrate will be the standards ultimately selected by the majority of our advertiser-clients.
+Added: There is also no guarantee that such standards will accurately reflect the true effectiveness of our advertising.
+Added: Finally, our ability to integrate with technological standards may be limited by both emerging laws and third parties.
+Added: If we fail to integrate with the technological standards preferred by our clients, or if those methodologies are inaccurate, our revenue may be adversely affected.
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;
−Removed: • competing effectively for advertising with other dominant online services, such as Spotify, Google, Facebook and YouTube, as well as other marketing and media outlets;
−Removed: • successfully competing for local radio advertising;
+Added: • competing effectively for advertising with other dominant online products and services, such as Spotify, Google, Facebook and YouTube, as well as other marketing and media outlets;
• demonstrating the ability of advertisements to reach targeted audiences, including the value of mobile digital advertising;
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Failure to demonstrate to advertisers the value of our Pandora service would result in reduced spending by, or loss of, advertisers, which would harm our revenue and business.
−Removed: If we are unable to maintain revenue growth from our advertising products our results of operations will be adversely affected.
−Removed: In order to effectively monetize listener hours, we must, among other things, penetrate local advertising markets and develop compelling ad product solutions.
+Added: If we are unable to maintain our advertising revenue our results of operations will be adversely affected.
+Added: In order to effectively monetize listener hours, we must, among other things, develop compelling ad product solutions.
The substantial majority of the total listening to our Pandora service occurs on mobile devices.
We are engaged in efforts to continue to convince advertisers of the capabilities and value of mobile digital advertising and to direct an increasing portion of their advertising spend to our ad-supported Pandora service.
−Removed: We are continuing to build our sales capability to penetrate local advertising markets, which places us in competition with terrestrial radio.
−Removed: We may not be able to capture an increasing share of local and audio advertising revenue, which may have an adverse impact on our future revenue.
+Added: We do not currently have the ability to effectively capture a meaningful share of local audio advertising revenue, which may have an adverse impact on our future revenue.
Changes to mobile operating systems and browsers may hinder our ability to sell advertising and market our services.
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Apple, as well as mobile operating system and browser providers, have implemented product features and plans that may adversely impact our ability to use these common identifiers and data collected in connection with these common identifiers in our Pandora business.
−Removed: If we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing and attract new listeners.
+Added: If we fail to accurately predict and play music, comedy or other content that our Pandora listeners enjoy, we may fail to retain existing listeners and attract new listeners.
A key differentiating factor between our Pandora service and other music content providers is our ability to predict music that our listeners will enjoy.
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Privacy and data security laws and regulations may hinder our ability to market our services, sell advertising and impose legal liabilities.
−Removed: We receive a substantial amount of personal data on purchasers and lessees of new and used vehicles from third parties.
−Removed: We use this personal data to market our services.
−Removed: We collect and use demographic, service usage, purchase history and other information, including location information, from and about our listeners through the internet.
+Added: We receive a substantial amount of personal data from third parties on purchasers and lessees of new and pre-owned vehicles and from and about listeners to our services.
+Added: We use this personal data to market our services and to enhance our advertising business.
+Added: Regulations and obligations on third party data providers may restrict or reduce the third party data we receive or in the manner in which we use such third party data.
+Added: We collect and use demographic, service usage, purchase history and other information from and about our listeners through interactions with our products and services and content over the internet.
Further, we and third parties use tracking technologies, including “cookies” and related technologies, to help us manage and track our listeners’ interactions with our services and deliver relevant advertising.
Various federal and state laws and regulations, as well as the laws of foreign jurisdictions, govern the collection, use, retention, sharing and security of the personal data we receive.
−Removed: Privacy groups and government authorities have increasingly scrutinized the ways in which companies collect and share personal data, including linking personal identities and data associated with particular users or devices with data collected through the internet, and we expect such scrutiny to increase.
−Removed: Alleged violations of laws and regulations relating to privacy and personal data may expose us to potential liability, may require us to expend significant resources in responding to and defending such allegations and claims and could in the future result in negative publicity and a loss of confidence in us by our subscribers, listeners, advertisers and other third parties with whom we do business.
+Added: Privacy groups and government authorities have increasingly scrutinized the ways in which companies collect and share personal data, and we expect such scrutiny to increase.
+Added: Alleged violations of laws and regulations relating to privacy and personal data may expose us to potential liability, may require us to expend significant resources in responding to and defending such allegations and claims and could in the future result in negative publicity and a loss of confidence in us by our subscribers, listeners, advertisers and other third parties.
Privacy-related laws and regulations, such as the California Consumer Privacy Act and the European General Data Protection Regulation, are evolving and subject to potentially differing interpretations.
Various federal and state legislative and regulatory bodies as well as foreign legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security-related matters.
+Added: We may not be in compliance with all of the new laws and regulations regarding privacy.
New laws, amendments to or re-interpretations of existing laws and contractual obligations, as well as changes in our listeners’ expectations and demands regarding privacy and data security, may limit our ability to collect and use consumer data.
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Consumer protection laws and our failure to comply with them could damage our business.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Federal and state consumer protection laws, rules and regulations cover nearly all aspects of our marketing efforts.
+Added: The nature of our business requires us to expend significant resources to try to ensure that our marketing activities comply with consumer protection laws.
These efforts may not be successful, and we may have to expend even greater resources in our compliance efforts.
−Removed: 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.
+Added: In November 2024, a New York Court found that our cancellation practices violated the “simple mechanism requirement” for subscription cancellations in the federal Restore Online Shoppers’ Confidence Act (“ROSCA”).
+Added: As a result of the Court’s findings, we now permit New York residents who purchase a subscription online to also cancel that subscription online, a cancellation mechanism that is at least as easy to use as the method the consumer used to initiate the subscription.
+Added: The Federal Trade Commission has issued proposed rules that are scheduled to go into effect on May 15, 2025 that will require us on a nationwide basis to permit a purchaser of a subscription online to also cancel that subscription online.
+Added: In addition, other governmental authorities have commenced investigations into our consumer practices, including the manner in which we allow consumers to cancel subscriptions to our services.
+Added: Modifications to consumer protection laws, including laws regarding 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.
−Removed: 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.
+Added: We may face lawsuits, incur liability or suffer reputational harm as a result of content published or made available through our services.
+Added: The nature of our business could expose us to claims or public criticism related to defamation, illegal content, misinformation, and content regulation.
+Added: We could incur costs investigating and defending any such claims.
+Added: 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.
+Added: 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.
Environmental, social and governance expectations and related reporting obligations may expose us to potential liabilities, increased costs, reputational harm, and other adverse effects.
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In addition, some stakeholders may disagree with our initiatives and objectives.
−Removed: Any failure, or perceived failure, to further our initiatives, adhere to public statements, comply with
−Removed: 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.
−Removed: We may face lawsuits, incur liability or suffer reputational harm as a result of content published or made available through our services.
−Removed: The nature of our business could expose us to claims or public criticism related to defamation, illegal content, misinformation, and content regulation.
−Removed: We could incur costs investigating and defending any such claims.
−Removed: 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.
−Removed: 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.
+Added: 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.
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.
−Removed: The nature of our business involves the receipt and storage of personal information about our subscribers and listeners including credit and debit card information.
+Added: The nature of our business involves the receipt and storage of personal information about our subscribers and listeners including, in some cases, credit and debit card information.
We have a program in place to detect and respond to data security incidents.
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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.
−Removed: Our services, which are supported by our own systems and those of third-party vendors, could be subject to computer malware and attacks as well as to catastrophic events (such as fires, floods, hurricanes, or tornadoes), any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information.
+Added: Our services, which
+Added: are supported by our own systems and those of third-party vendors, could be subject to computer malware and attacks as well as to catastrophic events (such as fires, floods, hurricanes, or tornadoes), any of which could lead to system interruptions, delays, or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information.
If we fail to protect the security of personal information about our customers or if an actual or perceived breach of security occurs on our systems or a vendor’s systems, we could be exposed to costly government enforcement actions and private litigation and our reputation could suffer.
We may also be required to expend significant resources to address these problems, including notification under various data privacy regulations, and our reputation and operating results could suffer.
−Removed: In addition, our subscribers and listeners, as well as potential customers, could lose confidence in our ability to protect their personal information, which could cause them to discontinue the use of our services.
+Added: In addition, our subscribers and listeners, as well as potential customers, could lose confidence in our ability to protect their personal information, which could cause them to discontinue or forego the use of our services.
This loss of confidence would also harm our efforts to attract and retain advertisers and to obtain personal information from third parties, and unauthorized access to our programming would potentially create additional royalty expense with no corresponding revenue.
Such events could adversely affect our results of operations.
−Removed: The costs of maintaining adequate protection, including insurance protection, against such threats as they develop in the future (or as legal requirements related to data security increase) could be material.
+Added: The costs of maintaining adequate protection against such threats as they develop in the future (or as legal requirements related to data security increase) could be material.
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.
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Additionally, we have increased our monitoring capabilities to enhance early detection and timely response to potential security anomalies.
−Removed: The cyber security measures we have implemented, however, may not be sufficient to prevent all possible attacks and may be vulnerable to hacking, employee error, ransom attacks, malfeasance, system error, faulty password management or other irregularities.
+Added: The cyber security measures we have implemented, however, may not be sufficient to prevent all possible attacks and may be vulnerable to hacking, employee error, ransom attacks, malfeasance, system error, faulty password management, social engineering or other irregularities.
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.
−Removed: 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.
−Removed: Our competitors or other third parties may incorporate
−Removed: 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.
−Removed: 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.
+Added: We incorporate various artificial intelligence (“AI”) solutions into our digital infrastructure, services, offerings and features, and these applications are becoming important in our operations.
+Added: We have not established definitive policies regarding the use of AI platforms and algorithms in our business and with our data and information, and we do not have systems in place that inventory all of the AI-based applications that may be in use in our enterprise.
+Added: Our competitors or other third parties may incorporate AI into their products and operations more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.
+Added: Additionally, if the content, analyses, search results or recommendations that AI applications assist in producing are, or are alleged to be, deficient, inaccurate, biased or in violation of third parties’ intellectual property rights, 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.
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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.
−Removed: 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.
+Added: The rapid evolution of AI, including the 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.
−Removed: 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.
+Added: We rely on our own systems and systems of third party vendors to enable subscribers and listeners to access our Pandora and SiriusXM 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 and service delivery systems we rely on and mitigate the harm of any unplanned interruptions, we cannot anticipate all eventualities.
−Removed: We occasionally experience unplanned outages or technical difficulties.
+Added: We occasionally experience unplanned outages or
+Added: 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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Risks Associated with Certain Intellectual Property Rights
+Added: Rapid technological and industry changes and new entrants could adversely impact our services.
+Added: The audio entertainment industry is characterized by rapid technological change, frequent product and feature innovations, changes in customer requirements and expectations, evolving standards and new entrants offering products and services.
+Added: If we are unable to keep pace with these changes, our business may not succeed.
+Added: Products using new technologies could make our services less competitive in the marketplace.
The market for music rights is changing and is subject to significant uncertainties.
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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.
−Removed: Under the United States Copyright Act, we also must pay royalties to copyright owners of sound recordings for the performance of such sound recordings on our Sirius XM service.
+Added: Under the United States Copyright Act, we also must pay royalties to copyright owners of sound recordings for the performance of such sound recordings on our SiriusXM service.
Those royalty rates may be established through negotiation or, if negotiation is unsuccessful, by the Copyright Royalty Board.
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antitrust laws and exercises significant market power in the licensing of sound recordings.
−Removed: Under the terms of the Copyright Royalty Board’s existing decision governing
−Removed: 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.
+Added: 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 agreements grant us the right to operate Pandora Premium, and add interactive features, such as replays, additional skips and offline play, to Pandora’s ad-supported service and to Pandora Plus.
−Removed: The economic terms of these direct licenses are onerous and, as a result, we may not be able to profitably operate the Pandora services.
+Added: The economic terms of these direct licenses are onerous and grant the licensors broad rights over the Pandora services.
+Added: As a result of these terms, we may not be able to profitably operate the Pandora services.
However, the economic terms of these direct licenses may be “market,” given the rates paid by Pandora’s competitors.
−Removed: Competition for Pandora’s services are primarily offered by entities that provide music and entertainment services as a small part of a larger business, such as Apple, Google and Amazon.
−Removed: These competitors have the ability to bear these onerous economic provisions to a much greater extent than our Pandora business.
−Removed: We may not be able to negotiate or obtain lower royalty rates under these direct licenses.
+Added: Competition for Pandora’s services are primarily offered by entities that provide music and entertainment services as a small part of a larger business, such as Apple, Google, Amazon and YouTube.
+Added: These competitors have the ability to bear these onerous economic provisions to a much
+Added: greater extent than our Pandora business.
+Added: We have not been able to negotiate or obtain lower royalty rates under these direct licenses.
These direct licenses are complex.
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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.
−Removed: 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
−Removed: operate our services or license our technology, or otherwise adversely affect our ability to successfully develop and market our services.
−Removed: 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.
−Removed: We may incorporate in some products software licensed under “open source” licenses.
+Added: 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.
+Added: Some of our services and technologies 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.
+Added: We incorporate in some products software licensed under “open source” licenses.
Open source licenses often require that the source code be made available to the public and that any modifications or derivative works to the open source software continue to be licensed under open source licenses.
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In the event that portions of our proprietary technology are determined to be subject to an open source license, we may be required to publicly release portions of our source code, be forced to re-engineer all or a portion of our technologies, or otherwise be limited in the licensing of our technologies, each of which could adversely affect our ability to sustain and grow our business.
−Removed: Rapid technological and industry changes and new entrants could adversely impact our services.
−Removed: The audio entertainment industry is characterized by rapid technological change, frequent product and feature innovations, changes in customer requirements and expectations, evolving standards and new entrants offering products and services.
−Removed: If we are unable to keep pace with these changes, our business may not succeed.
−Removed: Products using new technologies could make our services less competitive in the marketplace.
−Removed: Risks Related to our Capital and Ownership Structure
−Removed: We have a significant amount of indebtedness, and our debt contains certain covenants that restrict our operations.
−Removed: As of December 31, 2023, we had an aggregate principal amount of approximately $9.3 billion of indebtedness outstanding.
−Removed: Our indebtedness increases our vulnerability to general adverse economic and industry conditions;
−Removed: 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;
−Removed: limits our ability to borrow additional funds;
−Removed: and may limit our flexibility in planning for, or reacting to, changes in our business and the audio entertainment industry.
−Removed: In addition, our borrowings under our Senior Secured Revolving Credit Facility carry a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: We are a “controlled company” for the purposes of the NASDAQ Stock Market listing rules.
−Removed: As such, we have elected not to comply with certain NASDAQ corporate governance requirements.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: See “Business - Liberty Media Split-Off Transaction.”
−Removed: 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.
−Removed: 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.
−Removed: Three Liberty Media executives and one other member of the board of directors of Liberty Media are members of our board of directors.
−Removed: Our board of directors currently has thirteen members.
−Removed: Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of Holdings’ board of directors.
−Removed: Our board of directors is responsible for, among other things, the appointment of executive management, future issuances of
−Removed: common stock or other securities, the payment of dividends, if any, the incurrence of debt, and the approval of various transactions.
−Removed: 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.
−Removed: Liberty Media can also cause or prevent a change of control of Holdings and could preclude any unsolicited acquisition of our company.
−Removed: 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.
−Removed: In certain cases, the interests of Liberty Media may not be aligned with the interests of other stockholders of Holdings.
−Removed: Following the consummation of the Transactions, Liberty Media will no longer beneficially own Holdings’ common stock.
−Removed: See “Business - Liberty Media Split-Off Transaction.”
−Removed: The Transactions may adversely affect our business and financial condition.
−Removed: 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.
−Removed: The risks, and adverse effects, of such disruptions and diversions could be exacerbated by a delay in the completion of the Transactions.
−Removed: Any such disruptions or diversions could adversely affect our financial position or results of operations, regardless of whether the Transactions are completed.
−Removed: Moreover, the Transactions impose certain restrictive interim covenants on us during the pendency of the Transactions.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: See “Business - Liberty Media Split-Off Transaction.”
+Added: Risks Related to our Capital Structure
While we currently pay a quarterly cash dividend to holders of our common stock, we may change our dividend policy at any time.
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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.
+Added: Our holding company structure could restrict access to funds of our subsidiaries that may be needed to pay third party obligations.
+Added: Sirius XM Holdings is a holding company, and its assets consist of its investments in its subsidiaries, including Sirius XM Inc.
+Added: and Sirius XM Radio.
+Added: As a holding company, our ability to meet our financial obligations (including assumed liabilities in connection with the Transactions) to third parties is dependent upon our available cash balances, distributions from subsidiaries and other investments and proceeds from any asset sales.
+Added: Further, our ability to receive dividends or payments or advances from our subsidiaries’ businesses depends on their individual operating results, any statutory, regulatory or contractual restrictions to which they are or may become subject and the terms of their indebtedness (including the restrictive covenants contained in Sirius XM Radio’s credit agreement and indentures) and any additional debt they may incur in the future.
+Added: Accordingly, our ability to make payments to third parties and to otherwise meet our financial obligations at the holding company level may be constricted.
+Added: We have significant indebtedness, and our subsidiaries’ debt contains certain covenants that restrict their operations.
+Added: We have significant indebtedness.
+Added: As of December 31, 2024, we had an aggregate principal amount of approximately $10.4 billion of indebtedness outstanding.
+Added: Our indebtedness and the indebtedness of our subsidiaries:
+Added: • increases our vulnerability to general adverse economic and industry conditions;
+Added: • requires us and our subsidiaries to dedicate a portion of our and/or their cash flow from operations to payments on indebtedness, reducing the availability of cash flow to fund capital expenditures, marketing and other general corporate activities;
+Added: • limits our and our subsidiaries’ abilities to borrow additional funds;
+Added: • may limit our and our subsidiaries’ flexibility in planning for, or reacting to, changes in our business and the audio entertainment industry.
+Added: In addition, Sirius XM Radio’s borrowings under its Senior Secured Revolving Credit Facility, including the Incremental Term Loan, carry a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”).
+Added: Sirius XM Radio may, in the future, hedge against interest rate fluctuations by using hedging instruments such as swaps, caps, options, forwards, futures or other similar products.
+Added: 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.
+Added: If we are unable to generate sufficient cash flow to repay or refinance our debt on favorable terms, it could significantly adversely affect our financial condition and the value of our outstanding debt.
+Added: Our ability to incur additional indebtedness to fund our operations could be limited, which could negatively impact our operations.
+Added: We have a substantial amount of indebtedness maturing in the next several years.
+Added: Our ability to refinance our indebtedness on favorable terms, or at all, is dependent on (among other things) conditions in the credit and capital markets, which are beyond our control.
+Added: In addition, any such refinancing efforts may increase our debt service obligations as we refinance lower interest rate debt with higher interest rate debt.
+Added: Any refinancing of our debt may require us to comply with more onerous covenants, which could further restrict our business operations.
+Added: If additional debt financing is not available to us in the future or we are unable to access funds of our subsidiaries, we may obtain liquidity through the issuance and sale of our equity securities.
+Added: If additional funds are raised through the issuance of equity securities, our stockholders may experience significant dilution.
+Added: If we are unable to obtain sufficient liquidity in the future, we may be unable to continue to develop our
+Added: business, complete acquisitions or otherwise take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on our business, financial condition and results of operations.
+Added: Risks Relating to the Transactions
+Added: We may have a significant indemnity obligation to Liberty Media, which is not limited in amount or subject to any cap, if the transactions associated with the Split-Off are treated as a taxable transaction.
+Added: Pursuant to the Tax Sharing Agreement that we entered into with Liberty Media in connection with the Split-Off, we are required to indemnify Liberty Media, its subsidiaries and certain related persons for taxes and losses (other than any taxes or tax-related losses that result from Section 355(e) of the Internal Revenue Code (the “Code”) applying to the Split-Off as a result of the Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire a 50-percent or greater interest (measured by vote or value) in the stock of Liberty Media) resulting from the failure of the transactions associated with the Split-Off to qualify as a generally tax-free transaction under Section 355, Section 368(a)(1)(D) and related provisions of the Code to the extent that such taxes and losses (a) result primarily from, individually or in the aggregate, the breach of certain covenants made by us (applicable to actions or failures to act by us and our subsidiaries following the completion of the Split-Off), (b) result primarily from, individually or in the aggregate, the failure of certain representations made by us in support of the opinion of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden Arps”) regarding the generally tax-free status of the transactions associated with the Split-Off to be true and correct, or (c) result from the application of Section 355(e) of the Code to the Split-Off as a result of the treatment of the Split-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50% or greater interest (measured by vote or value) in our stock (or any successor corporation), except, in the case of clauses (a) and (b), if such taxes and losses result from an action required to be taken pursuant to the agreements governing the Transactions.
+Added: Our indemnification obligations to Liberty Media, its subsidiaries and certain related persons are not limited in amount or subject to any cap.
+Added: If we are required to indemnify Liberty Media, its subsidiaries or such related persons under the circumstances set forth in the Tax Sharing Agreement, we may be subject to substantial liabilities, which could materially adversely affect our financial position.
+Added: We may determine to forgo certain transactions that might otherwise be advantageous in order to avoid the risk of incurring significant tax-related liabilities.
+Added: Under the Tax Sharing Agreement, we agreed not to take certain actions, or fail to take any action, following the Split-Off, which action or failure to act would be inconsistent with the transactions associated with the Split-Off qualifying under Section 355, Section 368(a)(1)(D) and related provisions of the Code.
+Added: In particular, for the two-year period following the distribution, we are subject to specific restrictions that are intended to preserve the generally tax-free status of the Split-Off, including restrictions on our ability to discontinue the conduct of certain businesses, to merge, consolidate, liquidate, or dissolve Sirius XM Holdings or Sirius XM Inc., to redeem or repurchase our common stock, or to enter into certain other corporate transactions that may cause us to undergo either a 45% or greater change in the ownership of our voting stock or a 45% or greater change in the ownership (measured by value) of all classes of our stock, taking into account the Merger.
+Added: Further, the Tax Sharing Agreement requires us to indemnify Liberty Media for any taxes or losses (subject to certain exceptions) incurred by Liberty Media (or its subsidiaries) to the extent that such taxes and losses (a) result primarily from, individually or in the aggregate, the breach of certain covenants made by us (applicable to actions or failures to act by us and our subsidiaries following the completion of the Split-Off), (b) result primarily from, individually or in the aggregate, the failure of certain representations made by us in support of the opinion of Skadden Arps regarding the generally tax-free status of the transactions associated with the Split-Off to be true and correct, or (c) result from the application of Section 355(e) of the Code to the Split-Off as a result of the treatment of the Split-Off as part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50% or greater interest (measured by vote or value) in our stock (or any successor corporation).
+Added: Under Section 355(e) of the Code, an acquisition of our stock would generally be presumed to be part of a plan (or series of related transactions) with the Split-Off if such acquisition occurs within two years before or after the Split-Off (or if such stock is received in the Split-Off in exchange for Liberty SiriusXM common stock that was acquired within the two years before the Split-Off).
+Added: This presumption, however, may be rebutted based upon an analysis of the facts and circumstances related to the Split-Off and the particular acquisition in question, including a weighing of certain plan and non-plan factors set forth in U.S.
+Added: Treasury Regulations promulgated under Section 355(e) of the Code.
+Added: Further, these U.S.
+Added: Treasury Regulations provide certain safe harbors under which an acquisition will be deemed not to be part of a plan (or series of related transactions) with the Split-Off for purposes of Section 355(e) of the Code.
+Added: In light of the Tax Sharing Agreement and the requirements under Section 355 of the Code, including the factors and safe harbors described above, we may determine to forgo certain transactions that might otherwise be advantageous.
+Added: In particular, we may determine to continue to operate certain of our business operations for the foreseeable future even if a sale of such business operations might otherwise be advantageous.
+Added: Moreover, we might determine to forgo certain transactions, including share repurchases, stock issuances, certain asset dispositions and other strategic transactions, for some period of time following the Split-Off.
+Added: In addition, our indemnity obligations under the Tax Sharing Agreement might discourage, delay or prevent us entering into a change of control transaction for some period of time following the Split-Off.
+Added: We have assumed and are responsible for all of the liabilities attributed to the Liberty SiriusXM Group as a result of the completion of the Transactions, and acquired the assets of SplitCo on an “as is, where is” basis.
+Added: We acquired all of SplitCo’s assets and assumed, performed, discharged and fulfilled all of the liabilities of SplitCo, as applicable, regardless of when or where such liabilities arose or arise.
+Added: The assets of SplitCo were conveyed to us on an “as is, where is” basis, and while Liberty Media is subject to certain indemnification obligations in favor of us, these are generally limited to indemnification for certain indemnifiable losses to the extent arising out of, relating to or in connection with the businesses, assets and liabilities retained by Liberty Media (or any third party claims related thereto) or any breach or failure to perform or comply with any covenant, undertaking or obligation of Liberty Media or its subsidiaries (other than us or our subsidiaries).
+Added: Furthermore, there are no remedies available to the parties with respect to any breach of representations of the parties to the Merger Agreement, except for certain rights the party may have under applicable law to bring a claim for fraud or willful breach of the Merger Agreement.
+Added: As a result, we bear full responsibility for any and all assets and liabilities of SplitCo.
+Added: To the extent any of the liabilities of SplitCo are larger than anticipated, or an issue with any asset of SplitCo prohibits our businesses from performing as planned, they could have a material adverse impact on our business, financial condition and results of operations.
+Added: We may be harmed by securities class actions and derivative lawsuits in connection with the Transactions.
+Added: Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into agreements for significant transactions such as the Transactions in an effort to seek monetary relief.
+Added: In October 2024, purported stockholders commenced an action in the Court of Chancery of the State of Delaware against Liberty Media, John C.
+Added: Malone and members of the Board of Directors of Old Sirius relating to the Transactions.
+Added: The plaintiffs allege that the Transaction was unfair to minority stockholders and unduly favored Liberty Media because, among other things:
+Added: we have taken on tax liabilities;
+Added: we have assumed Liberty Media’s debt;
+Added: and the transaction enabled Liberty Media to appoint a majority of our board of directors with staggered terms to give Liberty Media at least three years of board-level control.
+Added: The plaintiffs also allege that the Transactions closed a multi-billion-dollar valuation gap between the price at which the LSXM shares traded in the market and the net asset value of the underlying assets those LSXM shares “tracked,” which solely benefited Liberty Media stockholders, and that the Special Committee failed to negotiate a fair exchange ratio in light of these benefits to Liberty Media.
+Added: Even if such lawsuit, and future lawsuits relating to the Transactions, are without merit or resolved in our favor, defending against these claims may result in substantial costs and divert management time and resources from other potentially beneficial business opportunities.
+Added: We cannot predict whether additional lawsuits will be brought against us or the outcome of the pending lawsuit, nor can we predict the amount of time and expense that will be required to resolve any of this litigation.
+Added: It may be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders.
+Added: Certain provisions of our amended and restated charter and amended and restated bylaws may discourage, delay or prevent a change in control that a stockholder may consider favorable.
+Added: These provisions include the following:
+Added: • establishing a classified board of directors, with staggered terms until the third annual meeting after the effective time of the Merger, which may lengthen the time required to gain control of our board of directors;
+Added: • allowing the authorized number of directors on the board of directors to be changed only by resolution of the board of directors;
+Added: • permitting only the board of directors to fill vacancies on the board;
+Added: • limiting who may call special meetings of stockholders;
+Added: • prohibiting stockholder action by written consent (subject to certain exceptions), thereby requiring stockholder action to be taken at a meeting of the stockholders;
+Added: • requiring stockholder approval by holders of at least 66-2∕3% in voting power of all then-outstanding shares entitled to vote thereon, voting together as a single class, with respect to an amendment to our amended and restated bylaws and with respect to an amendment to particular articles of our amended and restated charter;
+Added: • establishing advance notice requirements for nominations of candidates for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;
+Added: • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect candidates to serve as a director on the board;
+Added: • an exclusive forum provision providing that (a) the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings and (b) the federal district courts will be the exclusive forum for causes of action arising under federal securities law, in each case unless we consent in writing to the selection of an alternative forum;
+Added: • the existence of authorized and unissued stock, including “blank check” preferred stock, which could be issued by our board of directors to persons friendly to our then current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of us.
+Added: Moreover, because we are incorporated in Delaware and are governed by Section 203 of the Delaware General Corporation Law (the “DGCL”), pursuant to our amended and restated charter, an “interested stockholder” (as such term is defined in the DGCL) is prohibited from merging or combining with us, or engaging in other “business combinations,” for a period of three years after the date of the transaction in which the person acquired in excess of 15% of the outstanding voting stock, except in certain circumstances.
+Added: These provisions in our amended and restated charter and amended and restated bylaws may discourage, delay or prevent a change in control that a stockholder may consider favorable.
+Added: We have directors associated with Liberty Media, which may lead to conflicting interests.
+Added: Maffei, a senior advisor to Liberty Media, also serves as the Chairman of our board of directors.
+Added: Evan Malone, a director of Liberty Media, also serves as a member of our board of directors.
+Added: The members of our board of directors have fiduciary duties to our stockholders.
+Added: Such persons also have fiduciary duties to Liberty Media’s stockholders.
+Added: Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting their respective companies.
+Added: For example, there may be the potential for a conflict of interest if any conflict arises under the Tax Sharing Agreement or when we or Liberty Media look at acquisitions and other corporate opportunities that may be suitable for each of them.
+Added: Moreover, our Chairman of the board of directors and certain other directors may continue to own Liberty Media common stock, restricted stock units and options to purchase Liberty Media common stock.
+Added: These ownership interests could create, or appear to create, potential conflicts of interest when these individuals are faced with decisions that could have different implications for us or Liberty Media.
+Added: Any potential conflict that could qualify as a “related party transaction” (as defined in Item 404 of Regulation S-K) will be subject to review by an independent committee of the applicable company’s board of directors in accordance with its corporate governance guidelines.
+Added: Any other potential conflicts that arise will be addressed on a case-by-case basis, keeping in mind the applicable fiduciary duties owed by the executive officers and directors of each company.
+Added: From time to time, Liberty Media or its respective affiliates may enter into transactions with us and/or our subsidiaries or other affiliates.
+Added: Although the terms of any such transactions or agreements will be established based upon negotiations between employees of the companies involved, there can be no assurance that the terms of any such transactions will be as favorable to us, or our subsidiaries or affiliates as would be the case where the parties are completely at arms’ length.
+Added: Our directors and officers are protected from liability for a broad range of actions.
+Added: Delaware law permits limiting or eliminating the monetary liability of a director and, subject to certain limitations set forth in the DGCL, certain officers, to a corporation or its stockholders, except with regard to breaches of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, in the case of directors, unlawful payment of dividends or unlawful stock purchase or redemption, any transaction from which a director or officer derived an improper personal benefit, or, in the case of officers, any action by or in the right of the corporation.
+Added: Our amended and restated charter eliminates the liability of its directors and officers to the fullest extent permitted by Delaware law.
Other Operational Risks
5 unchanged sentences
Our facilities could be damaged by natural catastrophes or terrorist activities.
−Removed: 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
+Added: An earthquake, hurricane, tornado, flood, fires, 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 extreme weather conditions can be caused or exacerbated by climate change.
−Removed: 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.
−Removed: Damage to our satellite uplink facilities could result in a complete loss of our Sirius XM satellite service until we could transfer operations to suitable back-up facilities.
−Removed: The unfavorable outcome of pending or future litigation could have an adverse impact on our operations and financial condition.
+Added: Any damage to the satellites that transmit to our terrestrial repeater networks would likely result in degradation of the affected service for some SiriusXM subscribers and could result in complete loss of satellite radio service in certain or all areas.
+Added: Damage to our satellite uplink facilities could result in a complete loss of our satellite radio service until we could transfer operations to suitable back-up facilities.
+Added: The unfavorable outcome of pending or future litigation and mass arbitrations 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 and governmental actions and possible class actions and mass arbitrations arising from our pricing and cancellation practices.
8 unchanged sentences
Our ability to maintain and enhance our brands also depends in part on our ability to continue to develop and provide an innovative and high-quality entertainment experience, which we may not do successfully.
−Removed: Special Note About Forward-Looking Statements
−Removed: 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.
−Removed: 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.
−Removed: In addition, from time to time, we, through our management, may make oral forward-looking statements.
−Removed: For example, these forward-looking statements may include, among other things, our statements about our outlook and our future results of operations and financial condition;
−Removed: share repurchase plans;
−Removed: the impact of economic and market conditions;
−Removed: and the impact of recent acquisitions.
−Removed: 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.
−Removed: Forward-looking statements are subject to risks and uncertainties, including those identified above, which could cause actual results to differ materially from such statements.
−Removed: We caution you that the risk factors described above are not exclusive.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: We undertake no obligation to update publicly or revise any forward-looking statements, except as required by law.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.