Sirius XM Holdings Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

Related Party Transactions

3 Months Ended

Mar. 31, 2017

In the normal course of business, we enter into transactions with related parties.

Liberty Media

As of March 31, 2017, Liberty Media beneficially owned, directly and indirectly, approximately 68% of the outstanding shares of our common stock and has two executives and one of its directors on our board of directors. Gregory B. Maffei, the President and Chief Executive Officer of Liberty Media, is the Chairman of our board of directors.

Sirius XM Canada

We hold an equity method investment in Sirius XM Canada. As of March 31, 2017, we owned approximately 47,300 of Sirius XM Canada’s Class A shares on a converted basis, representing an approximate 37% equity interest and an approximate 25% voting interest. We primarily provide programming and content services to Sirius XM Canada and are reimbursed from Sirius XM Canada for certain product development costs, production and distribution of chipsets, as well as for information technology and streaming support costs. Refer to Note 1, Business - Basis of Presentation, for information on the pending transaction with Sirius XM Canada.

We had the following related party balances associated with Sirius XM Canada:



	March 31, 2017		December 31, 2016
Related party current assets	$	6,846	$	6,170
Related party long-term assets	$	8,114	$	8,918
Related party current liabilities	$	2,840	$	2,840
Related party long-term liabilities	$	7,245	$	7,955

Our related party current assets balance primarily consist of activation fees and streaming and chipset costs for which we are reimbursed. Our related party long-term assets balance as of March 31, 2017 and December 31, 2016 primarily included our investment balance in Sirius XM Canada. Our related party liabilities as of March 31, 2017 and December 31, 2016 included $2,776 for the current portion of deferred revenue and $7,170 and $7,867, respectively, for the long-term portion of deferred revenue recorded as of the Merger date related to agreements with legacy XM Canada, now Sirius XM Canada. These costs are being amortized on a straight line basis through 2020.

We recorded the following revenue and other income associated with Sirius XM Canada in our unaudited consolidated statements of comprehensive income:



	For the Three Months Ended March 31,
	2017		2016
Revenue ^(a)	$	12,216	$	9,911
Other income
Share of net earnings ^(b)	$	3,014	$	6,274
Dividends ^(c)	$	—	$	3,575

(a)

Under our agreements with Sirius XM Canada, we currently receive a percentage-based royalty of 10% and 15% for certain types of subscription revenue earned by Sirius XM Canada for the use of Sirius and XM platforms, respectively; and additional royalties for premium services and royalties for activation fees and reimbursements for other charges. We record revenue from Sirius XM Canada as Other revenue in our unaudited consolidated statements of comprehensive income. The license and services agreement entered into with legacy Sirius Canada will expire in August 2017. The license agreement entered into with legacy XM Canada will expire in November 2020.


(b)	We recognize our proportionate share of earnings or losses of Sirius XM Canada as they occur as a component of Other income in our unaudited consolidated statements of comprehensive income on a one month lag.


(c)	Sirius XM Canada paid gross dividends to us of $3,796 and $3,575 during the three months ended March 31, 2017 and 2016, respectively. These dividends were first recorded as a reduction to our investment balance in Sirius XM Canada to the extent a balance existed and then as Other income for the remaining portion.