Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.5.0.2
Related Party Transactions
 9 Months Ended
Sep. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions
Related Party Transactions 
In the normal course of business, we enter into transactions with related parties.

Liberty Media
As of September 30, 2016, Liberty Media beneficially owned, directly and indirectly, approximately 65% 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. We have not had any related party transactions with Liberty Media during the three and nine months ended September 30, 2016 and 2015.

Sirius XM Canada
We hold an equity method investment in Sirius XM Canada.  We own 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 chipset radios, 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:
 
September 30, 2016
 
December 31, 2015
Related party current assets
$
5,249

 
$
5,941

Related party long-term assets
$
6,163

 
$
—

Related party current liabilities
$
3,015

 
$
2,840

Related party long-term liabilities
$
8,665

 
$
10,795


Our related party current asset balances primarily consist of activation fees and streaming and chipset costs for which we are reimbursed.  Our related party long-term asset balance as of September 30, 2016 primarily included our investment balance in Sirius XM Canada. Our related party liabilities as of September 30, 2016 and December 31, 2015 included $2,776 for the current portion of deferred revenue and $8,557 and $10,639, respectively, for the long-term portion of deferred revenue recorded as of the Merger date related to agreements with 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 September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue (a)
$
11,551

 
$
17,941

 
$
32,129


$
44,437

Other income
 

 
 

 





Share of net earnings (b)
$
1,274

 
$
—

 
$
9,725


$
—

Dividends (c)
$
—

 
$
3,891

 
$
3,575


$
8,880

(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 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 current license and services agreement entered into with Sirius Canada will expire in 2017.  The current license agreement entered into with XM Canada will expire in 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)
Pursuant to the Arrangement Agreement, Sirius XM Canada did not pay any dividends during the three months ended September 30, 2016. Sirius XM Canada paid gross dividends to us of $3,891 during the three months ended September 30, 2015 and $7,548 and $11,881 during the nine months ended September 30, 2016 and 2015, 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.