Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

 v2.3.0.11
Intangible Assets
 6 Months Ended
Jun. 30, 2011
Goodwill and Intangible Assets [Abstract]  
Intangible Assets
(5) Intangible Assets
          Intangible assets consist of the following:
                                                     
        June 30, 2011     December 31, 2010  
        Gross                     Gross              
    Weighted Average   Carrying     Accumulated     Net Carrying     Carrying     Accumulated     Net Carrying  
    Useful Lives   Value     Amortization     Value     Value     Amortization     Value  
Indefinite life intangible assets:
                                                   
FCC licenses
  Indefinite   $ 2,083,654     $ —     $ 2,083,654     $ 2,083,654     $ —     $ 2,083,654  
Trademark
  Indefinite     250,000       —       250,000       250,000       —       250,000  
 
                                                   
Definite life intangible assets:
                                                   
Subscriber relationships
  9 years     380,000       (168,428 )     211,572       380,000       (144,325 )     235,675  
Licensing agreements
  9.1 years     78,897       (29,137 )     49,760       78,897       (24,130 )     54,767  
Proprietary software
  6 years     16,552       (10,610 )     5,942       16,552       (9,566 )     6,986  
Developed technology
  10 years     2,000       (583 )     1,417       2,000       (483 )     1,517  
Leasehold interests
  7.4 years     132       (52 )     80       132       (43 )     89  
 
                                       
Total intangible assets
      $ 2,811,235     $ (208,810 )   $ 2,602,425     $ 2,811,235     $ (178,547 )   $ 2,632,688  
 
                                       
     Indefinite Life Intangible Assets
          We have identified our FCC licenses and the XM trademark as indefinite life intangible assets after considering the expected use of the assets, the regulatory and economic environment within which they are used and the effects of obsolescence on their use.
          We hold FCC licenses to operate our satellite digital audio radio service and provide ancillary services. The following table outlines the years in which each of our licenses expires:
         
FCC license   Expiration year
SIRIUS FM-1 satellite
    2017  
SIRIUS FM-2 satellite
    2017  
SIRIUS FM-3 satellite
    2017  
SIRIUS FM-4 satellite(1)
    2017  
SIRIUS FM-5 satellite
    2017  
SIRIUS FM-6 satellite
    (2)  
XM-1 satellite
    2014  
XM-2 satellite
    2014  
XM-3 satellite
    2013  
XM-4 satellite
    2014  
XM-5 satellite
    2018  
 
(1)   In 2010, we retired the FM-4 ground spare satellite. We still maintain the FCC license for this satellite.
 
(2)   We hold an FCC license for the FM-6 satellite. The FCC license will expire eight years from launch of this satellite.
          Prior to expiration, we are required to apply for a renewal of our FCC licenses. The renewal and extension of our licenses is reasonably certain at minimal cost, which is expensed as incurred. Each of the FCC licenses authorizes us to use the broadcast spectrum, which is a renewable, reusable resource that does not deplete or exhaust over time.
          In connection with the Merger, $250,000 of the purchase price was allocated to the XM trademark. As of June 30, 2011, there were no legal, regulatory or contractual limitations associated with the XM trademark.
          Our annual impairment assessment of our indefinite intangible assets is performed as of October 1st of each year. An assessment is made at other times if events or changes in circumstances indicate that it is more likely than not that the assets have been impaired. As of June 30, 2011, there were no indicators of impairment and no impairment loss was recorded for intangible assets with indefinite lives during the three and six months ended June 30, 2011 and 2010.
     Definite Life Intangible Assets
          Subscriber relationships are amortized on an accelerated basis over 9 years, which reflects the estimated pattern in which the economic benefits will be consumed. Other definite life intangible assets include certain licensing agreements, which are amortized over a weighted average useful life of 9.1 years on a straight-line basis.
          Amortization expense for definite life intangible assets was $14,960 and $16,818 for the three months ended June 30, 2011 and 2010, respectively, and $30,263 and $34,114 for the six months ended June 30, 2011 and 2010, respectively. Expected amortization expense for the remaining period in 2011, each of the years 2012 through 2015 and for periods thereafter is as follows:
         
Year ending December 31,   Amount  
Remaining 2011
  $ 28,817  
2012
    53,680  
2013
    47,357  
2014
    38,879  
2015
    37,553  
Thereafter
    62,485  
 
     
Total definite life intangibles assets, net
  $ 268,771