Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

v2.4.0.8
Intangible Assets
 6 Months Ended
Jun. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
Intangible Assets

As a result of the Merger, certain intangible assets formerly held by XM Satellite Radio Holdings Inc. were recorded at fair value. Intangible assets consist of the following:
 
 
 
June 30, 2013
 
December 31, 2012
 
Weighted Average
Useful Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net Carrying
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

 
(252,826
)
 
127,174

 
380,000

  
(233,317
)
 
146,683

Licensing agreements
9.1 years
 
78,289

 
(49,169
)
 
29,120

 
78,489

  
(44,161
)
 
34,328

Proprietary software
6 years
 
16,552

 
(13,087
)
 
3,465

 
16,552

  
(12,777
)
 
3,775

Developed technology
10 years
 
2,000

 
(983
)
 
1,017

 
2,000

  
(883
)
 
1,117

Leasehold interests
7.4 years
 
132

 
(88
)
 
44

 
132

  
(79
)
 
53

Total intangible assets
 
 
$
2,810,627

 
$
(316,153
)
 
$
2,494,474

 
$
2,810,827

  
$
(291,217
)
 
$
2,519,610



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 satellite licenses
 
Expiration year
SIRIUS FM-1
 
2017
SIRIUS FM-2
 
2017
SIRIUS FM-3
 
2017
SIRIUS FM-5
 
2017
SIRIUS FM-6 (1)
 

XM-1
 
2014
XM-2
 
2014
XM-3
 
2021
XM-4
 
2014
XM-5
 
2018

(1)
We hold an FCC license for our FM-6 satellite, which will expire eight years from when this satellite is launched and placed into operation.

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, 2013, 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 the fourth quarter of each year. An assessment is performed at other times if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. If the carrying value of the intangible assets exceeds its fair value, an impairment loss is recognized. As of June 30, 2013, 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, 2013 and 2012.

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 all definite life intangible assets was $12,345 and $13,651 for the three months ended June 30, 2013 and 2012, respectively, and $24,936 and $27,577 for the six months ended June 30, 2013 and 2012, respectively. Expected amortization expense for the remaining period in 2013, each of the fiscal years 2014 through 2017 and for periods thereafter is as follows:
Year ending December 31,
  
Amount
2013
  
$
22,391

2014
  
38,877

2015
  
35,561

2016
  
32,546

2017
  
19,582

Thereafter
  
11,863

Total definite life intangible assets, net
  
$
160,820