Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554
) ) IB Docket No. 12-282 ) DA 12-1569 Application of ) ) IBFS File Nos. SES-T/C-20120821-00776 Liberty Media Corporation ) SES-T/C-20120821-00777 ) SES-T/C-20120821-00792 For Consent to Transfer of De Jure ) SAT-T/C-20120817-00133 Control of Sirius XM Radio Inc. ) SAT-T/C-20120817-00134 ) SAT-T/C-20120817-00135 ) SAT-T/C-20120817-00136 ) ) ULS File Nos. 0005353974 and ) 0005353880 ) ) Experimental License File Nos. 0019-EX-TU- 2012, 0020-EX-TU-2012 ) ______)
RESPONSE OF LIBERTY MEDIA CORPORATION TO COMMENTS OF ALEXANDER BERGMANN ON APPLICATIONS FOR CONSENT TO TRANSFER OF CONTROL
Robert L. Hoeg1e Timothy J. Fitzgibbon Thomas F. Bardo Nelson Mullins Riley & Scarborough LLP 101 Constitution Avenue, NW, Suite 900 Washington, D.C. 20001 (202) 712-2800
Counsel for Liberty Media Corporation TABLE OF CONTENTS
SUMMARY ...... i BACKGROUND ...... 2 I. The Bergmann Comments Are Procedurally Defective and Provide No Factual or Legal Basis for Denying the Applications ...... : ...... 4 II. The Bergmann Comments Concern Issues Unrelated to this Transaction ...... 5 III. The Commission Already Has Passed Upon Liberty Media's Qualifications ...... 8 IV. Grant of the Applications Will Serve the Public Interest ...... 10 CONCLUSION ...... 13 SUMMARY
By Public Notice issued October 2, 2012, the Commission accepted for filing the
above-captioned Applications for consent to transfer of control of Sirius XM Radio, Inc. to
Liberty Media Corporation, granted certain waivers requested by Liberty Media concerning
the Applications and established November 1, 2012 as the deadline for filing petitions seeking to deny the Applications. No petitions to deny have been filed, and only Alexander Bergmann has submitted "Comments" in response to the Public Notice.
The Bergmann Comments are procedurally and substantively deficient and should be dismissed or summarily denied. The Bergmann Comments provide no information regarding the nature of Bergmann's interest in Sirius or how that interest might be adversely affected by grant of Liberty Media's Applications. Section 309(d) requires that petitions to deny be supported by affidavit, but Bergmann has provided none. He also failed to serve his
Comments on the Applicants as required by statute. Even if considered as an informal objection, the Bergmann Comments fail to allege any facts showing that grant of the
Applications would be prima facie inconsistent with the public interest. Instead, Bergmann has provided a rambling, often incoherent, series of questions and conclusions that appear to be predicated upon his interpretation of international accounting standards that: (a) are irrelevant to the Commission's statutory responsibility in considering applications for transfer of control of Commission licensees; and (b) have never been adopted by the Securities and Exchange
Commission for use by reporting entities in the United States.
The record shows that the public interest will be served by grant of Liberty Media's
Applications. Liberty Media's 2009 transaction with Sirius preserved Sirius and its innovative programming services when Sirius was facing imminent bankruptcy. Since then, the
i Commission has granted numerous applications filed by Sirius in which Liberty Media was identified as a party to the application, finding each time that grant of the application would serve the public interest. The Bergmann Comments provide no factual or legal basis for the
Commission to reach any different conclusion on the Applications for consent to the transfer of control of Sirius. The Commission should dismiss or summarily deny the Bergmann
Comments and grant Liberty Media's Applications.
ii Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554
) Application of ) ) Liberty Media Corporation ) IB Docket No. 12-282 ) DA 12-1569 For Consent to Transfer of De Jure ) Control of Sirius XM Radio Inc. ) ______)
Liberty Media Corporation ("Liberty Media") submits this response to the Comments
filed by Alexander Bergmann ("Bergmann Comments") regarding the pending applications for
consent to transfer of control of Sirius XM Radio Inc. ("Sirius") to Liberty Media
(collectively, "Applications"). 1 The Bergmann Comments do not comply with the basic
procedural requirements of the Communications Act concerning petitions to deny and should
be dismissed. Even if considered as an informal objection, the Commission should summarily
deny the Bergmann Comments and grant the Applications because: (a) Bergmann has provided
no factual or legal basis for denying the Applications or designating them for hearing; (b) the
Commission already has passed upon the qualifications of Liberty Media repeatedly in
numerous applications filed by Sirius since 2009 in which Sirius identified Liberty Media as a
party to the applications; and (c) grant of the Applications serves the public interest.
1 The Applications were filed on August 17, 2012 and were accepted for filing on October 2, 2012. See Public Notice, DA 12-1569, released October 2, 2012 ("Public Notice") at 1. The file numbers of the various applications filed by Liberty Media are set forth in the Public Notice and the caption of this filing. Background
In early 2009, when Sirius was facing the prospect of immediate bankruptcy, 2 Liberty
Media loaned $530 million to Sirius. As part of the consideration for that loan, Liberty Media
received Preferred Shares of Sirius that are convertible into common shares of Sirius equal to
40 percent of the outstanding common stock of Sirius. At the time, the Chief Executive
Officer of Sirius stated that Sirius was "pleased to have come to this agreement with Liberty
Media, particularly in light of today's challenging credit markets," and that Liberty Media's
loan was "a vote of confidence" in Sirius that "allows us to continue to provide the great
content and innovative programming our subscribers know and love." See Press Release,
Exhibit 99.1 to February 17, 2009 Form 8-K.
The agreements pursuant to which Liberty Media provided the loan to Sirius and obtained the Preferred Shares included certain restrictions on Liberty Media's ownership and voting rights. Those restrictions expired on March 6, 2012. 3 Since then, Liberty Media has converted slightly less than one-half of its Preferred Shares4 and has purchased additional common shares of Sirius such that it currently holds approximately 1,904,291,000 common
2 In a filing with the Securities and Exchange Commission ("SEC") dated February 13, 2009, Sirius stated that it was "in discussions with others with respect to transactions that could refinance some of our and our subsidiaries' indebtedness," but could not assure "that any of these transactions will be successfully consummated," and further advised that "[i]f these transactions are not consummated, we may be forced to file for bankruptcy protection as early as February 17, 2009." See Prospectus Supplement dated February 13, 2009, a copy of which is attached hereto as Exhibit I, at page 9 of 21. Sirius subsequently announced that it had reached an agreement with Liberty Media on February 17, 2009. See Sirius Form 8-K, filed with the SEC on February 17, 2009, a copy of which is attached hereto as Exhibit 2 ("Febmary 17, 2009 Form 8-K").
3 Liberty Media informed the Commission of the expiration of these contractual restrictions in meetings with the Commission staff, by letter, and in applications seeking Commission consent to the transfer of de facto control of Sirius, which were filed on March 20, 2012. The Commission dismissed those applications in May 2012, finding that they were "defective with respect to 'execution' and 'other matters of a formal character."' See Letter dated May 4, 2012 to Robert L. Hoegle, 27 FCC Red. 5036, 5037 (Int'l Bur. & OET 2012); WTB Notices of Dismissal, Reference Nos. 5370148 and 5370149, dated May 10, 2012.
4 Liberty Media informed the Commission of its conversion of 6,249,900 Preferred Shares of Sirius by letter dated September 17, 2012.
2 shares of Sirius (approximately 36.7 percent of the outstanding common shares) in addition to
6,250,100 remaining shares of B-1 Preferred Stock. 5
Upon conversion of the remaining Preferred Shares, Liberty Media will hold
1,293,509,076 additional common shares of Sirius. Exchanging certain Senior Subordinated
Notes will yield 5,866,666 additional shares of Sirius common stock, such that Liberty Media
would hold 3,203,666,978 common shares of Sirius, or approximately 49.5 percent of the total common shares outstanding.' Liberty Media also has stated that it intends to purchase additional shares of Sirius in the open market. However, consistent with the requirements of
Section 310(d) of the Communications Act, Liberty Media is seeking Commission consent before converting a sufficient number of Preferred Shares such that Liberty Media will own more than 50 percent of the total outstanding common shares of Sirius.
On October 2, 2012, the Commission issued a Public Notice accepting the Applications for filing, granting certain waivers requested by Liberty Media, and setting November 1, 2012 as the deadline for filing petitions seeking to deny the Applications. No petitions to deny were filed. The Bergmann Comments are the only filing received by the Commission in response to the Public Notice. Those Comments do not comply with the procedural requirements for petitions to deny and do not raise any facts showing that grant of the Applications would be prima facie inconsistent with the public interest. Consequently, the Commission should dismiss or summarily deny the Bergmann Comments and promptly grant the Applications.
5 See Sirius Form 10-Q filed with the SEC on November 1, 2012 at 14, relevant portions of which are attached as Exhibit 3 hereto. The percentage is based on 5, 192,364,730 total shares issued and outstanding, as reported at page 20 of the Form 10-Q Report.
6 See Schedule 13-D filed with the SEC on September 17, 2012, a copy of which is attached as Exhibit 4 hereto.
3 I. The Bergmann Comments Are Procedurally Defective and Provide No Factual or Legal Basis for Denying the Applications.
Section 309(d) of the Communications Act states that a petition to deny a pending
application "shall contain specific allegations of fact sufficient to show that the petitioner is a
party in interest and that grant of the application would be prima facie inconsistent with" the
public interest. 47 U.S.C. §309(d)(l). The Act also requires that the relevant "allegations of
fact ... be supported by affidavit of a person or persons with personal knowledge thereof." !d.
Finally, Section 309(d) requires the petitioner to serve a copy of the petition upon the applicant. !d. 7 Bergmann has failed to comply with every one of these procedural requirements, and his "Comments" should be dismissed without consideration or summarily denied.
Although not captioned as a Petition to Deny, the Bergmann Comments clearly seek denial of the Applications, among other relief. See, e.g., Comments at 2-4, 8-10. However,
Bergmann does not even attempt to demonstrate that he qualifies as a "party in interest" and provides absolutely no "specific allegations of fact" in his submission to establish his standing to petition to deny the Applications. Bergmann never identifies his specific interest in Sirius or how that interest would be adversely affected by the proposed transfer of control to Liberty
Media.
Likewise, the Bergmann Comments offer no specific factual allegations to demonstrate that grant of Liberty Media's Applications would be prima facie inconsistent with the public interest. Bergmann also fails to provide the required affidavit to support his comments.
7 See also Section 1.939(c) and (d) and Section 25.154(a)(4) of the Commission's Rules, which require petitioners seeking to deny applications for wireless and satellite services to: (i) include specific allegations of fact, supported by affidavit, demonstrating fhat fhe petitioner is a party in interest and that grant of fhe application would be prima facie inconsistent with the public interest; and (ii) serve a copy of the petition on fhe applicant and all other interested parties.
4 Instead, the Bergmann Comments consist of ten pages of rambling, often incoherent, questions
and seemingly unrelated statements that are devoid of any allegation that grant of the
Applications would violate the Communications Act, contravene relevant FCC rules or policies, or otherwise be prima facie inconsistent with the public interest. Finally, Bergmann did not serve a copy of his Comments upon Liberty Media or its counsel in this proceeding as required by Section 309(d) of the Communications Act and the Commission's Rules.
Because Bergmann failed to provide specific allegations of fact demonstrating that he is a party in interest, failed to support his Comments with affidavits from persons with personal knowledge, and failed to serve his Comments upon Liberty Media, the Commission should dismiss the Bergmann Comments without consideration. Even if the Commission considers the
Bergmann Comments as an "informal objection" to the Applications, Bergmann has failed to allege any specific facts to show that grant of the Applications would be prima facie inconsistent with the public interest. See, e.g., Joseph F. Bryant, 6 FCC Red. 6121 (Vid. Div.
1991), at ~2 ("informal objectors must still set forth sufficient facts to justifY the relief sought" in their submissions). Consequently, even if it considers them as an "informal objection," the
Commission should summarily deny the Bergmann Comments and grant the Applications.
II. The Bergmann Comments Concern Issues Unrelated to this Transaction.
The Commission has stated that "[t]he goal of our license transfer application review process is to allow parties to realize the economic efficiencies associated with the transaction, while ensuring that any harms resulting from the license transfer are mitigated and some portion of the benefits of the transfer are passed on to the public." See General Motors Corp. and Hughes Electronics Corp., Transferors, and the News Corporation Limited, Transferee,
19 FCC Red. 473 (2004) ("News Corp. Order"), at ~131. However, the Commission long has
5 recognized "the temptation and tendency for parties to use the license transfer review
proceeding as a forum" to raise disputes and other issues "that have little if any relationship to the transaction or to the policies and objectives of the Communications Act." See Applications for Consent to the Transfer of Control of Licenses and Section 2I4 Authorizations by Time
Warner, Inc. and America Online, Inc. to AOL Time Warner Inc., 16 FCC Red 6547 (2001), at ,6. Thus, the Commission repeatedly has advised that an "application for transfer of control of Commission licenses is not an opportunity to correct any and all perceived
imbalances in the industry." News Corp. Order at ,131.
The Bergmann Comments do not address the qualifications of Liberty Media as the proposed transferee of the Commission licenses issued to Sirius. Instead, the Comments appear to take issue with the Commission's determination that ownership of more than
50 percent of the voting stock of an applicant constitutes de jure control and to suggest instead that the appropriate threshold for de jure control should be ownership of 80 percent or more of the voting stock of the licensee. See, e.g., Bergmann Comments at 2, 4 ("The FCC or SEC or
Justice Department have to deny an application (Liberty Media) ... unless clear 80% of share purchase by Liberty Media. .. .The license should not be transfer to Liberty Media until full control (80%) and no SEC or FCC independence compromise."). Specifically, the Bergmann
Comments suggest that IFRS 10 offers "a single definition of control for all entities" that should be used for all purposes, including determining control of an FCC licensee. See
Bergmann Comments at 2. 8 Bergmann claims that the "IFRS 10" standard for determining
8 "!FRS 10" refers to International Financial Reporting Standard 10 issned by the International Accounting Standards Board ("IASB"). Although the SEC is evaluating whether the !FRS should be incorporated into the United States financial reporting system, a Report issued by the SEC's Office of Chief Accountant in July 2012 reached no decision on that question, but noted that the vast majority of participants in the United States capital markets do not support the adoption of the !FRS as authoritative guidance on accounting issues in this country. See Work Plan for the Consideration of Incorporating International Financial Reporting Standards in the
6 control (for certain accounting purposes) "does not provide 'bright lines' and requires
consideration of many factors." !d. Bergmann appears to argue that if Liberty Media does not
own at least 80 percent of the Sirius stock, the Commission should hold a hearing to explore
the innumerable factors and questions listed by Bergmann at pages 2-8 of his Comments before
it can grant the Liberty Media Applications.
However, the Commission consistently has held that ownership of 50 percent or more
of the voting stock of a corporate licensee is sufficient to confer de jure control upon the
majority shareholder. See, e.g., Forbearance from Section 310(d) Regarding Non-Substantial
Assignments of Wireless Licenses and Transfers of Control Involving Telecommunications
Carriers, 13 FCC Red. 6293 (1998), at ,7 ("De jure control is control as a matter of law. It is
present where a shareholder or shareholders voting together own or control fifty percent or more of the licensee's voting shares."); Fox Television Stations, 10 FCC Red. 8452 (1995), at ,151 (de jure control typically is determined by whether a shareholder owns more than fifty percent of a corporation's voting stock). The Commission also consistently has determined that lower thresholds of common stock ownership are sufficient to confer de facto control upon a substantial minority shareholder where the remaining voting stock of the licensee is widely held. See, e.g., News Corp. Order at ,14 (transfer of a 34 percent interest in DIRECTV to
News Corp. constituted a transfer of de facto control); News Corp. and The DIRECTV Group,
Financial Reponing System for U.S. Issuers, Final Staff Report, Office of the Chief Accountant, United States Securities and Exchange Commission, July 13, 2012 at 2 ("However, early in the Staff's research, it became apparent to the Staff that pursuing the designation of the [!FRS] standards of the IASB as authoritative was, among other things, not supported by the vast majority of participants in the U.S. capital markets and did not ,appear to be consistent with the methods of incorporation employed by the other major capital markets around the world."). Thus, Bergmann would have the Commission deny the Liberty Media Applications, or designate them for hearing, on the basis of international accounting standards that: (a) are unrelated and contrary to the Commission's statutory role in evaluating applications for transfer of control of Commission licensees; and (b) have not been adopted by the SEC, the federal agency principally responsible for evaluating the appropriateness of those standards.
7 Inc., Transferors, and Liberty Media Corp., Transferee, for Authority to Transfer Control, 23
FCC Red. 3265 (2008), at ~2 ("Liberty Media-DIRECTV Order") (Liberty Media determined
to have de facto control over DIRECTV by virtue of its "40.36% interest in DIRECTV,
making it the largest stockholder by far").
Here, there is no dispute that Liberty Media: (a) currently holds approximately
37 percent of the outstanding common stock of Sirius; (b) also holds 6,250,100 additional
Preferred Shares that are convertible into common shares of Sirius; and (c) has stated that it
will acquire additional common shares of Sirius and, upon receiving Commission approval,
will convert its Preferred Shares such that it will hold more than 50 percent of the outstanding common stock of Sirius. Likewise, it is undisputed that no other entity holds even 10 percent
of the outstanding common stock of Sirius. In his Comments, Bergmann does not dispute any of those facts or provide any other facts suggesting that grant of the Applications would be contrary to the public interest. Thus, the Bergmann Comments offer no basis for denial of the
Applications under the current and long-standing criteria used by the Commission to determine de jure control. Nor do Bergmann's Comments offer any reasoned basis for the Commission to reconsider its standard to determine control of its licensees or to revise the Commission's long-standing criteria for determining de jure control.
III. The Commission Already Has Passed Upon Liberty Media's Qualifications.
Since Liberty Media first acquired its interest in Sirius in 2009, Sirius has filed numerous applications for construction permits, licenses and other authorizations, in which
Sirius disclosed that Liberty Media was a party to the application, held a substantial ownership interest in Sirius, and had several designees on the Sirius Board of Directors. In each of those
8 applications, Sirius represented that grant of the application would serve the public interest,
and in each case the Commission agreed and granted the application. 9
For example, in the Application of Satellite CD Radio, Inc. for Modification to Extend
License Term and to De-Orbit the FM-1, FM-2 and FM-3 Satellites (File No. SAT-MOD-
20091119-00123), filed November 19, 2009, Sirius stated that grant of its application to extend
the license term of certain satellites for an additional seven years "will serve the public
interest" and identified Liberty Media as follows: 10
Satellite CD Radio, Inc. is a wholly owned subsidiary of Sirius XM Radio, Inc. ("Sirius XM"). Liberty Media Corporation, a Delaware corporation, holds a 40% ownership interest in Sirius XM. The address of Liberty Media Corporation is 12300 Liberty Boulevard, Englewood, Colorado 80112. Dr. John C. Malone, a United States citizen, owns shares of Liberty Media Corporation representing approximately 34.4% of the aggregate voting power of the company. Dr. Malone's business address is 12300 Liberty Boulevard, Englewood, Colorado 80112.
No other entities or individuals own a 10% or greater direct or indirect interest in Sirius XM.
The same exhibit also disclosed that the following designees of Liberty Media were directors of Sirius: John C. Malone, Gregory B. Maffei and David J.A. Flowers. That application was placed on Public Notice on December 18, 2009 11 and granted by the Commission on
February 5, 2010. See International Bureau Report No. SAT-00664, DA No. 10-236, released
February 10, 2010.
9 Exhibit 5 lists the applications filed by Sirius since March 2009 in which Liberty Media was identified as a party to the application, the date that each application was put on Public Notice as accepted for filing, and the date that each was granted by the Commission.
10 See Exhibit responding to Question No. 40 on FCC Form 312, which requires a corporate applicant applying for a space station license to "attach as an exhibit the names, address, and citizenship of those stockholders owning a record and/or voting 10 percent or more of the Filer's voting stock and the percentages so held" as well as "the names and addresses of the officers and directors of the Filer."
11 See International Bureau Report No. SAT-00655, released December 18, 2009.
9 Thereafter, the Commission accepted for filing and granted at least seven more Sirius
applications in which Liberty Media was disclosed as a party to the application, finding each
time that grant of the application would serve the public interest. See Exhibit 5 hereto. The
most recent application was granted in September 2011. Thus, since March 2009, the
Commission repeatedly has passed upon the qualifications of Liberty Media as a party to
various applications filed by Sirius and has concluded that the public interest would be served through grant of those applications. The Bergmann Comments provide no basis for reaching any different conclusion on the current Applications for consent to the transfer of control of
Sirius.
IV. Grant of the Applications Will Serve the Public Interest.
Section 310( d) of the Communications Act requires that the Commission determine whether the transfer of control of Sirius to Liberty Media will serve the public interest, convenience and necessity. See 47 U.S. C. §310(d). The public interest analysis requires the
Commission to determine initially whether the transaction violates the Communications Act, other applicable statutes, or the Commission's rules. See, e.g., Liberty Media-DIRECTV
Order at ~22. If the transaction does not violate the Communications Act, or any other statute or regulation, the Commission considers whether the transaction will result in public interest harms by frustrating or impairing the objectives or the implementation of the Communications
Act. Id. Here, no petitions to deny were filed against the Applications, and the Bergmann
Comments contain no specific allegations of fact to demonstrate that grant of the Applications would be contrary to the Communications Act or to any rule or policy of the Commission.
10 In fact, the only mention of potential public interest harms contained anywhere in the
Bergmann Comments consists of the conclusory statements that "Liberty Media Control and
De jure change can destroy the value and purpose of Sirius XM to provide satellite radio" and
that "Malone will destroy the satellite only radio." Bergmann Comments at 3, 8. As a
threshold matter, such conclusory allegations cannot substitute for the specific allegations of fact required by Section 309(d) of the Act. See, e.g., Kowal v. MCI Communications Corp.,
16 F.3d 1271, 1276 (D.C. Cir. 1994) (a court need not accept "legal conclusions cast in the form of factual allegations"); American Mobile Radio Corp., 13 FCC Red. 8829 (Int'l Bur.
1997), review denied, 16 FCC Red. 21431 (2001), at ~21 (petition to deny was "replete with conclusory statements that are unsupported by specific facts" and therefore "failed to satisfy the necessary procedural requirements."). Bergmann not only failed to support his conclusory statements with the affidavits required by Section 309( d), he also failed to provide any specific factual allegations to support his conclusions.
Moreover, Bergmann's conclusory statements that Liberty Media or Mr. Malone will
"destroy" the Sirius satellite radio service are directly contradicted by the statements of Sirius'
Chief Executive Officer, who credited Liberty Media with saving Sirius from bankruptcy and enabling it "to continue to provide the great content and innovative programming our subscribers know and love." Finally, and most significantly, the hypocrisy of the Bergmann
Comments is best demonstrated by the fact that Bergmann purports to oppose Liberty Media's exercise of control over Sirius through ownership of 50 percent of the company's stock, but apparently would have no problem with Liberty Media owning a substantially larger share of the company. See Bergmann Comments at 8 ("Liberty Media control to buy All the share will be a clear and right approach ... ").
11 The Commission also evaluates "whether the transaction is likely to produce public
interest benefits" and weighs "any potential public interest harms of the proposed transactions
against any potential public interest benefits" to determine whether, "on balance," the
proposed transaction will serve the public interest, convenience and necessity. See Liberty
Media-DIRECTV Order at ,,22, 140. In "deciding whether a claimed benefit should be considered and weighed against potential harms," the Commission considers whether the public interest benefits are transaction-specific, verifiable, and "flow through to consumers," rather than inuring "solely to the benefit of the company." !d. at ,140. Where, as here, there are no identifiable public interest harms arising from the transaction, the "balance" of benefits to harms is simple and clearly supports grant of the Applications.
There is no question that the public has benefitted from Liberty Media's transactions with Sirius in 2009. When Liberty Media made its $530 million loan to Sirius, the bankruptcy of Sirius was imminent. Liberty Media's loan preserved the "innovative programming" enjoyed by millions of subscribers, as well as the other "public interest benefits" cited by the
Commission in approving the Sirius-XM merger. See Applications for Consent to the Transfer of Control of Licenses from XM Satellite Radio Holdings Inc., Transferor, to Sirius Satellite
Radio Holding, Inc., Transferee, 23 FCC Red. 12348 (2008), at ,83, 88. Thus, the public has been realizing the benefit of Liberty Media's transaction with Sirius for more than three years and will continue to do so. 12
12 Although Bergmann contends that "Liberty Media and Malone will be freed from standstill and control limitations" if the Applications are granted (Comments at 9), the fact is that the standstill and other restrictions contained in the Investment Agreement expired under the te1ms of that Agreement in March 2012.
12 In contrast, there would be significant harm to the public interest if Liberty Media were
precluded from realizing the full benefit of its transaction with Sirius. The Commission
repeatedly has recognized the importance of fostering investment in new services and ensuring
that its policies do not undermine legitimate investment incentives. 13 Liberty Media invested in
Sirius in 2009, as Sirius was facing bankruptcy. Its loan helped to preserve the company and
the innovative service it provides. During the three years since Liberty Media obtained its
ownership interest in Sirius, Sirius has filed numerous applications in which it identified
Liberty Media as a party to the application, and the Commission has concluded repeatedly that
the public interest would be served through grant of those applications. Under these
circumstances, to deny Liberty Media the full benefit of the bargain it struck three years ago
would send a chilling message to other potential lenders or investors facing similar investment decisions in the future.
CONCLUSION
The Bergmann Comments do not comply with the procedural requirements of
Section 309(d) of the Communications Act concerning petitions to deny. Even if the
Commission considers the Bergmann Comments as informal objections, those Comments· provide absolutely no factual or legal basis for denial of the Liberty Media Applications and purport to raise issues unrelated to the proposed transfer of control to Liberty Media. The
13 The Commission has recognized that it is in the public interest for the Commission's transfer of control procedures to facilitate investment in entities licensed by the Commission and to permit investors to recognize the full value of their investments. See, e.g., AmericaSky C01p., Application for Authority for Transfer of Control, 11 FCC Red. 21134 (Int'l Bur. 1996), at ~20.
13 Bergmann Comments should be dismissed or summarily denied and the Liberty Media
Applications should be granted.
Respectfully submitted,
LIBERTY MEDIA CORPORATION
BY: Robert L. Hoegle, Esquire Timothy J. Fitzgibbon, Esquire Thomas F. Bardo, Esquire
Nelson Mullins Riley & Scarborough LLP 101 Constitution Avenue, N.W., Suite 900 Washington, D.C. 20001 (202) 712-2800
November 13, 2012
14 CERTIFICATE OF SERVICE
I, Thomas F. Bardo, do hereby certify that a copy of the foregoing Response of Liberty
Media Corporation to Comments of Alexander Bergmann on Applications for Consent to
Transfer of Control was served by first class U.S. mail, postage prepaid, this 13'h day of
November 2012 on the following:
Alexander Bergmann 6513 Baythorne Road Baltimore, MD 21209
Thomas F. Bardo
15 EXHIBIT 1 424B7 Page 1 of21
424B7 1 y74671b7e424b7.htm PROSPECTUS SUPPLEMENT
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Filed pursuant to Rule 424(b)(7) Registration File No.: 333-156495
CALCULATION OF REGISTRATION FEE
(•roposed 1\rlaximum Proposed Maximum Title of Each Class of Amount to be Offering Price per Aggregate Offering Amount of Securities to be Registered Registered Shure Price Rc,gistmtion Fee Common Stock, par value $0.00 I per share 59,178,819 shares $ 0.074(1) $ 4,379,233(1) $ 172(2) (I) Estimated in accordance with Rule 457(c) of the Securities Act of 1933 solely for the purposes of calculating the registration fee, based on the average of the high and low sales prices of Sirius XM Radio Inc. common stock as reported on the NASDAQ Global Select Market on February 12, 2009, which was $0.074 per share. (2) Pursuant to Rule 457(p) under the Securities Act of 1933, unused filing fees of $7,614 have already been paid with respect to unsold securities, of which $172 is being offset against the registration fee due for this offering and of which $7,442 remains available for future registration fees. No additional registration fee has been paid with respect to this offering.
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Prospectus Supplement (To Prospectus dated December 30, 2008)
59,178,819 Shares Sirius XM Radio Inc. COMJ'v!ON STOCK This prospectus supplement relates to the offering of up to 59,178,819 shares of our common stock, par value $0.00 I per share. The shares are being offered for sale from time to time by the selling stockholders named herein. The selling stockholders, or any of their successors in interest, may offer the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. We will not receive any proceeds from the selling stockholders' sale of any such shares. We originally issued the shares pursuant to a note purchase agreement, dated February 13, 2009, among Sirius XM Radio Inc., our wholly owned subsidiaries XM Satellite Radio Holdings Inc., XM 1500 Eckington LLC and XM Investment LLC, and the selling stockholders. For further information regarding the note purchase agreement, see "Selling Stockholders" beginning on page S-8 of this prospectus supplement. The shares were issued in private placement transactions exempt from the registration requirements of the Securities Act of !933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof. We are not selling any shares of our common stock under this prospectus supplement and the accompanying prospectus, and we will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders, but we have agreed to pay certain registration expenses relating to such shares. The selling stockholders from time to time may offer and sell the shares of our common stock held by them directly or through underwriters, broker-dealers or agents, who may receive compensation in the fonn of discounts, commissions or concessions. For further information regarding the possible methods by which shares may be distributed, see "Plan of Distribution" beginning on page S-12 of this prospectus supplement. Our common stock is listed on the Nasdaq Global Select Market under the symbol "SIR!." On February 12, 2009, the last reported sale price of our common stock on the Nasdaq Global Select Market was $0.074 per share.
/uvestiug iu our common stock involves risks, See ''Risk Factors" begiuuiug 011 page S-4 of this prospectus .mpplemeut. Neither the Securities aud Exc/lauge Commi.vsiou uor auy slate securities commission has approved or disapproved of these secarities or determiued or passed upouthe accuracy or adequacy ofthis prospectus or the accompanying prospectus. Auy represeutatlou to the colllfllry is a crimlua/ offense. February 13,2009
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Page PROSPECTUS SUPPLEMENT ABOUT THIS PROSPECTUS SUPPLEMENT ii SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS ii SUMMARY 1 RISK FACTORS 4 USE OF PROCEEDS 7 PRICE RANGE OF COMMON STOCK . 7 DIVIDEND POLICY 7 SELLING STOCKHOLDERS 8 CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S HOLDERS 9 PLAN OF DISTRIBUTION I2 VALIDITY OF SECURITIES I4 EXPERTS I4 INCORPORATION BY REFERENCE 14 WHERE YOU CAN FIND MORE INFORMATION 15
PROSPECTUS ABOUT THIS PROSPECTUS I SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS 2 RISK FACTORS 3 SIRIUS XM RADIO INC. 3 RATIO OF EARNINGS TO FIXED CHARGES, COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS 5 USE OF PROCEEDS 5 DESCRIPTION OF DEBT SECURITIES 6 DESCRIPTION OF CAPITAL STOCK 17 DESCRIPTION OF DEPOSITARY SHARES 2I DESCRIPTION OF WARRANTS 24 DESCRIPTION OF STOCK PURCHASE CONTRACTS 27 DESCRIPTION OF UNITS 28 BOOK-ENTRY SECURITIES 29 PLAN OF DISTRIBUTION 3 I LEGAL MATTERS 32 EXPERTS 32 INCORPORATION BY REFERENCE 32 WHERE YOU CAN FIND MORE INFORMATION 33
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ABOUT THIS PROSPECTUS SUPPLEMENT This document is in two parts. The first part is this prospectus supplement, which describes the specific terms of this offering. The second part consists of the accompanying prospectus, which gives more general infmmation, some of which may not be applicable to this offering. lfthe description of the offering varies between this prospectus supplement and the accompanying prospectus, you should rely on the information in this prospectus supplement. You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not authorized any other person to provide you with different infmmation. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the selling stockholders are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since those dates.
In this prospectus supplement and the accompanying prospectus, unless otherwise indicated, • "Sirius/' "we," "us," "our" and similar tenns refer to Sirius XM Radio [nc. and its subsidiaries, "XM Holdings" and "Holdings" refer to XM Satellite Radio Holdings Inc., our direct subsidiary, and "XM Inc." refers to XM Satellite Radio Inc., the direct subsidiary of XM Holdings.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS This prospectus supplement, the accompanying prospectus, and the documents incorporated by reference herein, include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Without limitation, the words "anticipates," "believes," "estimates/' ~'expects," "intends," "plans," "will" and similar expressions are intended to identity forward-looking statements. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future, including statements relating to growth, expected levels of expenditures and statements expressing general optimism about future operating results, are forward-looking statements. Similarly, statements that describe our business strategy, outlook, prospective financial condition, objectives, plans and intentions also are forward looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. These risks and uncertainties include, but are not limited to, those described in "Risk Factors" included in this prospectus supplement and the accompanying prospectus and i11 our Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which we filed with the Securities and Exchange Commission ("SEC") on February 29, 2008, as amended by Amendment No. I on Form 10-K/A, which was filed with the SEC on April29, 2008, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2008, which was filed with the SEC on November 12, 2008, XM Holdings' Annual Report on Form 10-K for the fiscal year ended December 31, 2007, which was filed with the SEC on February 28,2008, as amended by Amendment No. I, which was filed with the SEC on April29, 2008, and XM Holdings' Qumterly Report on Form 10-Q for the quarter ended September 30, 2008, which was filed with the SEC on November 12, 2008. These cautionary statements should not be construed by you to be exhaustive and are made only as of the date of this prospectus supplement. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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SUMMARY This summary highlights selected information about us and the offering ofshares of our common stock. This summmy is not complete and does not contain all ofthe iliformation that may be important to you. You should read carejitlly this entire prospectus supplement and the accompanying prospectus, including the "Risk Factors" section, and the other documents that we refer to and incorporate by reference herein for a more complete understanding ofus and this offering. In particular, we incorporate by reference important business and financial information into this prospectus supplement and the accompanying prospectus.
About Sirius XM Radio Inc. We provide satellite radio in the United States. We broadcast music, sports, news, talk, entertainment, traffic and weather for a subscription fee through proprietary satellite radio systems-the Sirius system and the XM system. On July 28, 2008, our wholly owned subsidiary, Vernon Merger Corporation, merged (the "Merger") with and into XM Satellite Radio Holdings Inc. and, as a result, XM Satellite Radio Holdings Inc. is now our wholly owned subsidiary. The Sirius satellite radio system consists of three in-orbit satellites, approximately 120 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios. The XM satellite radio system consists of four in-orbit satellites, over 700 terrestrial repeaters that receive and retransmit signals, satellite uplink facilities and studios. Subscribers can also receive music channels and ce1tain other channels over the Internet. Sirius and XM radios are primarily distributed through retailers, automakers and through our websites. On September 30, 2008, Sirius and XM radios were available at more than 20,000 retail locations. We also have agreements with every major automaker, including Acura!Honda, Aston Martin, Audi, Automobili Lamborghini, Bentley, BMW, Chrysler, Dodge, Ford, General Motors, Honda, Hyundai, Infiniti!Nissan, Jaguar, Jeep, Kia, Land Rover, Lincoln, Lexus/Toyota!Scion, Maybach, Mazda, Mercedes-Benz, Mercury, MINI, Mitsubishi, Rolls-Royce, Volvo and Volkswagen, to offer either Sirius or XM satellite radios as factory or dealer-installed equipment in their vehicles. Sirius and XM radios are also offered to customers of rental car companies, including Hertz and Avis. As of September 30, 2008, we had !8,920,91! subscribers compared with 8,321,785 subscribers as of December 3!, 2007 and 7,667,476 subscribers as of September 30, 2007. Our current subscriber total includes 9, 7!6,070 XM subscribers that we acquired as a result of the Merger. Our subscriber totals include subscribers under our regular pricing plans; subscribers that have prepaid, including payments received from automakers for prepaid subscriptions included in the sale or lease price of a new vehicle; active Sirius radios under our agreement with Hertz; active XM radios under our agre·ement with A vis; and subscribers to Sirius Internet Radio and XM Internet Radio, our Internet services.
Our primary source of revenue is subscription fees, with most of our customers subscribing on an annual, semi~annual, quarterly or monthly basis. We offer discounts for pre-paid and long-term subscriptions as well as discounts for multiple subscriptions. We also derive revenue from activation fees, the sale of advertising on select non-music channels, the direct sale of satellite radios and accessories, and other ancillary services, such as our Backseat TV, data and weather services. In certain cases, automakers include a subscription to our radio services in the sale or lease price of vehicles. The length of these prepaid subscriptions varies but is typically three months to one year. In many cases, we receive subscription payments from auto makers in advance of the activation of our service. We also reimburse various automakers for certain costs associated with satellite radios installed in their vehicles. We also have an interest in the satellite radio services offered in Canada. SIRIUS Canada Inc. ("Sirius Canada"), a Canadian corporation that we jointly own with Canadian Broadcasting Corporation and Standard Radio Inc., offers a satellite radio service in Canada. Sirius Canada offers 120 channels of commercial-ftee music and news. sports, talk and entertainment programming, including II channels offering Canadian content. Canadian Satellite Radio Holdings Inc. ("XM Canada"), a Canadian co1poration in which we have an ownership interest, also offers satellite radio service in Canada. XM Canada offers !30 channels of music and news, sports, talk and entertainment programming. Subscribers to the Sirius Canada service and the XM Canada service are not included in our subscriber count.
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Recent Developments The shares being offered for sale under this prospectus supplement and the accompanying prospectus were originally issued to the selling stockholders in private transactions on Februaty 13, 2009. Pursuant to a note purchase agreement among us, our wholly owned subsidiaries XM Satellite Radio Holdings Inc., XM 1500 Eckington LLC and XM Investment LLC, and the selling stockholders, XM Satellite Radio Holdings Inc. issued to the selling stockholders $!72,485,000 in aggregate principal amount of Senior PIK Secured Notes due 20 II (the "exchange notes") in exchange for a like principal amount of XM Satellite Holdings Inc.'s outstanding I 0% Convertible Notes due 2009 (the "old notes"). The exchange notes are fully and unconditionally guaranteed by- XM 1500 Eckington LLC and XM Investment LLC, our wholly owned subsidiaries, and are secured by a lien on certain real estate and personal property held by those entities. In addition, we paid the selling stockholders a fee, per $1,000 aggregate principal amount of old notes exchanged, in the amount of either ( 1) 833 shares of our common stock or (2) $50 cash, at each selling stockholder's election. We agreed pursuant to the note purchase agreement to file this prospectus supplement to register these shares for resale. In addition to the infonnation contained in our Current Repot1s on Fonn 8-K incorporated by reference into this prospectus supplement, as described in "Incorporation by Reference," you should carefully review the risks we outline under "Risk Factors," including the risk entitled "Our future prospects are uncertain, and we may be unable to avoid filing for bankruptcy protection."
Corporate Information Sirius XM Radio Inc. was incorporated in the State of Delaware as Satellite CD Radio, Inc. on May 17, 1990. On December 7, 1992, Satellite CD Radio, Inc. changed its name to CD Radio Inc., and Satellite CD Radio, Inc. was fonned as a wholly owned subsidiary. On November 18, !999, CD Radio Inc. changed its name to Sirius Satellite Radio Inc. On August 5, 2008, we changed our name from Sirius Satellite Radio Inc. to Sirius XM Radio Inc. XM Satellite Radio Holdings Inc., together with its subsidiaries, is operated as an unrestricted subsidiary under our existing indebtedness. As an unrestricted subsidiary, transactions between the companies are required to comply with various contractual provisions in our respective debt instruments.
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The Offering
Issuer Sirius XM Radio Inc.
Shares of common stock offered by 59,17&,819 shares. the selling stockholders
Shares of common stock outstanding 3, 792,034,824 shares. as of February ll, 2009
Nasdaq Global Select Market trading SIR! symbol
Use of proceeds We will not receive any ofthe proceeds from the sale by the selling stockholders of any shares of common stock. See "Use of Proceeds."
Risk tactors You should carefully consider the information set forth in the "Risk Factors" section of this prospectus supplement and accompanying prospectus as well as the other information included in or incorporated by reference in this prospectus supplement and the accompanying prospectus before deciding whether to invest in our common stock. See "Description of Capital Stock" beginning on page 17 of the accompanying prospectus for additional information regarding the common stock to be sold pursuant to this prospectus supplement.
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RISK FACTORS An investment in our common stock involves certain risks. You should carefit!ly consider the risks described below, as well as !he other il?formation included or incorporated by reference in this prospectus supplemenl and the accompanying prospectus before making an investment decision. Our business, financial condition or results ofoperations could be materially adversely affected by any ofthese risks. The market or trading price ofour common stock could decline due to any ofthese risks, and you may lose all or part ofyour investment. In addition, please read "Special Note About Forward-Looking Statements" in this prospectus supplement and the accompanying prospectus, where we describe additional uncertainties associated with our business and thefonvard-looking statements included or incorporated by reference in this prospectus supplement and the accompanying prospectus. Please note that additional risks not presently known to us or that we currently deem immaterial may also impair our business and operations. Certain risks relating to us and our business are described under the heading "Risk Factors" in our Annual Report on Form !O-K for the year ended December 31, 2007,filedwith the SEC on Februmy 29, 2008, as amended by Amendment No. !,filed with the SEC on April 29, 2008, and our Quarterly Report on Form 10-Qfor the quarter ended September 30, 2008,filed with the SEC on November I 2, 2008, each ofwhich is incorporated by reference into this prospectus supplement, and which you should carefully review and consider. Certain additional risks relating to XM Holdings and XM Inc. specifically are described under the heading "Risk Factors" inXM Holdings' Annual Report on Form 10-Kfor the year ended December 31, 2007, filed with the SEC on Februmy 28, 2008, as amended by Amendment No. !,filed with the SEC onApri/29, 2008, and XM Holdings' Quarterly Report on Form 10-Qfor the quarter ended September 30, 2008,filed with the SEC on November 12, 2008, each ofwhich are incorporated by reference into this prospectus supplement, and which you should carefidly review and consider.
Risi
Risks Relating to Our Common Stock Tile Price of our Commo11 Stock Historically has been Volatile. This Volatility may Affect the Price at which you could Sell our Commo11 Stock, and tile Sale ofSubsta11tial Amounts of our Common Stock could Adversely Affect the Price ofour Common Stock. · The market price for our common stock has varied between a high closing sales price of$3.83 per share and a low closing sales price of $0.05 in the past eighteen months. This volatility may affect the price at which you could sell our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our
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common stock. The price for our common stock is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including the other factors discussed in the risks related to our business and the business of XM Holdings; variations in our quarterly operating results fi·om our expectations or those of securities analysts· or investors; downward revisions in securities analysts' estimates; competitive developments; and capital commitments. In the past, following periods of volatility in the market price of their stock, many companies have been the subject of securities class action litigation. If we became involved in securities class action litigation in the future, it could result in substantial costs and diversion of our management's attention and resources and could harm our stock price, business, prospects, results of operations and financial condition. In addition, the broader stock market has recently experienced significant price and volume fluctuations. This volatility has affected the market prices of securities issued by many companies for reasons unrelated to their operating performance and may adversely affect the price of our common stock. In addition, our announcements of our quarterly operating results, changes in general conditions in the economy or the financial markets and other developments affecting us, our affiliates or our competitors could cause the market price of our common stock to fluctuate substantially. In addition, the sale of substantial amounts of our common stock could adversely impact its price. As of February II, 2009, we had outstanding approximately 3,792 million shares of common stock, options to purchase approximately 95 million shares of our common stock (of which approximately 63 million were exercisable as of that date at prices ranging from $0.49 to $31.25) and convertible notes convertible into approximately 167 million shares (at conversion prices ranging from $0.69 to $28.46). The sale or the availability for sale of a large number of shares of our common stock in the public market could cause the price of our common stock to decline. Tile Issua11ce am/ Sale ofour Commo11 Stock upo11tlle Exclla11ge, Co11versio11 or Exercise of Outsta11tli11g Equity-Li11ketl Securities may C 5 http://www.sec.gov/Archives/edgar/data/908937/000095012309002821/y74671 b7e424b7.... 11/7/2012 42487 Page II of21 Table of Contents existing stockholders. In addition, our board of directors has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock, including the adoption of a "poison pill," which could be used defensively if a takeover is threatened. The ability of ow· board of directors to create and issue a new series of preferred stock and certain provisions of Delaware law and our certificate of incorporation and bylaws could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender offer for our common stock, which, under certain circumstances, could reduce the market price of our common stock. 6 http://www.sec.gov/Archives/edgar/data/908937/00009501230900282IIy74671 b7e424b7.... 111712012 424B7 Page 12 of21 Table of Contents USE OF PROCEEDS We will not receive any of the proceeds from the sale by the selling stockholders of any shares of common stock. PRICE RANGE OF COMMON STOCK Our common stock is traded on the Nasdaq Global Select Market under the symbol "SlRI." On February 12,2009, the last repmted sale price for our common stock was $0.074 per share, as reported on the Nasdaq Global Select Market (exclusive of after hours trading). The following table sets forth, for the periods indicated, the reported high and low closing sales price per share of our common stock on the Nasdaq Global Select Market (exclusive of after hours trading): High Low 2009 First Quarter (through February 12, 2009) $0.17 $0.06 2008 Fourth Quarter 0.65 0.11 Third Quarter 2.68 0.57 Second Quarter 2.89 1.83 First Quarter 3.31 2.65 2007 Fourth Quarter 3.83 3.03 Third Quarter 3.52 2.71 Second Quarter 3.15 2.69 First Quarter 4.15 3.20 As of February !0, 2009, there were approximately 900,000 holders of record of our common stock. DIVIDEND POLICY We have never paid cash dividends on our capital stock. We currently intend to retain earnings, if any, for use in our business and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors, subject to applicable limitations under Delaware law, and will be dependent upon our results of operations, financial condition and other factors deemed relevant by our board of directors. A number of our current debt instruments contain, and future debt instruments may contain, provisions restricting our ability to pay dividends. 7 http://www.sec.gov/Archives/edgar/data/908937/000095012309002821/y74671 b7e424b7.... 11/7/2012 42487 Page 13 of21 Table of Contents SELLING STOCKHOLDERS The shares being offered for sale under this prospectus supplement and the accompanying prospectus were originally issued by us pursuant to the note purchase agreement, dated Febmary 13,2009, among us, our wholly owned subsidiaries XM Satellite Radio Holdings Inc., XM 1500 Eckington LLC andXM Investment LLC, and the selling stockholders. Pursuant to the note purchase agreement, XM Satellite Radio Holdings Inc. agreed to issue to certain holders of its outstanding I 0% Convertible Notes due 2009 (the "old notes"), including the selling stockholders, $172,485,000 in aggregate principal amount of Senior PIK Secured Notes due 20 II (the "exchange notes") in exchange for a like principal amount of old notes. TI1e exchange notes are fully and unconditionally guaranteed by XM 1500 Eckington LLC and XM Investment LLC, our wholly-owned subsidiaries, and are secured by a lien on certain real and personal property held by such entities. In addition, we paid these holders of old notes a fee, per $1,000 aggregate principal amount of old notes exchanged, in the amount of either (I) 833 shares of our common stock or (2) $50 cash, at each selling stockholder's election. We agreed pursuant to the note purchase agreement to file this prospectus supplement to register these shares for resale. The exchange notes and the shares of common stock were issued in private placement transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof. The following table sets forth certain information on or around the date hereof concerning the shares of common stock that may be offered from time to time by each selling stockholder pursuant to this prospectus supplement. The information is based on information provided by or on behalf of the selling stockholders. Other than the transactions described above and except as set fm1h in the table below, none of the selling stockholders nor any of its affiliates, officers, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with us or XM Inc. (or our or XM Inc.'s predecessors or affiliates) during the past three years. Percentage of Number of Outstanding Shares of Shares of Common Common Percentage of Stock Stock Outstanding Beneficially Beneficially Shares of Shares of Shares of Owned After Owned After Common Common Common Sale of All Sale of All Stock Stock Stock That Shares That Shares That Beneficially Beneficially 1\-lay be May be Maybe Owned Prior Owned Prior Offered Offered Offered Name to Offering to Offering {I} Herebr: Herebr Herebr Long Island International Limited(2) 17,589,844 * 16,660,000 Canyon Capital Arbitrage Master Fund, Ltd (3) 5,365,185 * 3,948,420 The Canyon Value Realization Fund (Cayman), Ltd (3) 5,852,594 * 4,648,140 Canyon Value Realization Mac 18 Ltd.(3) 391,230 * 395,675 Canyon Value Realization Fund, LP(4) 2,239,309 * 1,836,765 Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio(5) 7,142,075 * 4,360,755 Goldman, Sachs & Co.(6) 40,587,171 1.07% 27,329,064 * Less than I%. (1) Calculated based on Rule 13d-3(d)(l)(i) of the Securities Exchange Act of 1934, as amended, using 3,792,034,824 shares of common stock outstanding as of February ·11, 2009. (2) Long Island International Limited is under common control with Barclays Capital Inc. (3) Canyon Capital Advisors LLC is the investment advisor for Canyon Capital Arbitrage Master Fund, Ltd., The Canyon Value Realization Fund (Cayman), Ltd. and Canyon Value Realization Mac 18 Ltd. and has the power to direct investments by Canyon Capital Arbitrage Master Fund, Ltd., The Canyon Value Realization Fund (Cayman), Ltd and Canyon Value Realization Mac 18 Ltd. The managing partners of Canyon Capital Advisors LLC are Joshua S. Friedman, Mitchell R. Julis, and K. Robe11 Turner. Canyon Capital Arbitrage Master Fund, Ltd. and The Canyon Value Realization Fund (Cayman), Ltd. are Exempt Companies incorporated in the Cayman Islands with limited liability. (4) The general partner of Canyon Value Realization Fund, LP is Canpmmers Investments lll, L.P. and as such has the voting power (the general partner of Can partners Investments lll, L.P. is Canyon Capital Advisors LLC). Canyon Capital Advisors LLC is the investment advisor of Canyon Value Realization Fund, L.P. and as such, has the power to direct investments by Canyon Value Realization Fund, L.P. The managing pmtners of Canyon Capital Advisors LLC are Joshua http://www.sec.gov/ Archives/edgar/data/90893 7/0000950 12309002821/y74671 b7e424b7. ... 11/7/20 12 424B7 Page 14 of21 S. Friedman, Mitchell R. Julis, and K. Robert Turner. Canyon Value Realization Fund, L.P. is a limited partnership fmmed in Delaware. (5) Pursuant to an investment management agreement, Radcliffe Capital Management, L.P. ("Radcliffe Capital") serves as the investment manager of Radcliffe SPC, Ltd.'s Class A Segregated Portfolio. ROC Management Company, LLC ("Management") is the general partner of Radcliffe Capital. Steve Katznelson and Gerald Stahlecker serve as the managing members of Management. Each of Radcliffe Capital, Management and Messrs. Katznelson and Stahlecker disclaim beneficial ownership of securities owned by Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio. (6) Goldman, Sachs & Co. is an indirect, wholly-owned subsidiary of The Goldman Sachs Group, Inc., a publicly-traded company. In accordance with the Securities and Exchange Commission Release No. 34-39538 (Janumy 12, 1998) (the "Release"), this tiling retlects the securities beneficially owned by certain operating units (collectively, the "Goldman Sachs Reporting Units") of The Goldman Sachs Group, Inc. and its subsidiaries and affiliates (collectively, "GSG"). This filing does not retlect securities, if any, beneficially owned by any operating units of GSG whose ownership of securities is disaggregated from that of the Goldman Sachs Reporting Units in accordance with the Release. The Goldman Sachs Reporting Units disclaim beneficial ownership ofthe securities beneficially owned by (i) any client accounts with respect to which the Goldman Sachs Repo1ting Units or their employees have voting or investment discretion, or both and (ii) certain investment entities of which the Goldman Sachs Reporting Units act as the general partner, managing general partner or other manager, to the extent interests in such entities are held by persons other than the Goldman Sachs Reporting Units. 8 http://www.sec.gov/ Archives/edgar/data/90893 7/0000950123 09002821/y74671 b 7e424b7 .... 11/7/2012 42487 Page 15 of21 Table of Contents CERTAIN UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES TO NON-U.S. HOLDERS The following is a summary of certain United States federal income and estate tax consequences of the purchase, ownership and disposition of our commonstock as of the date hereof. Except where noted, this summary deals only with common stock that is held as a capital asset by a non-U.S. holder. A "non-U.S. holder" means a person (other than a partnership) that is not for United States federal income tax purposes any of the following: • an individual citizen or resident ofthe United States; • a corporation (or any other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; • an estate the income of which is subject to United States federal income taxation regardless of its source; or a trust if it (I) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. This summary is based upon provisions of the Internal Revenue Code of I986, as amended (the "Code"), and regulations, rulings and judicial decisions as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in United States federal income and estate tax consequences different from those summarized below. This summary does not address all aspects of United States federal income and estate taxes and does not deal with foreign, state, local or other tax considerations that may be relevant to non-U.S. holders in light of their personal circumstances. In addition, it does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws (including if you are a United States expatriate, "controlled foreign corporation," "passive foreign investment company" or a partnership or other pass-through entity for United States federal income tax purposes). We cannot assure you that a change in law will not alter significantly the tax considerations that we describe in this summary. If a partnership holds our common stock, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common stock, you should consult your tax advisors. If you are considering the purchase of our common stock, you should consult your own tax advisors concerning the particular United States federal income and estate tax consequences to you of the ownership of the common stock, as well as the consequences to you arising under the laws of any other taxing jurisdiction. Dividends Dividends paid to· a non-U.S. holder of our common stock generally will be subject to withholding of United States federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the United States (and, if required by an applicable income tax treaty, are attributable to a United States pennanent establishment) are not subject to the withholding tax, provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to United States federal income tax on a net income basis in the same manner as if the non-U.S. holder were a United States person as defined under the Code. Any such effectively connected dividends received by a foreign corporation may be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. 9 http://www.sec.gov/Archives/edgar/data/90893 7/0000950 12309002821/y74671 b7e424b 7.... 11/7/2012 424B7 Page 16 of21 Table of Contents A non-U.S. holder of our common stock who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be required (a) to complete Internal Revenue Service Form W-88EN (or other applicable form) and certizy under penalty ofperjmy that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our common stock is held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable United States Treasury regulations. Special ce1tification and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals. A non-U.S. holder of our common stock eligible for a reduced rate of United States withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. Gain on Disposition of Common Stock Any gain realized on the disposition of our common stock generally will not be subject to United States federal income tax unless: • the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a United States permanent establishment of the non-U.S. holder); the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or • we are or have been a "United States real property holding corporation" for United States federal income tax purposes. An individual non-U.S. holder described in the first bullet point immediately above will be subject to tax on the net gain derived from the sale under regular graduated United States federal income tax rates. An individual non-U.S. holder described in the second bullet point immediately above will be subject to a flat 30% tax on the gain derived from the sale, which may be offset by United States source capital losses, even though the individual is not considered a resident of the United States. !fa non-U.S. holder that is a foreign corporation falls under the first bullet point immediately above, it will be subject to tax on its net gain in the same manner as if it were a United States person as defined under the Code and, in addition, may be subject to the branch profits tax equal to 30% of its effectively connected earnings and profits or at such lower rate as may be specified by an applicable income tax treaty. We believe we are not and do not anticipate becoming a "United States real property holding corporation" for United States federal income tax purposes. Federal Estate Tax Common stock held by an individual non-U.S. holder at the time of death will be included in such holder's gross estate for United States federal estate tax purposes, unless an applicable estate tax treaty provides otherwise. Information Reporting and Backup Withholding We must report annually to the Internal Revenue Service and to each non-U.S. holder the amount of dividends paid to such holder and the tax withheld with respect to such dividends, regardless of whether withholding was required. Copies of the inf01mation returns reporting such dividends and withholding may also be made available to the tax authorities in the country in which the non-U.S. holder resides under the provisions of an applicable income tax treaty. A non-U.S. holder will be subject to backup withholding for dividends paid to such holder unless such holder certifies under penalty ofperjwy that it is a non-U.S. holder (and the payor does not have actual knowledge or reason 10 http://www.sec.gov/ Archives/edgar/data/90893 7/0000950 12309002821/y74671 b7e424b7.... 11/7/2012 424B7 Pagel7of21 Table of Contents to know that such holder is a United States person as defined under the Code), or such holder othe1wise establishes an exemption. Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our common stock within the United States or conducted through certain United States-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined under the Code), or such owner otherwise establishes an exemption. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder's United States federal income tax liability provided the required information is furnished to the Internal Revenue Service. II http://www.sec.gov/Archives/edgar/data/90893 7/0000950 12309002821/y7 4671 b7e424b7. ... 11/7/2012 424B7 Page 18 of2l Table of Contents PLAN OF DISTRIBUTION The selling stockholders, including their transferees, pledgees or donees or their successors, may !Tom time to time offer and sell the shares of our common stock directly to purchasers or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, commissions or concessions !Tom the. selling stockholders or the purchasers of the common stock. These discounts, commissions or concessions as to any particular underwriter, broker-dealer or agent may be in excess of those custommy in the types of transactions involved. Notwithstanding the foregoing, in no event will the method of distribution take the form of an underwritten offering of our common stock without our prior agreement. The shares of our common stock may be sold in one or more transactions at: • fixed prices; • prevailing market prices at the time of sale; • varying prices determined at the time of sale; or • negotiated prices~ These prices will be determined by the selling stockholders or by agreement between such selling stockholders and underwriters, broker-dealers or agents. The aggregate proceeds to the selling stockholders !Tom the sale of the common stock offered by them will be the purchase price of the common stock less discounts, commissions and concessions, if any. Each of the selling stockholders reserves the right to accept and, together with its agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents. We will not receive any of the proceeds from this offering. The sales described above may be effected in transactions: • on any national securities exchange or quotation service on which the common stock may be listed at the time of sale; • in the over-the-counter market; otherwise than on such exchanges or se:rvices or in the over-the-counter ma'rket; • through the writing of options; or • any combination of such methods of sale. These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade. In connection with the sale of any shares of our common stock, the selling stockholders may enter into hedging transactions with broker-dealers, which may in tum engage in short sales of the common stock in the course of hedging the positions they assume. The selling stockholders may also sell shares of our common stock short and deliver such shares of common stock to close out their short positions, or loan or pledge such shares of common stock to broker-dealers that in tum may sell such securities. In order to comply with the securities laws of some states, if applicable, the shares of common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states the shares of common stock may not be sold unless they have been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with. 12 http://www.sec.gov/Archives/edgar/data/908937/0000950 l230900282l/y7467l b7e424b7.... ll/7/2012 42487 Page 19 of21 Table of Contents The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the shares of common stock may be "underwriters" within the meaning of Section 2{11) of the Securities Act. Any discounts, commissions, concessions or profit they earn on any resale of the common stock may be deemed to be underwriting discounts or commissions under the Securities Act. Selling stockholders who are "underwriters" within the meaning of Section 2( II) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act and may be subject to statutory liabilities, including, liability under Sections II and 12 of the Securities Act and Rule !Ob-5 under the Exchange Act. The selling stockholdm~ have acknowledged that they understand their obligation to comply, and they have agreed to comply, with the prospectus delivery and other provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder, particularly Regulation M. The selling stockholders have agreed that neither they nor any person acting on their behalf will engage in any transaction in violation of such provisions. To our knowledge, there are currently no plans, arrangements or understandings between any selling stockholder and any underwriter, broker-dealer or agent regarding the sale of the shares of common stock. Selling stockholders may ultimatelinot sell all, and conceivably may not sell any, of the shares of common stock offered by them under this prospectus supplement. In addition, we cannot assure you that a selling stockholder will not transfer, devise or gift the shares of common stock by other means not described in this prospectus supplement. Furthermore, any securities covered by this prospectus supplement which quality for sale pursuant to Rule 144 or Rule 144A ofthe Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this prospectus supplement. To the extent required, the specific shares of common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement to which this prospectus supplement relates. We have agreed, among other things, to pay certain expenses of the registration statement to which this prospectus supplement relates. We have agreed to indemnity the selling stockholders against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments the selling stockholders may be required to make because of any of those liabilities. 13 http://www.sec.gov/ Archives/edgar/data/908937/0000950 12309002821/y74671 b7e424b7.... 11/7/2012 42487 Page 20 of21 Table of Contents VALIDITY OF SECURITIES The validity of the common stock offered by this prospectus supplement has been passed upon for us by Simpson Thacher & Ba•tlett LLP, New York, New York. EXPERTS Our consolidated financial statements as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007 appearing in our 2007 Annual Report on Form 10-K (including the schedule appearing therein) and management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2007 incorporated by reference therein have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, incorporated by reference therein, and incorporated herein by reference. Such consolidated financial statements and management's assessment are incorporated herein by reference in reliance upon such reports given on the authority of such firm as expe1ts in accounting and auditing. The consolidated financial statements and schedule of XM Satellite Radio Holdings Inc. as of December 31, 2007 and 2006, and for each of the years in the three-year period ended December 31, 2007, and management's assessment of the effectiveness of internal control over fmancialreporting as of December 31, 2007 have been incorporated by reference herein in reliance upon the reports of KPMG LLP, independent registered public accounting finn, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The audit repmt with respect to the consolidated financial statements refers to XM Satellite Radio Holdings Inc.'s change in the method of accounting for stock-based compensation effective January I, 2006. INCORPORATION BY REFERENCE Tile SEC allows us to "incorporate by reference" in this prospectus supplement other infmmation we file with it, which means that we can disclose important information to you by referring you to those documents. This prospectus supplement incorporates important business and financial information about us that is not included in or delivered with this prospectus supplement. The infonnation we file later with the. SEC will automatically update and supersede the infmmation included in and incorporated by reference in this prospectus supplement. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. I. Our Annual Report on Fonn 10-K for the year ended December 31,2007, as amended by Amendment No. I filed on April 29, 2008. 2. Our Quarterly Reports on Form I 0-Q for the qumters ended March 31, 2008, June 30, 2008 and September 30, 2008. 3. Our Current Reports on Form 8-K filed on February 29, 2008, July I, 2008, July 28,2008 (Item 8.01), August I, 2008, August 4, 2008, and August 5, 2008, our Current Report on Fonn 8-K/A filed on August 5, 2008, and our Current Reports on Fonn 8-K filed on September 25, 2008, October I, 2008, October 20, 2008, October 29, 2008, December 22, 2008, December 30,2008, January 5, 2009 and January 14,2009. 4. Our Proxy Statement on Schedule 14A filed on November 4, 2008. 5. The description of our common stock contained in our Registration Statement on Form 8-A filed pursuant to Section 12 (b) of the Securities Exchange Act of 1934 including any amendment' or report updating such description. In addition, we incorporate by reference the documents listed below and any future filings made by XM Holdings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934. 14 http://www .sec.gov/Archives/edgar/data/90893 7/0000950 12309002821/y74671 b7 e424b7.... 11/7/20 12 424B7 Page 21 of21 Table of Contents I. XM Holdings' Annual Report on Form !0-K for the year ended December 31, 2007, as amended by Amendment No. I filed on April 29, 2008. 2. XM Holdings' Qumterly Reports on Form 10-Q for the quarters ended March 31, 2008, June 30, 2008 and September 30, 2008. 3. XM Holdings' Current Reports on Form 8-K filed on February2l, 2007 (and the merger agreement filed therewith), January 7, 2008, February 7, 2008, February 29,2008, May 21,2008, June 26,2008, July 17,2008, July 21,2008 (Item 8.01), July 28,2008 (Item 8.01), July 30,2008, August 6, 2008 and August II, 2008. The referenced documents have been tiled with the SEC and are available from the SEC's intemet site and public reference rooms described under "Where You Can Find More Information." You may also request a copy of these filings, at no cost, by writing or calling us at the following address or telephone number: Sirius XM Radio Inc. 122! Avenue of the Americas 36th floor NewYork,NewYork 10020 Phone: (2 !2) 584-5100 Attention: Investor Relations You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different information. WHERE YOU CAN FIND MORE INFORMATION We and XM Holdings file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings can be read and copied at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330(~ for further information on the operation ofthe public reference room. Our SEC filings and XM Holdings' SEC filings are also available over the lntemet at the SEC's website at http://www.sec.gov and through the Nasdaq Stock Mm·ket, One Liberty Plaza, New York, New York, !0006, on which our common stock is listed. 15 http://www.sec.gov/Archives/edgar/data/908937/0000950 12309002821/y74671 b7e424b7.... I 1/7/2012 EXHIBIT2 c56660_8k.htm --Converted by SEC Publisher, created by BCL Teclmologies Inc., for S... Page I of 6 8-K l c56660_8k.htm UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): February 17, 2009 Sirius XM Radio Inc. (Exact name of registrant as specified in its charter) Delaware 0-24710 52-1700207 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 1221 Avenue of the Americas, 35th Fl., New York, NY 10020 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (212) 584-5100'£7 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: D Written communications pursuant to Rule 425 under the Securities Act 07 CFR 230.425) D Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) D Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b)) D Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act 07 CFR 240.13e-4 (c)) http://www.sec.gov/Archives/edgar/data/90893 7/0000930413 09000841 /c56660 8k.htm 11/7/2012 c56660 _ 8k.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for S... Page 2 of 6 Item 1.01 Entry into a Material Definitive Agreement We have entered into agreements pursuant to which Liberty Media Corporation and its affiliate, Liberty Radio, LLC, will invest an aggregate of $530 million in the form of loans and will receive a significant equity interest in us. The investments are expected to be funded in two separate phases. Phase One: $280 Million Sirius Credit Agreement On February 17, 2009, we entered into a Credit Agreement (the "Sirius Credit Agreement") with Liberty Media Corporation, as administrative agent and collateral agent. The Sirius Credit Agreement provides for a $250 million term loan and $30 million of purchase money loans: Concurrently with entering into the Sirius Credit Agreement, we borrowed $250 million under the term loan facility. The proceeds of the term loan will be used (i) to repay at maturity our outstanding 2!% Convertible Notes due February 17, 2009 and (ii) for general corporate purposes, including related transaction costs. The loans under the Sirius Credit Agreement bear interest at a rate of 15% per annum. Commencing on March 31, 2010, the loans amortize in quarterly installments equal to: (i) 0.25% of the aggregate principal amount of the loans outstanding on January 1, 2010 and (ii) after December 31, 2011, 25% of the aggregate principal amount of the loans outstanding on January 1, 2012. The loan matures on December 20, 2012. We paid Liberty Media Corporation a structuring fee of $30 million in connection with the Sirius Credit Agreement. In addition, we will pay a commitment fee of 2.0% per annum on the unused portion of the purchase money loan facility. If, prior to December 31, 2009, we elect to terminate the Investment Agreement (as defined below), the lenders under the Sirius Credit Agreement may require prompt repayment at 105% of face amount. The loans under the Sirius Credit Agreement are guaranteed by Sirius Asset Management Company LLC and Satellite CD Radio, Inc., our wholly owned subsidiaries. The loans are secured by a lien on substantially all of our assets. The affirmative covenants, negative covenants and event of default provisions in the Sirius Credit Agreement are substantially similar to those in the Term Credit Agreement, dated as of June 20, 2007, among us, the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent and collateral agent. Phase Two: Investment Agreement On February 17, 2009, we entered into an Investment Agreement (the "Investment Agreement") with Liberty Radio, LLC (the "Purchaser"), an indirect wholly-owned subsidiary of Liberty Media Corporation. Pursuant to the Investment Agreement, we agreed to issue to the Purchaser 12,500,000 shares of convertible preferred stock with a liquidation preference of $0.001 per share in partial consideration for the loan investments described herein. Upon expiration of the applicable waiting period under the Hart-Scott-Rodino Act, the preferred stock will be convertible into 40% of our outstanding shares of common stock (after giving effect to such conversion). Issuance of the preferred stock is subject to the satisfaction of certain conditions, including the conditions to funding under the XM Credit Agreement described below. Pursuant to the Investment Agreement, we have agreed to various covenants and agreements, including not to solicit or encourage alternative transactions or, subject to certain exceptions, to enter into 2 http://www.sec.gov/Archives/edgar/datal90893 7/000093 04!309000841/c56660_ 8k.htm 1117/2012 c56660_8k.htm --Converted by SEC Publisher, created by BCL Teclmologies Inc., for S... Page 3 of 6 discussions concerning, provide confidential information in connection with, or approve or recommend, any alternative transaction until April 15, 2009. If, prior to April 15, 2009, we receive an alternative proposal that our Board of Directors concludes in good faith is a Superior Proposal (as defined below), our Board of Directors may terminate the Investment Agreement in order to transact the Superior Proposal. After April 15, 2009, we may terminate the Investment Agreement if our Board of Directors determines it is in our best interests to do so. In either of those events, we will pay the Purchaser a termination fee of $7 million. "Superior Proposal" means a bona fide written alternative proposal that our Board of Directors in good faith determines, after consultation with its legal and financial advisors, would, if accepted, be reasonably capable of being consummated, taking into account legal, financial, regulatory, timing and similar aspects of the proposal and the person making the proposal, and would, if consummated, result in a transaction more favorable to our stockholders from a financial point of view than the transaction contemplated by the Investment Agreement. The Purchaser has agreed not to acquire more than 49.9% of our outstanding common stock for three years. Certain of the standstill restrictions will cease to apply after two years. Phase Two: The Preferred Stock The preferred stock will be issued concurrently with the funding under the XM Credit Agreement described below. The rights, preferences and privileges of the preferred stock will be set forth in a Certificate of Designations to be filed with the Secretary of State of the State of Delaware. The preferred stock is convertible at any time, at the option of the holder, into shares of our common stock equal to 40% of our outstanding common stock (after giving effect to such conversion). The holders of the preferred stock are entitled to appoint a proportionate number of our board of directors based on their ownership levels from time to time. The Certificate of Designations also provides that so long as the Purchaser beneficially owns at least half of its initial equity investment, we will need the consent of the Purchaser for certain actions, including: • the grant or issuance of our equity securities; o any merger or sale of all or substantially all of our assets; o any acquisition or disposition of assets other than in the ordinary course of business above certain thresholds; o the incurrence of debt in amounts greater than a stated threshold; o engaging in a business different than the business currently conducted by us; and • amending our certificate of incorporation or by-laws in a manner that materially adversely affects the holders of the preferred stock. The preferred stock will, with respect to dividend rights, rank on a parity with our common stock, and with respect to rights on liquidation, winding-up and dissolution, rank senior to our common stock. Dividends on the preferred stock are payable, on a non-cumulative basis, as and if declared on our common stock, in cash, on an as-converted basis. 3 http://www.sec.gov/Archives/edgar/data/90893 7/000093041309000841/c56660 _ 8k.htm 11/7/2012 c56660 8k.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for S... Page 4 of 6 Phase Two: $150 !VIi/lion XM Credit Agreement On February 17, 2009, XM Satellite Radio Inc. ("XM") entered into a Credit Agreement (the "XM Credit Agreement") with Liberty Media Corporation, as administrative agent and collateral agent. The XM Credit Agreement provides for a $150 million term loan. The term loan facility will be available in two drawings. The term loans bear interest at a rate of 15% per annum, and mature on May 1, 2011. XM will pay a commitment fee of 2.0% per annum on the undrawn portion of the term loan facility. The loans under the XM Credit Agreement are guaranteed by XM Radio Inc. and XM Equipment Leasing LLC. The term loan facility is secured by a lien on substantially all of XM's assets. The affirmative covenants, negative covenants and event of default provisions in the Xlvl Credit Agreement are substantially similar to those in the Credit Agreement, dated as of June 26, 2008, among XM, XM Satellite Radio Holdings Inc., the lenders named therein and UBS, as administrative agent. The closing and funding of the XM Credit Agreement is subject to several conditions, including: (i) XM's existing credit agreements being amended to extend the maturity of the loans to a date and on terms reasonably satisfactory to Liberty Media Corporation, (ii) Liberty Media Corporation purchasing assignments of loans outstanding under such existing credit facilities in an aggregate principal amount of up to $100 million, (iii) delivery of a report from our auditors in respect of fiscal year 2008 without any "going concern" or like qualification (or receipt of a waiver from certain lenders), and (iv) issuance of the preferred stock under the Investment Agreement. Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant The information set forth above in Item 1.01 is hereby incorporated by reference into this Item 2.03. Item 3.02 Unregistered Sales of Equity Securities Pursuant to the Investment Agreement, we have agreed to issue 12,500,000 shares of the preferred stock in consideration for the investments described herein. The preferred stock was offered to the Purchaser in an offering exempt from the Securities Act registration requirements under Section 4(2) of the Securities Act of 1933. Upon election of the holders of such preferred stock, the shares of the preferred stock will be convertible into a number of shares of our common stock determined pursuant to the conversion rate set forth in the Certificate of Designations. As of February 13, 2009, 3,793,193,708 shares of our common stock were outstanding. Item 8.01 Other Events On February 17, 2009, we issued a press release announcing, among other things, that we had entered into the Investment Agreement, the Sirius Credit Agreement and the XM Credit Agreement. The press release is attached hereto as Exhibit 99.1 and is hereby incorporated by reference into this Item 8.01. 4 http://www.sec.gov/Archives/edgar/data/90893 7/000093041309000841 /c56660_ 8k.htm 11/712012 c56660_8k.htm --Converted by SEC Publisher, created by BCL Teclmologies Inc., for S... Page 5 of6 Item 9.01 Financial Statements and Exhibits (d) Exhibits Exhibit No. Exhibit Description Exhibit 99.1 Press Release issued by Sirius Xlvl Radio and Liberty Media on February 17, 2009. 5 http://www.sec.gov/ Archives/edgar/data/90893 7/000093041309000841/c56660 _ 8k.htm 11/7/2012 c56660_8k.htm --Converted by SEC Publisher, created by BCL Technologies Inc., for S... Page 6 of6 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SIRIUS XM RADIO INC. Date: February 17, 2009 By: Is! Patrick L. Donnelly Patrick L. Donnelly Executive Vice President, General Counsel and Secretary 6 http://www .sec.gov/ Archives/edgar/data/90893 7/000093041309000841/c56660 _ 8k.htm 1117/2012 c56660_ex99-l.htm --Converted by SEC Publisher, created by BCL Technologies Inc., f... Page I of4 EX-99.1 2 c56660 ex99-l.htm Exhibit 99.1 SIRIUS XM Radio and Liberty Media Reach Agreement for Investment Liberty Makes Loan to SIRIUS XM to Repay 2%% Convertible Notes due February 17, 2009 Agreement Provides for Additional Loan Liberty to Acquire SIRIUS XM Preferred Stock and Board Representation in Connection with Investments NEW YORK, NY and ENGLEWOOD, CO.- February 17, 2009- SIRIUS XM Radio Inc. (NASDAQ: SIRI) and Liberty Media Corporation (NASDAQ: LINTA, LINTS, LCAPA, LCAPB, LMDIA, LMDIB) today announced that they have entered into agreements pursuant to which Liberty will invest an aggregate of $530 million in the form of loans to SIRIUS XM and its subsidiaries and receive an equity interest in SIRIUS XM. Under the terms of the agreements, the investments will be funded in two separate phases . • The first phase includes a $280 million senior secured loan from Liberty to SIRIUS XM, $250 million of which will be funded today. The proceeds of that loan will be used by SIRIUS XM to repay $171.6 million of its maturing 2%% Convertible Notes due February 17, 2009, and the balance will be used for general corporate purposes, including working capital and transaction costs. The loan will bear interest at a rate of 15%, mature in December 2012, and be secured by the assets securing SIRIUS XM's existing term credit agreement. • The second phase provides an additional loan of $150 million to XM Satellite Radio, SIRIUS XM's wholly owned subsidiary. Liberty has also agreed to offer to purchase up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities from the lenders. Upon completion of the second phase of the Liberty investments, SIRIUS XM will issue Liberty an aggregate of 12.5 million shares of preferred stock convertible into 40% of the common stock of SIRIUS XM. In addition, Liberty will receive seats on the SIRIUS XM Board of Directors proportionate to its equity ownership. It is expected that John Malone and Greg Maffei will join the SIRIUS XM Board of Directors. Liberty's obligation to consummate the second phase of its investment is subject to various closing conditions. Mel Karmazin, Chief Executive Officer of SIRIUS XM Radio, said, "We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets. Liberty's investment is an important validation of what SIRIUS XM has already achieved and a vote of confidence in what we will achieve. This http://www.sec.gov/Archives/edgar/data/90893 7/000093041309000841/c56660 _ ex99-l.htm 11/7/2012 c56660 _ ex99-l.htm -- Convetted by SEC Publisher, created by BCL Technologies Inc., f... Page 2 of 4 agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM. By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love." "We are excited to be investing in SIRil.JS XM. We have been impressed with the company, its operations and management team," said Greg Maffei, president and CEO of Liberty. "SIRIUS XM's ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a "must have" service." The agreements, and the transactions contemplated by the agreements, do not constitute a change in control for SIRIUS XM under its outstanding debt instruments and are not subject to the approval of the Federal Communications Commission. The receipt by Liberty of voting stock is subject to expiration of the applicable waiting period under the Hart-Scott-Rodino Act. Important details of the agreements relating to this investment will be available on a Current . Report on Form 8-K which SIRIUS XM expects to file with the Securities and Exchange Commission. Liberty has advised that its investment will be attributed to the Liberty Capital group and is not expected to affect the timing of the previously announced split-off of a portion of Liberty Entertainment. About SIRIUS XM Radio SIRIUS XM Radio is America's satellite radio company delivering commercial-free music channels, premier sports, news, talk, entertainment, traffic and weather, to more than 18.9 million subscribers. SIRIUS XM Radio has content relationships with an array of personalities and artists, including Howard Stern, Martha Stewart, Oprah Winfrey, Jimmy Buffett, Jamie Foxx, Barbara Walters, Opie & Anthony, Bubba the Love Sponge®, The Grateful Dead, Willie Nelson, Bob Dylan, Tom Petty, and Bob Edwards. SIRIUS XM Radio is the leader in sports programming as the Official Satellite Radio Partner of the NFL, Major League Baseball®, NASCAR®, NBA, NHL®, and PGA TOUR®, and broadcasts major college sports. SIRIUS XM Radio has arrangements with every major automaker. SIRIUS XM Radio products are available at shop.sirius.com and shop.xmradio.com, and at retail locations nationwide, including Best Buy, RadioShack, Target, Sam's Club, and Wai-Mart. SIRIUS XM Radio also offers SIRIUS Backseat 1V, the first ever live in-vehicle rear seat entertainment featuring Nickelodeon, Disney Channel and Cartoon Network; XM NavTraffic® service for GPS navigation systems delivers real-time traffic information, including accidents and road construction, for more than 80 North American markets. http://www.sec.gov/Archives/edgar/data/908937/000093041309000841/c56660 ex99-l.htm 11/7/2012 c56660_ex99-l.htm --Converted by SEC Publisher, created by BCL Technologies Inc., L Page 3 of4 About Liberty Media Corporation Liberty Media Corporation owns interests in electronic retailing, media, communications and entertainment businesses. Those interests are attributed to three tracking stock groups: (1) the Liberty Interactive group, which includes Liberty's interests in QVC, Provide Commerce, Backcountry.com, BUYSEASONS, Bodybuilding.com, IAC/InterActiveCorp, and Expedia, (2) the Liberty Entertainment group, which includes Liberty's interests in The DIRECTV Group, Inc., Starz Entertainment, FUN Technologies, Inc., GSN, LLC, WildBiue Communications, Inc., and Liberty Sports Holdings LLC, and (3) the Liberty Capital group, which includes all businesses, assets and liabilities not attributed to the Interactive group or the Entertainment group including its subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., and TruePosition, Inc., and minority equity investments in Time Warner Inc. and Sprint Nextel Corporation. This communication contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving SIRIUS and XM, including potential synergies and cost savings and the timing thereof, future financial and operating results, the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such 11 11 11 11 as ''anticipate,'' believe," plan, '' estimate," "expeCt," "intend," "will, II Should," "may," or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of SIRIUS' and XM's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond the control of SIRIUS and XM. Actual results may differ materially from the results anticipated in these forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statement: general business and economic conditions; the performance of financial markets and interest rates; the failure to realize synergies and cost-savings from the merger or delay in realization thereof,· the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' and XM's Annual Reports on Form 10-K for the year ended December 31, 2007 and their respective Quarterly Reports on Form 10-Q for the quarter ended September 30, 2008, which are filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (bttp://www.sec.govl. The information set forth herein speaks only as of the date hereof, and SIRIUS and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this communication. Certain statements in this press release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including the statements regarding Liberty Media's expectations related to the Sirius XM investment and the pending split-off of a portion of the Liberty Entertainment group. These forward looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results could differ materially from those expressed or implied by such forward-looking statements. These forward-looking statements speak only as of the date of this press release. Libetty Media expressly disclaims any obligation or undettaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Libetty Media's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. http://www.sec.gov/Archives/edgar/data/908937/000093041309000841/c56660 _ ex99-1.htm 11/7/2012 c56660_ex99-l.htm --Converted by SEC Publisher, created by BCL Technologies Inc., f... Page 4 of 4 Additional Information Nothing in this release shall constitute a solicitation to buy or an offer to sell shares of the split-off company or any of the Liberty Media tracking stocks. The offer and sale of shares in the proposed split-off will only be made pursuant to an effective registration statement. Liberty Media stockholders and other investors are urged to read the registration statement to be filed with the SEC, including the proxy statement/prospectus to be contained therein, because it will contain important information about the transaction. A copy of the preliminary proxy statement/prospectus filed with the SEC is available, and the registration statement and definitive proxy statement/prospectus once filed will be available, free of charge at the SEC's website (http://www.sec.gov). Copies of the proxy statement/prospectus and the filings with the SEC that will be incorporated by reference in the proxy statement/prospectus can also be obtained, without charge, by directing a request to Liberty Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor Relations, Telephone: (720) 875-5408®. Participants in a Solicitation The directors and executive officers of Liberty Media and other persons may be deemed to be participants in the solicitation of proxies in respect of proposals to approve the transaction. Information regarding Liberty Media's and the split-off company's directors and executive officers and other participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be available in the proxy materials filed with the SEC. G-SIRI Contacts for SIRIUS XM Radio: Media Relations Investor Relations Patrick Reilly Paul Blalock 212-901-6646:@ 212-584-5174~ [email protected] [email protected] Kelly Sullivan Hooper Stevens Joele Frank, Wilkinson Brimmer Katcher 212-901-6718\@ 212-355-4449~ [email protected] [email protected] Contacts for Liberty Media Corp.: Courtnee Ulrich 720-875-5420\!fl http://www.sec.gov/ Archives/edgar/data/908937 /000093041309000841/c56660 _ ex99-l.htm 11/7/2012 EXHIBIT 3 SIR!- 2012.9.30 -I OQ Page I of 56 10-Q I siri-2012930xl0q.htm 10-Q Table Of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,2012 OR 0 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ___ COMMISSION FILE NUMBER 001-34295 SIRIUS XM RADIO INC. (Exact name of registrant as specified in its charter) Delaware 52-1700207 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 1221 Avenue of the Americas, 36th Floor New York. New York 10020 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 584-5100 lndicate by' check mark whether the registrant (I) has filed all reports required to be tiled by Section 13 or 15( d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to tile such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes 0 No 0 Indicate by check mark whether the registrant has submitted electronically omd posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S~ T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes 0 No 0 Indicate by check mark whether the registrant is a large accelerated filt:r, an accelerated tiler, a non-accelerated filer, or a smaller reporting company. See the definitions of"large accelerated tiler," "accelerated tiler" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated tiler 0 Accelerated t11er 0 Non-accelerated filer 0 Smaller reporting company 0 Indicate by check mark whether the registrant is a shell company (as defined in Rule l2b~2 of the Act). Yes D No 0 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. (Class) (Oulslandlng as of October 25, 1012) COMMON STOCK, $0.001 PAR VALUE 5,207,146,165 SHARES http://www.sec.gov/Archives/edgar/data/908937/000090893 7!2000009/siri-20 12930x I Oq.... I I/7/2012 SIRI- 2012.9.30 -10Q Page 2 of 56 Table Of Contents SIRIUS XM RADIO INC. AND SUBSIDIARIES INDEX TO FORM 10-Q Item No. Dc.H:riptlon PAIH I Flnnnclallnformation Financial Statements: Unaudited Consolidated Statements of Comprehensive Income for the tht·ce and nine months ended September 30. 2012and2011 1 Consolidated Balance Sheets as of September 30. 2012 (Unaudited) and December 31. 20 II .f. Unaudited Consolidated Statement of Stockholders' Equity for the nine months ended September 30.2012 J. Unaudited Consolidated Statements of Cash Flows for the nine months en~ed September 30. 2012 and 20 II .4. Notes to Unaudited Consolidated Financial Statements ~ Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Material Risk Controls and Procedures PART II-Other Information rtcm l. Legal Proceedings Item lA. Risk Factors Item 2. Unregistered Sales of Equity Securities and Use of Proceeds . Item 3. Defaults Upon Senior Securities ·rtcm 4. Mine Safety Disclosures Item 5. Other Information Signatures 50 http://www.sec.gov/ Archives/edgar/data/90893 7/000090893712000009/siri-20 12930xl Oq.... 11/7/2012 SIR!- 2012.9.30 -IOQ Page 18 of 56 Table of Contents SIRIUS XM RADIO INC. AND SUDSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCL\L STATEMENTS- Continued (Dollar nmounts in thousands, unle~s otherwise stated) Four of these satellites were manufactured by Boeing Satellite Systems lnternational and five were manufhctured by Space s·ystems/Loral. During the three months ended September 30, 2012 and 20 II, we capitalized expenditures, including interest, of $8,219 and $16,875, respectively, and $25,224 and $67,576 during the nine months ended September 30, 2012 and 2011, respectively, related to the construction of our FM-6 satellite and related launch vehicle. (10) Related Party Trnnsactions We had the following related party balances at September 30, 2012 and December 3 I, 2011: Related party long-term Related party current Related party long-term Related party long-term Related party current nucts n.m~t.t liabilities liabilities debt Setltember JO, DecemberJI, S~plember JO, December Jl, September JO, De-rember J I, September JO. December ll, S~plemberJ(}, December Jl, 2012 lOll 1012 2011 2012 lOll lOll lOll 1012 2011 Liberty 8,408 9,722 Media $ $ $ 837 $ t,212 $ $ $ $ $ 208,742 $ 328,788 Sirius XM 8,221 14,702 49,267 53,74t 4,580 4,580 19,660 2t,74t Canada Total$ 8,221 $ t4.702 $ 50.104 $ 54,953 $ 12,988 $ 14,302 $ 19,660 $ 21,741 $ 208,742 $ 328,788 Liberty Media fn February 2009, we entered into an fnvestment Agreement {the "fnvestment Agreement") with an affiliate of Liberty Media Corporation, Liberty Radio, LLC {collectively, "Liberty Media"), Pursuant to the fnvestment Agreement, in March 2009 we issued to Liberty Radio, LLC 12,500,000 shares of our Convertible Perpetual Preferred Stock, Series D-1 (the "Series B Preferred Stock"), with a liquidation preference of$0.001 per share in partial consideration for certain loan !nvestments. Liberty Media has representatives on our board of directors. In September 2012, Liberty Media converted 6,249,900 shares of the Series B Preferred Stock into 1,293,467,684 shares of common stock. As of October 25, 2012, Liberty Media owned approximately 1,904,291,000 shares of our common stock. Liberty Media has advised us that as of September 30,2012 and December 31, 2011, respectively, it also owned the following: September JO, l)e(:ember J l, 2012 2011 8.75% Senior Notes due 2015 $ 150,000 $ 150,000 9. 75% Senior Secured Notes due 2015 50,000 l3% Senior Notes due 2013 76,000 7% Exchangeable Senior Subordinated Notes due 2014 11,000 11,000 7.625% Senior Notes due 2018 50,000 50,000 Total principal debt 211,000 337,000 Less: discounts 2,258 8,212 Total carrying value of debt $ 208,742 $ 328,788 During the three months ended September 30, 2012, we redeemed Liberty Media's $50,000 of9.75% Senior Secured Notes due 2015 and $76,000 of 13% Senior Notes due 2013 as part of the redemption of these Notes in their entirety. As of September 30,2012 and December 31, 201 l, we recorded $8,408 and $9,722, respectively, rehtted to accnaed interest with Liberty Media to Related party current liabilities. We recognized Interest expense associated with debt held by Liberty Media of $8,242 and $8,934 for the three months ended September 30,2012 and 2011, respectively, and $26,260 and $26,718 for the nine months ended September 30,2012 and 2011, respectively. 14 http://www.sec.gov/Archives/edgar/data/908937/000090893712000009/siri-20 12930x I Oq.... 11/7/2012 SIRI- 2012.9.30 -10Q Page 24 of 56 Tahle of Contents SIRIUS XM RADIO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED I'INANCIAL STATEMENTS- Continued (Dollar amounts in thousands, unless otherwise stated) 11.15% Settlor Secured Notes due 2013 In January 2011, we purchased the remaining portion of our outstfinding I 1.25% Senior Secured Notes due 2013 for an aggregate purchase price of$40,376. A loss ti'om extinguishment of debt of$4,915 associated with this purchase was recorded during the nine months ended September 30, 20 II. Covenants mul Restrlctlolls Our debt generally requires compliance with certain covenants that restrict our ability to, among other things, (i) incur additional indebtedness unless our consolidated leverage would be no greater than 6.0 times consolidated operating cash flow after the incurrence of the indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with atliliates, (v) merge or consolidate with another person, (vi) sell, assign, lease or otherwise dispose of alJ or substantially .all of our assets, and (vii) make voluntary prepayments of certain debt, in each case subject to exceptions. Under our debt agreements, the following generally constitute an event of default: (i) a default in the payment of interest; (ii) a default in the payment of principal; (iii) failure to comply with covenants; (iv) failure to pay other indebtedness after final maturity or acceleration of other indebtedness exceeding a specified amount; (v) certain events of bankruptcy; (vi) a judgment for payment of money exceeding a specified aggregate amount; and (vii) voidance of subsidiary guarantees, subject to grace periods where applicable. If an event of defhult occurs and is continuing, our debt could become immediately due and payable. · At September 30, 20I2 and December 31, 201 I, we were in compliance with our debt covenants. (13) Stockholders' Equity CommoJJ Stock, pllr value $0.001 per slwre We were authorized to issue up to 9,000,000,000 shares of common stock as of September 30, 20 I 2 and December 31, 20 II. There were 5, I92,364,730 and 3,753,201,929 shores of common stock issued and outstanding as of September 30, 2012 and December 31, 20 II, respectively. As of September 30, 2012, approximately I,954,599,000 shares of common stock were reserved for issuance in connection with outstanding convertible debt, preferred stock, warrants, incentive stock awards and common stock to be granted to third parties upon satisfaction of perfonnance targets. To facilitate the offering of the Exchangeable Notes, we entered into share lending agreements with Morgan Stanley Capital Services Inc. ("MS") and UBS AG London Branch ("UBS") in July 2008, under which we loaned MS and UBS an aggregate of 262,400,000 shares of our common stock in exchange for a tee of $0.001 per share. During the third quarter of2009, MS returned to us 60,000,000 shares of our common stock borrowed. In October 20 II, MS and UBS returned the remaining 202,400,000 shares loaned. The returned shares were retired upon receipt and removed from outstanding common stock. The share lending agreements have been terminated. Under GAAP, the borrowed shares were not considered outstanding for the purpose of computing and reporting our net income (loss) per common share. We recorded interest expense related to the amortization of the costs associated with the share lending arrangement and other issuance costs of$3, 139 and $1,276, respectively, for the three months ended September 30, 2012 and 2011 and $9,181 and $6,727, respectively, tOr the nine months ended September 30, 2012 and 2011. As of September 30, 20I2, the unamortized balance of the debt issuance costs was $30,873, with $30,256 recorded in deferred financing fees, net, and $617 recorded in LongMterm related partY assets. As of December 31, 20 II, the unamortized balance of the debt issuance costs was $40,054, with $39,253 recorded in deferred financing fees, net, and $80 I recorded in Long-tenn related party assets. These costs will continue to be amortized until the debt is terminated. In January 2004, Sirius Satellite Radio lnc. signed a seven-year ngreement with u sports programming provider which expired in Fcbnmry 2011. Upon execution of this agreement, Sirius delivered I5, 173,070 shares of common stock valued at $40,967 to that programming provider. These shares of common stock were subject to transfer restrictions which lapsed over time. We recognized share based payment expense associated with these shares of $1,568 in the nine months ended September 30, 20 t I. 20 http://www.sec.gov/Archives/edgar/data/908937/000090893712000009/siri-20 12930x 1Oq .... 11/7/2012 SIR!- 2012.9.30 -1 OQ Page 25 of 56 Table of Contents SIRIUS XM RADIO INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS- Continued (Dollar amounts in thousands, unless· otherwise stated) Preferred Stock, par value SO.OOJ per s!tare We were authorized to issue up to 50,000,000 shares of undesignated prefCrred stock as of September 30, 2012 and December 31, 20 II. There were no shares of Series A Conwrtible Preferred Stock ("Series A Preferred Stock") issued and outstanding as of September 30, 2012 and December 31, 20 II. There were 6,250, I 00 and 12,500,000 shares of Series B Preferred Stock issued and outstanding as of September 30, 2012 and December 31, 20 II, respectively. In September 2012, Liberty Media converted 6,249,900 shares of the Series B Preferred Stock into I ,293,467,684 shares of common stock. The Series B Preferred Stock is convertible into shares of our common stock at the rate of 206.9581409 shares of common stock for each share of Series B Preferred Stock, representing approximately 20% of our outstanding shares of common stock (after giving effect to such conversion). As the holder of the Series B Preferred Stock, Liberty Radio LLC is entitled to a number of votes equal to the number of shares of our common stock into which such shares of Series B Preferred Stock are convertible. Liberty Radio LLC will also receive dividends and distributions ratably with our common stock, on an asMconvcrted basis. With respect to dividend rights, the Series B Preferred Stock ranks evenly with our common stock and each other class or series of our equity securities not expressly provided as ranking senior to the Series B Preferred Stock. With respect to liquidation rights, the Series 8 Preferred Stock ranks evenly with each other class or series of our equity securities not expressly providt:d as ranking senior to the Series B Preferred Stock, and ranks senior to our common stock. JVarrmtts We have issued warrants to purchase shares of common stock in connection with distribution. programming and satellite purchase agreements. As of September 30, 2012 and December 31, 2011, approximately 22,506,000 warrants to acquire an equal number of shares of common stock were outstanding and fully vested. These warrants were excluded from the calculation of diluted net income per common share as the effect would have been anti-dilutive. The warrants expire at various times through 2015. At September 30, 2012 and December 31, 20 II, the weighted average exercise price of outstanding warrants was $2.63 per share. We did not incur warrant related expenses during the three and nine months ended September 30,2012 and 2011. In February 20 II, Daimler AG exercised 16,500,000 warrants to purchase shares of common stock on a net settlement basis, resulting in the issuance of 7,122,951 shares of our common stock. (14) Benefit Plans We recognized share-based payment expense of $17,492 and $13,983 for the three months ended September 30, 2012 and 20 II, respectively, and $46,361 and $36,006 for the nine months ended September 30, 2012 and 20 II, respectively. 2009 Long-Term Stock Incentive Plan In May 2009, our stockholders approved the Sirius XM Radio Inc. 2009 Long-Term Stock Incentive Plan (the "2009 Plan"). Employees, consultants and members of our board of directors are eligible to receive awards under the 2009 Plan. The 2009 Plan provides for the grant of stock options, restricted stock, restricted stock units and other stockMbased awards that the compensation committee of our board of directors may deem appropriate. Vesting and other tenns of stockMbased awards are set forth in the agreements with the individuals receiving the awards. Stock-based awards granted under the 2009 Plan are generally subject to a vesting requirement. Stock based awards generally expire ten years from the date of grant. Each restricted stock unit entitles the holder to receive one share of common stock upon vesting. As of September JO, 2012, approximately 142,977,000 shares of common stock were available for future grants under the 2009 Plan. Otfter PItillS We maintain four other share~based benefit plans- the XM 2007 Stock Incentive Plan. the Amended and Restated Sirius Satellite Radio 2003 Long~ Term Stock Incentive Plan, the XM 1998 Shares Award Plan and the XM Talent Option Plan. No further awards may be made under these plans. Outstanding awards under these plans continue to vest. 21 http://www.sec.gov/Archives/edgar/data/90893 7/000090893712000009/siri-20 12930x 1Oq.... 1117/2012 EXHIBIT4 Page I of7 SC !3D/A I a12-21083 2scl3da.htm SC !3D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No.5)* SIRIUS XM RADIO INC. (Name of Issuer) COMMON STOCK, PAR VALUE $.001 PER SHARE (Title of Class of Securities) 82967N108 (CUSIP Number) Charles Y. Tanabe, Esq. Executive Vice President and General Counsel Liberty Media Corporation 12300 Liberty Boulevard Englewood, CO 80112 (720) 875-5400~ (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 17,2012 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition is the subject of this Schedule 130, and is filing this schedule because of §240.13d- I(e), 240.13d- l(f) or 240.13d-!(g), check the following box. 0 Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent. • The remainder ofthis cover page shall be filled out for a repmting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. 1l1e information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Exchange Act (however, see the Notes). http://www.sec.gov/Archives/edgar/data/908937/000 II 0465912063804/a12-21 083 2sc 13... 11/6/2012 Page 2 of7 CUSIP Number: 82967N I 08 I. Names of Reporting Persons Liberty Media Corporation 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) ------D (b) ------D 3. SEC Use Only 4. Source of Funds (See Instructions) we 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) D 6. Citizenship or Place of Organization Delaware 7. Sole Voting Power 3,162,579,225(1), (2) Number of 8. Shared Voting Power Shares None Beneficially Owned by Each Reporting 9. Sole Dispositive Power Person With 3,162,579,225(1), (2) I 0. Shared Dispositive Power None II. Aggregate Amount Beneficially Owned by Each Reporting Person 3,203,666,978 (3) 12. Check if the Aggregate Amount in Row (II) Excludes Certain Shares (See Instructions) IRl http://www.sec.gov/Archives/edgar/data/908937 /00011 0465912063804/a 12-21083 _ 2sc 13... 11/6/2012 Page 3 of7 Excludes shares beneficially owned by the executive officers and directors of Liberty. 13. Percent of Class Represented by Amount in Row (II) 49.5%(4) 14. Type of Reporting Person (See Instructions) co (l) Sole voting power and dispositive power of such shares is held indirectly through control of wholly owned subsidiaries of Liberty Media Corporation. (2) Does not include 41,087,753 shares of Common Stock that the Reporting Person has the right to acquire within 60 days pursuant to a forward purchase contract. See Item 6 of Amendment No. 3 to the Liberty Schedule lJD. (3) Includes 41,087,753 shares of Common Stock that the Reporting Person has the right to acquire within 60 days pursuant to a forward purchase contract. See Item 6 of Amendment No.3 to the Liberty Schedule !3D. (4) Based on 5, 168,241,703 shares of Common Stock outstanding based on information provided by the Issuer and after giving effect to the Partial Conversion (as defined in Item 3 of this Amendment). 2 http://www.sec.gov/Archives/edgar/data/908937/000110465912063804/al2-21083 2scl3... 11/6/2012 Page 4 of7 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 130 (Amendment No.5) Statement of LIBERTY MEDIA CORPORATION Pursuant to Section 13(d) of the Securities Exchange Act of l 934 in respect of SIRIUS XM RADIO INC. This Report on Schedule !3D relates to the shares of common stock, par value $0.00 l per share (the "Common Stock"), of Sirius XM Radio, Inc., a Delaware corporation (the "Issuer''). The Schedule !3D originally filed with the Securities and Exchange Commission by Liberty Media Corporation (formerly known as Liberty CapStarz, Inc.), a Delaware corporation (the "Reporting Person" or "Liberty"), on September 30, 20 I I, as amended by Amendment No. I filed with the Commission on May 9, 2012, Amendment No.2 filed with the Commission on May 31,2012, Amendment No.3 filed with the Commission on August 17, 20 !2 and Amendment No.4 filed with the Commission on September 13, 2012 (collectively, the "Liberty Schedule l3D"), is hereby amended and supplemented to include the information set forth herein. This amended statement on Schedule !3D/A (this "Amendment") constitutes Amendment No.4 to the Liberty Schedule !3D. Capitalized terms not defined herein have the meanings given to such terms in the Liberty Schedule !3D. Item 3. Source and Amount of Funds or Other Consideration The infotmation contained in Item 3 of the Liberty Schedule l3D is hereby amended and supplemented by adding the following information: On September 17, 2012, Liberty Radio, LLC ("Liberty Radio"), a wholly-owned subsidiary of the Reporting Person and the registered holder of 12,500,000 shares of the B-1 Preferred Stock, converted (the "Partial Conversion") 6,249,900 shares of the B-1 Preferred Stock at a conversion rate of206.9581409 shares of Common Stock for each share of B-1 Preferred Stock so converted. The aggregate number of shares of Common Stock issued in the Partial Conversion is 1,293,467,684, and, after the Partial Conversion, Liberty Radio is the registered holder of 6,250, l 00 shares of B-1 Preferred Stock. As a result of the Partial Conversion: • the Reporting Person and its wholly-owned subsidiaries are the registered owners of I ,863,203,483 shares of Common Stock (not including 41,087,753 shares that may be purchased upon physical settlement under the Forward Contract (see Item 6 of Amendment No.3 to the Liberty Schedule l3D)), representing approximately 32% of the outstanding shares of Common Stock; • pursuant to the Cet1ificate of Designations, the number of Series B-1 Directors to be elected at the next annual meeting of stockholders of the Company will be reduced from five to three; and 3 http://www.sec.gov/Archives/edgar/data/908937/000II 0465912063804/al2-21083 2scl3... 11/6/2012 Page 5 of7 • the Rep01ting Person, as the owner of all of the outstanding shares of Series B-1 Preferred Stock, retained the consent rights set forth in the Certificate of Designations. Item 5. Interest in Securities of the Issuer The information contained in Item 5 of the Liberty Schedule I 3D is hereby amended and supplemented by adding the following information: The information contained in Items 3 and 6 of, and Rows (7) through ( 10) of the cover page to, this Amendment is incorporated herein by reference. (a) The Reporting Person beneficially owns 3,203,666,978 shares of Common Stock (including (i) 1,293,509,076 shares of Common Stock issuable upon the conversion of all of the outstanding shares ofB-1 Preferred Stock, (ii) 5,866,666 shares of Common Stock issuable upon the exchange of $11 million aggregate principal amount of the Issuer's 7% Exchangeable Senior Subordinated Notes due 2014 (the "Exchange Notes") beneficially owned by the Reporting Person and (iii) the 41,087,753 shares that may be purchased upon physical settlement under the Forward Contract), which represent approximately 49.5% of the outstanding shares of Common Stock (as calculated pursuant to Rule l3d-3 of the Securities Exchange Act of 1934, as amended). 11Je number of shares of Common Stock deemed outstanding is 5, 168,241,703 based on information provided by the Issuer and after giving effect to the Partial Conversion. (b) The Reporting Person has the sole power to vote or to direct the voting of 3, 162,579,225 shares of Common Stock, and has the sole power to dispose or to direct the disposition of such number of shares. During the term of the Forward Contract, the Reporting Person has no right to vote or direct the voting, and has no right to dispose or direct the disposition, of the 41,087,753 shares of Common Stock covered by the Forward Contract, which are notional shares. (c) Other than as stated herein or in any amendments to the Liberty Schedule !3D, no transactions in the Common Stock were effected by the Reporting Person or, to the best of its knowledge, any of the persons listed on Schedule I hereto in the past 60 days. 4 http://www.sec.gov/Archives/edgar/data/908937/00011 0465912063804/a12-21083 2sc13... 11/6/2012 Page 6 of7 Signature After reasonable inquiry and to the best of my knowledge and belief, I certifY that the information set forth in this statement is true, complete and correct. Dated: September 17, 2012 LIBERTY MEDIA CORPORATION By:/s/ Charles Tanabe Charles Tanabe Executive Vice President 5 http://www.sec.gov/Archives/edgar/data/908937 /00011 0465912063804/a12-21 083 _ 2sc13... 11/6/2012 Page 7 of7 EXHIBIT INDEX Exhibit No. l>escri tion 7(a) Investment Agreement, dated as of February 17, 2009, between Sirius XM Radio Inc. and Liberty Radio, LLC (filed as Exhibit 4.55 to the Issuer's Annual Report on Form 10-K (SEC File No. 000-2471 0) dated March 9, 2009 and incorporated herein by reference). 7(b) Certificate of Designations of Series B-1 Convertible Perpetual Preferred Stock of the Issuer, dated March 5, 2009 (filed as Exhibit 3.1 to the Issuer's Current Report on Form 8-K (SEC File No. 000-24710) dated March 6, 2009 and incorporated herein by reference). 6 http://www.sec.gov/Archives/edgarldata/908937/00011 0465912063804/al2-21 083 _ 2scl3... 11/6/2012 EXHIBIT 5 Sirius FCC Applications* Disclosing Liberty Media Ownership Interest Application File Number Accepted For Filing PN Action Taken PN Date Date SAT -MOD-20091119-00123 12118/2009 2/5/2010 Int'1 Bur. Report No. SAT- 25 FCC Red. 1299 (Int'l Bur. 00655 (rei. Dec. 18, 2009) 2010) SAT-LOA-20 100409-00072 4/23/2010 2/1112011 Int'l Bur. Report No. SAT- 26 FCC Red. 1417 (Int'l Bur. 00683 (rei. Apr. 23, 2010) 2011) SAT-MOD-20100722-00165 8/6/2010 10/15/2010 Int'l Bur. Report No. SAT- 25 FCC Red. 14428 (Int'l 00712 (rei. Aug. 6, 2010) Bur. 2010) SAT-MOD-20101001-00205 10/8/2010 11112/2010 Int'l Bur. Report No. SAT- 25 FCC Red. 15956 (Int'l 00726 (rei. Oct. 8, 20 10) Bur. 2010) SAT-MOD-20101216-00262 1/14/2011 3/11/2011 Int'l Bur. Report No. SAT- 26 FCC Red. 3788 (Int'l Bur. 00749 (rei. Jan. 14, 2011) 2011) SAT -MOD-20 101216-00263 1/14/2011 3111/2011 Int'l Bur. Report No. SAT- 26 FCC Red. 3788 (Int'l Bur. 00749 (rei. Jan. 14, 2011) 2011) SAT-MOD-20101216-00264 1/14/2011 3/11/2011 . Int'l Bur. Report No. SAT- 26 FCC Red. 3788 (Int'l Bur. 00749 (rei. Jan. 14, 2011) 2011) SAT-MOD-20110525-00099 6117/2011 9/2/2011 Int'l Bur. Report No. SAT- 26 FCC Red. 12704 (Int'l 00786 (rei. June 17, 2011) Bur. 2011) * Excludes pro forma transfer of control and assignment applications disclosing Liberty Media ownership interest but which are not placed on an accepted for filing public notice.