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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies The following table summarizes our expected contractual cash commitments as of September 30, 2023:
| 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | Thereafter |  | Total
Debt obligations | $ | 22 |  |  | $ | 505 |  |  | $ | 5 |  |  | $ | 1,140 |  |  | $ | 1,500 |  |  | $ | 6,250 |  |  | $ | 9,422 |
Cash interest payments | 14 |  |  | 399 |  |  | 389 |  |  | 385 |  |  | 344 |  |  | 636 |  |  | 2,167 |
Satellite and transmission | 27 |  |  | 290 |  |  | 197 |  |  | 92 |  |  | 40 |  |  | 2 |  |  | 648 |
Programming and content | 130 |  |  | 344 |  |  | 263 |  |  | 134 |  |  | 63 |  |  | 107 |  |  | 1,041 |
Sales and marketing | 30 |  |  | 99 |  |  | 31 |  |  | 20 |  |  | 6 |  |  | — |  |  | 186 |
Satellite incentive payments | 2 |  |  | 8 |  |  | 8 |  |  | 3 |  |  | 3 |  |  | 15 |  |  | 39 |
Operating lease obligations | 16 |  |  | 56 |  |  | 51 |  |  | 47 |  |  | 39 |  |  | 79 |  |  | 288 |
Royalties, minimum guarantees and other | 105 |  |  | 393 |  |  | 167 |  |  | 79 |  |  | 26 |  |  | 12 |  |  | 782 |
Total (1) | $ | 346 |  |  | $ | 2,094 |  |  | $ | 1,111 |  |  | $ | 1,900 |  |  | $ | 2,021 |  |  | $ | 7,101 |  |  | $ | 14,573 |
(1)The table does not include our reserve for uncertain tax positions, which at September 30, 2023 totaled $110. Debt obligations. Debt obligations include principal payments on outstanding debt and finance lease obligations. Cash interest payments. Cash interest payments include interest due on outstanding debt and capital lease payments through maturity. Satellite and transmission. We have entered into agreements for the design, construction and launch of four additional satellites, SXM-9, SXM-10, SXM-11 and SXM-12. We also have entered into agreements with third parties to operate and maintain satellite telemetry, tracking and control facilities and certain components of our terrestrial repeater networks. Programming and content. We have entered into various programming and content agreements. Under the terms of these agreements, our obligations include fixed payments, advertising commitments and revenue sharing arrangements. In certain of these agreements, the future revenue sharing costs are dependent upon many factors and are difficult to estimate; therefore, they are not included in our minimum contractual cash commitments. Sales and marketing. We have entered into various marketing, sponsorship and distribution agreements to promote our brands and are obligated to make payments to sponsors, retailers, automakers, radio manufacturers and other third parties under these agreements. Certain programming and content agreements also require us to purchase advertising on properties owned or controlled by the licensors. Satellite incentive payments. Maxar Technologies (formerly Space Systems/Loral), the manufacturer of certain of our in-orbit satellites, may be entitled to future in-orbit performance payments upon XM-5, SIRIUS FM-5, SIRIUS FM-6, and SXM-8 meeting their fifteen-year design life, which we expect to occur. Operating lease obligations. We have entered into both cancelable and non-cancelable operating leases for office space, terrestrial repeaters, data centers and equipment. These leases provide for minimum lease payments, additional operating expense charges, leasehold improvements and rent escalations that have initial terms ranging from one to fifteen years, and certain leases have options to renew. Royalties, Minimum Guarantees and Other. We have entered into music royalty arrangements that include fixed payments. In addition, certain of our podcast agreements also contain minimum guarantees. As of September 30, 2023, we had future fixed commitments related to music royalty and podcast agreements of $500, of which $64 will be paid in 2023 and the remainder will be paid thereafter. On a quarterly basis, we record the greater of the cumulative actual content costs incurred or the cumulative minimum guarantee based on forecasts for the minimum guarantee period. The minimum guarantee period is the period of time that the minimum guarantee relates to, as specified in each agreement, which may be annual or a longer period. The cumulative minimum guarantee, based on forecasts, considers factors such as listening hours, downloads, revenue, subscribers and other terms of each agreement that impact our expected attainment or recoupment of the minimum guarantees based on the relative attribution method. Several of our content agreements also include provisions related to the royalty payments and structures of those agreements relative to other content licensing arrangements, which, if triggered, cause our payments under those agreements to escalate. In addition, record labels, publishers and performing rights organizations with whom we have entered into direct license agreements have the right to audit our content payments, and such audits often result in disputes over whether we have paid the proper content costs. We have also entered into various agreements with third parties for general operating purposes. In addition to the minimum contractual cash commitments described above, we have entered into other variable cost arrangements. These future costs are dependent upon many factors and are difficult to anticipate; however, these costs may be substantial. We may enter into additional programming, distribution, marketing and other agreements that contain similar variable cost provisions. We do not have any other significant off-balance sheet financing arrangements that are reasonably likely to have a material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources. Legal Proceedings In the ordinary course of business, we are a defendant or party to various claims and lawsuits, including those discussed below. We record a liability when we believe that it is both probable that a liability will be incurred, and the amount of loss can be reasonably estimated. We evaluate developments in legal matters that could affect the amount of liability that has been previously accrued and make adjustments as appropriate. Significant judgment is required to determine both probability and the estimated amount of a loss or potential loss. We may be unable to reasonably estimate the reasonably possible loss or range of loss for a particular legal contingency for various reasons, including, among others, because: (i) the damages sought are indeterminate; (ii) the proceedings are in the relative early stages; (iii) there is uncertainty as to the outcome of pending proceedings (including motions and appeals); (iv) there is uncertainty as to the likelihood of settlement and the outcome of any negotiations with respect thereto; (v) there remain significant factual issues to be determined or resolved; (vi) the relevant law is unsettled; or (vii) the proceedings involve novel or untested legal theories. In such instances, there may be considerable uncertainty regarding the ultimate resolution of such matters, including the likelihood or magnitude of a possible eventual loss, if any. U.S. Music Royalty Fee Actions and Mass Arbitrations. A number of class actions and mass arbitrations have been commenced against us relating to our pricing, billing and subscription marketing practices. Although each class action and mass arbitration contains unique allegations; in general, the actions and arbitrations allege that we falsely advertised our music subscription plans at lower prices than we actually charge, that we allegedly did not disclose our “U.S. Music Royalty Fee”, and that we have taken other actions to prevent customers from discovering the existence, amount and nature of the U.S. Music Royalty Fee in violation of various state consumer protection laws. The plaintiffs and claimants seek to enjoin us from advertising our music subscription plans without including the amount of the U.S. Music Royalty Fee. The plaintiffs and claimants also seek disgorgement, restitution and/or damages in the aggregate amount of U.S Music Royalty Fees paid by customers, as well as statutory and punitive damages where available. To date, the actions and arbitrations filed against us include: •On April 14, 2023, Ayana Stevenson and David Ambrose, individually, as private attorneys general, and on behalf of all other California persons similarly situated, filed a class action complaint against us in the Superior Court of the State of California, County of Contra Costa. The case has since been removed to the United States District Court for the Northern District of California. •On May 17, 2023, Robyn Posternock, Muriel Salters and Philip Munning, individually, as private attorneys general, and on behalf of all other New Jersey persons similarly situated, filed a class action complaint against us in the United States District Court for the District of New Jersey. •On June 5, 2023, Christopher Carovillano and Steven Brandt, individually, as private attorneys general, and on behalf of all other United States persons similarly situated (excluding persons in the states of California, New Jersey and Washington), filed a class action complaint against us in the United States District Court for the Southern District of New York. •Commencing on June 5, 2023, the law firm of Hattis & Lukacs filed a series of mass arbitration claims against us before the American Arbitration Association on behalf of approximately 13,500 claimants. In addition, we have been served with notices of claims by law firms claiming to represent approximately 11,000 claimants. The notices purport to state a variety of claims, including that: we do not adequately disclose to customers the total cost of our subscriptions; do not describe the type or amount of the fees imposed on customers; we enroll customers in automatic bill payments without having knowledge of the U.S. Music Royalty Fee; we fail to provide consumers with an easy way to cancel their subscriptions; in the case of trial subscriptions, we require customers to preauthorize automatic deductions from their accounts, while hiding the fact that customers agree to automatically pay recurring charges at higher rates when the promotional period ends; and we engage in other deceptive consumer practices. The notices assert potential causes of action under the Electronic Funds Transfer Act, various state consumer protection and false advertising laws, and other unspecified state and federal laws. We expect the claimants may also pursue individual arbitrations before the American Arbitration Association pursuant to the terms and conditions of our Customer Agreement. We believe we have substantial defenses to the claims asserted in these actions and arbitrations, and we intend to defend these actions vigorously. Other Matters. In the ordinary course of business, we are a defendant in various other lawsuits and arbitration proceedings, including derivative actions; actions filed by subscribers, both on behalf of themselves and on a class action basis; former employees; parties to contracts or leases; and owners of patents, trademarks, copyrights or other intellectual property. None of these other matters, in our opinion, is likely to have a material adverse effect on our business, financial condition or results of operations.

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