Please stand by. We are about to begin. Good morning and welcome to SiriusXM Third Quarter 2016 Results Conference Call. Today's conference is being recorded. A question-and-answer session will be conducted following the presentation. At this time, I would like to turn the call over to Hooper Stevens, Vice President of Investor Relations and Finance. Mr. Stevens, please go ahead.

Thank you, Kyle, and good morning, everyone. Welcome to SiriusXM's earnings conference call for the third quarter. Today, Jim Meyer, our Chief Executive Officer, will be joined by David Frear, our Senior Executive Vice President and Chief Financial Officer. At the conclusion of our prepared remarks, management will be glad to take your questions. Scott Greenstein, our President and Chief Content Officer, is also available for the Q&A portion of the call. First, I would like to remind everyone that certain statements made during the call might be forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based on management's current beliefs and expectations and necessarily depend upon assumptions, data, or methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information about those risks and uncertainties, please view SiriusXM's SEC filings. We advise listeners not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I would like to remind our listeners that today's results will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation. With that, I will hand the call over to Jim Meyer.

Thanks, Hooper and good morning. What an exciting quarter here at SiriusXM. We turned in strong third quarter results including record revenue and adjusted EBITDA and we are increasing our full year guidance for both of these two metrics. We are on track to achieve the rest of our guidance which we increased across the board this summer, and for the first time ever, we are adding a regular quarterly dividend to enhance our best-in-class capital return program. We also added another $2 billion to our share buyback authorization. Once again, SiriusXM is executing on our short-term goals even while making substantial progress on long-term objectives. We are doing a great job of avoiding distractions and following through on our commitments. We delivered an all-time high adjusted EBITDA margin of 38.4% during the quarter continuing our march north in margins. During the quarter, we added 385,000 self-pay net additions or 345,000 total net adds after accounting for changes in paid trials. I'm thrilled to announce that as of today, we have now exceeded 31 million total subscribers. Quite frankly, the auto industry is right where we anticipated and we remain pleased as new auto sales bounce around in the high 16 million to low 17 million range. We are confident in our full-year estimate for approximately 1.6 million self-pay net additions and 1.7 million total net additions. Those of you who have been following me at this company know how much I value our OEM distribution partners and how hard we work to keep that auto distribution channel strong. In the third quarter, we achieved several key accomplishments here and our OEM relationships have never been in better shape. Our penetration rate of 76% in the third quarter was up one point year-over-year and it's never been higher and our…

Thanks, Jim. Good morning, everyone. Thanks for joining us today. Our third quarter results continued to build on the strong performance we turned in the first half of the year. New car sales may have been down 1% in the quarter year-over-year but SAAR remains at a very healthy 17.4 million vehicle level and we will take that as long as it comes. Sales of SiriusXM-enabled vehicles actually grew 1% as our penetration rate rose to an all-time high of 76%. Used vehicle trial starts grew 21% over the prior year, bringing the total trial funnel at the end of the quarter to just under 9 million cars, the highest ever from 8.4 million at this time last year. While conversion of new car buyers remains our largest acquisition channel, it accounted for only 48% of all self-pay gross additions this quarter, conversions of used car buyers continues to grow rapidly accounting for 25% of self-pay additions in the quarter and we expect this figure to grow for many years to come. Including our win back and direct to self-pay marketing efforts, total used car additions were 34% of our self-pay adds in the quarter. We added 345,000 total net new subscribers in the quarter to bring our total subscriber count to just under 31 million. On a self-pay basis, we added 385,000 net new subs to bring our self-pay count to just over 25.5 million. Our self-pay churn rate in the quarter was 1.9%, which is flat from the third quarter of 2015 and in line with what we view as our long-term range. Based on these solid results, we feel good about achieving our total subscriber guidance of approximately 1.7 million net adds for the full year and self-pay net subscriber additions of approximately 1.6 million. Revenue in…

Thank you. And we'll take our first question from Vijay Jayant with Evercore ISI.

Thank you. Good morning. So question's on the dividend, it's about $200 million a year and if you sort of look at your buyback through 3Q and so far in 4Q, it started running below the $500 million level that you've done in the past. So just want to understand that how is the dividend adding on or is going to be part of the $2 billion that you're still committed to, like a $2 billion buyback. I think you mentioned that; I just want to confirm that. And then just on the business, can you just talk about how you think you're going to price the 360L product? Will all the chipsets have both the IP and the satellite functions embedded in it and you only activate the IP version if that person chooses the premium service, and any talk on what that pricing premium could be? Thank you.

I'll take the question on 360L first. Let me clear, at the heart of 360L is really software as opposed to a chipset that drives it, okay, because it's designed to take advantage both of an embedded modem should that exist in the car or a tethered modem from someone's device that they carry into the car. We haven't gotten anywhere near where we're ready yet to talk about how we might price or what options it might give us. It's a really interesting question. It's one that my staff and I quite honestly are going to discuss in a couple weeks at an off-site, but I'd say we're fairly far away from getting any detail from that level in terms of what it might do to our tiering and our pricing structure. In terms of the dividend, number one. I want to be clear, I'm really excited to be able to offer that our board obviously felt strongly about offering this and clearly with management's recommendation to do this. I don't really see tying the two together. The capital return authorization we've been very clear on. The board's increased it from $8 billion to $10 billion. I think David and I have both been clear that as you're thinking about our business, you ought to plan on that being about $2 billion a year. Some quarters will be a little less, some quarters will be a little more, but that's pretty clear where we're trying to go and what we're trying to do. And the launch of the dividend, you are exactly right, it's about $200 million, and we want to get it out there and see how it does.

Great. Thank you so much.

We'll take our next question from Jason Bazinet from Citi.

I know historically you guys have always downplayed the international opportunity, but at least when I've done the simple back-of-the envelope math, it suggested your sub base in North America may run out of gas at around the 40 million customer mark. So I just wanted to check-in and see has anything changed in terms of your thinking regarding international expansion or is it still the same, it's still very much noticeable?

Well, Jason, number one, I, for one, would be really happy at 40 million subscribers, and sure we're working hard to get there. Obviously, we're acquiring the Canadian entity because we see real value in improving how we can run the company together from a variety of best practices frankly on both sides of what our Canadian company is doing and what we're doing. We continue to look at Mexico. We have not come up with a viable plan there yet, Dave and I look at them all the time, but they're a long way from a plan we're ready to endorse, or one that we think is a good path for us. And with those exceptions I have to be quite honest with you, we're just simply not focused on any other international expansion. We look at it. People come to us all the time with various opportunities that are satellite-based. We've had some people talk to us about partnering with them on their Internet-based services. We have some visitors, for instance, coming in a couple weeks from a country that's the leading provider in that country of radio services that wants to talk about doing something together, but I would tell you it's all really nothing more than talk right now.

Okay. Thank you very much.

We'll take our next question from Jessica Reif Cohen with Bank of America.

Thank you. First of all, congratulations on the dividend. Just couple of questions. Can you give us any update on when you will roll out the video product starting with Howard Stern and anything to come after that?

Yes, I think David made some comments at a conference a couple weeks ago that I think is exactly where we are. Number one, we don't have that date lined up yet. We are deep into it and I think I mentioned, Jessica, at your conference that we've signed a strategic agreement with a company called Whalerock that's working with us to both architect and help us plot out not just what we want to launch short-term but where we might want to be mid-term and long-term using video to enhance our service. We're also getting that in a position where we can begin to have more conversations with Howard himself and clearly we will launch our video service with Howard. There is no question there. I hope I have more to say about this in the next couple months, but you should assume it's sometime next year.

2017, okay. And then SAC was down a lot in the quarter. Is this all due to the used car channel or was there a change in your underlying cost?

Sorry, I missed part of your...

The decline in SAC, is that due to the growth in the used car channel or was there a change in the cost structure?

So the used car channel doesn't affect SAC because it's only – a fraction is just new car installations, right, so.

Right. Okay.

Yeah, so it's not a channel mix thing. It is just improvement in contractual rates. We do hammer away at and driving costs down and there are times when we get step function changes in what this looks at, where we have a particular contract that rolls over and changes rates. But we're like any technology company where we know exactly what those costs are going to be, because we know what the building materials for the product is. But then it's implemented through a bunch of OEMs who are all operating on different timeframes in terms of when they move from an older higher cost platform to a lower new cost platform. So every now and then we get a bump like this.

Wow. Then one last question, Jim, you mentioned that you will invest more in connected vehicles. Do you mean investment or acquisitions?

So I mean both. And I said that more to kind of point you guys and point investors where I think there may be opportunities. I will tell you, and I used the words carefully in my comments today, this is the greenfield kind of thing, right. I know you all, your firms participate in writing them. I know investors that are on the phone participate in subscribing to them. The opportunities that you see I cannot remember which big bank came out with a report in the last two weeks, a very credible report that sizes the opportunity in the connected vehicle at $500 billion to $800 billion globally. This is a gigantic thing, okay. And I've been very clear with you guys that we know where North is. The connected vehicle is going to come. We know where we're going to play in that in terms of safety and security and things like that in the near-term. But bigger opportunities in that area we're studying hard now to see are there areas there where not only can we play, but quite candidly areas there that our strengths match very well with. I don't have any answers for you, but what I want to assure you is we're putting a lot of effort there and my gut tells me this is an area in the future we will certainly invest more in.

Thank you.

We'll take our next question from Phil Cusick with JPMorgan.

Hi, guys. Thanks. I wondered if you can talk about used, if the pace of new car sales come off, I wonder how you think about the correlation of the velocity of used car turnover and sales there as well? How correlated should we think of those two streams? Or is there is so much opportunity in used that you wouldn't expect any pullback? And also you've pointed out that a lot of homes in the U.S. have both new and used cars. Have you seen any difference in churn across similar cohorts of new and used? Thanks.

On the churn question, we really don't see a difference. When somebody chooses to become a self-pay subscriber, then they pretty much behave all the rest. In terms of your question on volatility, we think the growth that we have – just the organic growth we have in the used car channel is likely to offset any impact from new cars is certainly mitigated. In terms of the historical volatility in used cars, to be honest, I don't think there's a lot of really good long-term data on used cars where there is new cars. But with the data set that we have, some of our guys think that there's about – the used car market has about half of the volatility of the new car market. But I think for us – if you're thinking about like the next, let's call it five years, I think, overwhelmingly the organic growth in used car distribution for us is going to offset any cyclicality.

Understood. Thanks.

We'll take our next question from Ben Swinburne with Morgan Stanley. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Thank you. I just want to understand the theme of used cars for a second because it's obviously a big driver, no pun intended, of the success you've had the last couple of years. Jim, when you look at how many used cars sell a year in the U.S., how many of those sales are you communicating with the buyer around a trial today and what's a realistic goal for your organization. I would imagine 100% of the used car market is probably not realistic. But where do you think you can get the company through the various relationships you have with dealers and insurance companies and other things you've got planned over the next few years. And then I had a quick follow-up for David.

Ben, I'll let David take your first question too; I mean go ahead, David.

So Ben, I think of the cars satellite enabled vehicles that are turning over in the used car market today, we think our sort of direct dealer reporting system is getting us that sort of timely customer name and address for the sale of the car, maybe just under 60% of the vehicles being sold. And then we get to another 25% or so from buying basically list sets, all right, and so we think we're getting to 80% with sort of the 55%, 56% range being something that we get within a few days of the sale. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Got it. So then naturally that number continues to grow – the absolute grows as the number of vehicles enabled grows over time.

Exactly.

I think the challenge Ben, and again, I don't have an answer for you here. What David said is absolutely correct, is we're much more heavily penetrated today in the third of the used car business that are certified dealers, which we're getting direct reports from. So to answer your question longer-term, it's harder because we don't know, but more of those sales are going to start coming either from independent dealers or private transactions, which is why we're working so hard to try to find better ways to get that data. So we don't really – I've got to be honest, I don't really know where we're going to end up. Okay. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Right. And just quickly David, can you just help us think about CapEx next couple of years as we go through this build cycle, kind of rough bracketing of where we should expect total capital spending to be over the next kind of two, three years?

I'll tell you what – I will do that as part of guidance for 2017 that you know we do have the capital spending program going on the satellites obviously with launches in 2019 and 2020, but when we come out with guidance for 2017, I'll give you a little more detail on the spend. Benjamin Daniel Swinburne - Morgan Stanley & Co. LLC: Okay. Thank you.

We'll take our next question from Barton Crockett with FBR Capital Markets. Barton Crockett - FBR Capital Markets & Co.: ... for taking the questions. We see one kind of bigger picture and then another a little bit more detail on the numbers. You're getting this great kind of penetration of some of the great new technology for the home with Sonos and you talked about PlayStation, huge improvement over the start of Sirius when you had to stick these clunky satellite antennas out the window, which in personal experience didn't often work. Now it works beautifully through Sonos. Are you getting better engagement from your subscribers as you build into these new technologies and get into the home? Is that part of what's helping you put up these excellent kind of self-paid churn rates right now?

So I think that's certainly our intention. Okay, I mean, there's no question why we're doing it. We're not driving hard today. I wouldn't say in the future we might not experiment. We're not driving hard for, let's call it, a standalone in-home subscriber, okay. Most of our effort for doing all of these things is exactly, as you said, it's to enhance the listening experience outside of the car, and it's our theory and I believe it's going to prove to be absolutely true that that will have a good strong anchoring result in helping our churn performance stay steady. So that's certainly our intention. It's a little early to say we can prove the thesis, but that's what we're trying to do. Barton Crockett - FBR Capital Markets & Co.: Okay, great. And then on one of the numbers your self-paid subscriber guidance, I mean, that would imply only a couple hundred thousand net additions in the fourth quarter, so a lot less than last year. I struggle to come up with the fourth quarter where you've added that few self-paid subs. I mean, is there anything specific going on in the fourth quarter or is there just an element of conservatism in the guidance here?

Well, I would say sort of neither. I mean, we actually do tend to tell you exactly what we think things are going to be and the fact is that the subscriber base is a lot bigger, and so the churn numbers are just bigger while the rate is flat, that means we got a lot more people turning over. So there's sort of a title effect from that you battle against. And we've challenged our team members to kind of really drive the top end of the funnel this quarter just like we do every quarter, we come out, we give you guidance numbers, and then we go back and we work our tails off to beat them. I think it's just a realistic outlook. Barton Crockett - FBR Capital Markets & Co.: Okay, great. Thank you.

We'll take our next question from Amy Yong with Macquarie. Amy Yong - Macquarie Capital (USA), Inc.: Thanks and good morning. David, I think last quarter you talked about how you're watching churn really carefully opposed to price increase, but with churn steady at these levels, I guess what gives you confidence that perhaps there is wiggle room for an additional price increase, and is the video products with Howard Stern and products like telematics, does that boost ARPU over time? Thank you.

So, we always worry about the price adjustments that we make and we worry about all of them a lot. I think we've had enough time with the spring increase to sort of be confident that – we're not seeing a material amount of churn, all that being said, there's no doubt in my mind or in Jim's mind that there is churn going on. It's just that it's not as apparent. You're right, we do watch the churn very closely that we're looking for literally a few basis points difference in trend rates and one of the things about this business we've talked about it over time is sort of these laws of large numbers that you've got 25 million self-paid subscribers, and we're running 20 million trials a year to get new people to join the service. Those are just enormous figures. It's a lot of individual consumers making individual decisions. And so statistically we don't expect to see much variability in it at this point in time, which is why we watch it so closely. In terms of ARPU opportunities that – telematics doesn't figure into our ARPU calculations, so I'd say as it relates to that statistic then, we're not looking for connected vehicle services to drive ARPU. But we actually are very optimistic about this business as we talked many times before, it is a long cycle sort of implementation because you get the contracts done and the OEMs got to work it into production, that tends to take years, and it's going to begin to ramp up. But there's a very bright long-term future for connected vehicle. Amy Yong - Macquarie Capital (USA), Inc.: Great, thank you.

We'll take our next question from Bryan Kraft with Deutsche Bank.

Hi, good morning. Two questions. First I wanted to ask you about royalties. Over the past several months I think we've seen several online music industry players signing royalty agreements directly with the labels. I mean I was wondering with your proceeding (43:56), do you think this time there could be an opportunity for commercial deals instead of the statutory process. And then my other question is on Canada, can you just talk about how integrated those operations will be given the ownership structure and also how that accounting is going to work while you consolidate it, that'd be great. Thank you.

Okay. So on the royalties, I think that a direct deal in place of a statutory license for us is, I don't think that's a possibility that even if you've got the three majors, which I think is highly unlikely that you would still need the statutory license in order to cover all the people that you didn't have deals with. So our business is not the interactive music business where you actually can't play somebody's music out if you don't have a direct deal with them. So I don't really see that as something that's a likely possibility. On the Canadian integration, I think the most important thing to remember with Canada is that it's a different market, and the consumers are different. The economy is different up there that they own their cars much longer. It's an economy that's based more on extractive industries, and it just has a fundamentally different cycle and in many respects it is culturally different and some of the content that they enjoy is different than the U.S. And one of the things that we're not interested in doing is failing to continue to recognize that in fact it is different, it needs to have its own identity and needs to be managed as a separate business. We do think that there are integration opportunities in an awful lot of functions, especially in the area of IT systems and how you procure IT technologies, there's probably some efficiencies from a G&A perspective, it wouldn't be a public company any longer for. But this recapitalization, unlike the U.S. merger and unlike the Canadian merger which were all about the synergies of taking two companies doing the same thing in the same markets and putting them together, this is two companies offering the same product in totally different markets. And so it's not really about synergies so much. From an accounting perspective we have worked through that now with KPMG and with their national office, that as you know that we will own 70% of the equity in their company, but because Canada is a closed market from a media ownership perspective, Canadians will own two-thirds of the voting equity and will have a majority of the board of directors, and as a result under the existing accounting rules we are not deemed to control Canada and so we will not be consolidating it. But when we've got a better view on timing of closing, which I hope to have certainly before we issue 2017 guidance, we'll help you get an understanding of how it's going to affect the various line items in the financial statements, but for now what you know is that we use equity accounting for Canada today and we'll be continuing to use equity accounting for Canada in the future, we'll just have a bigger share.

Great. Thanks very much, David.

Hey, Bryan one other comment I just want to make, you should assume it's a different model, but what David said is absolutely driving us on Canada. Anything that's customer facing, we want to remain the way it should be. But you should also assume – we learned a lot in the acquisition of Agero. And we learned a lot about what we can and can't quickly combine and frankly forget the cost aspects of it, we just learned – it just helps those businesses run better when we can use the best tools across everything and so I think you should have a lot of confidence we know what we're doing there.

Okay. Great. Thanks, Jim.

We'll take our next and final question from Matthew Harrigan from Wunderlich.

Thank you. In your very good 360L demo at CES, you highlighted that you could login and logout in the radios car to car, which has a lot of applicability for Uber or Lyft, can you talk about that and specifically how you can see the increasing prevalence of Uber and Lyft affecting your business? Thank you.

I don't have a really good answer for you right now. I mean, we continue to try to work with Uber and Lyft to figure out a way for our customers to be able to conveniently enjoy our service. As you can guess as more and more of our customers use our service on the app, it really becomes much easier for them to do that. I just don't have a whole lot more that I can add there right now.

Thanks, Jim.