In digging through SXM's 3Q looking for some answers to the accounts payable problem brought up to pay MLB & the NFL, I came across an "Operating Expense Bucket" titled:
Operating Expenses: Programming and Content
Programming and content expenses include costs to acquire, create and produce content and on-air talent costs. We have entered into various agreements with third parties for music and non-music programming. These agreements require us to pay license fees, share advertising revenue, purchase advertising on media properties owned or controlled by the licensor and pay other guaranteed amounts.
I include here the explanation for the nine months ending 9/30/08:
Nine Months: For the nine months ended September 30, 2008 and 2007, programming and content expenses were $222,975 and $173,324, respectively, which represents an increase of $49,651. Excluding stock-based compensation of $7,477 and $6,857 for the nine months ended September 30, 2008 and 2007, respectively, programming and content expenses increased $49,031 from $166,467, to $215,498. The increase was primarily due to the impact of the Merger. XM’s programming and content expense accounted for $18,046 during the nine months ended September 30, 2008. The remaining increase was primarily attributable to a $27,500 one-time payment to a programming partner due upon completion of the Merger and license fees associated with new programming.
With the total revenue for the same period (9 months)being:
The Escrow Payment of $120M for the 2011 & the 2012 years is kept in an account titled: Restricted Investments, along with some other escrow fees for leases and mortgages, totaling $141M.
It would appear that they have been accruing payments to content providers right along even though actual payments to the providers are made annually, quarterly, or whatever is defined per contract. This would change Homer's formula considerably if the cash as been accrued, as this information indicates. Any thoughts??