Good morning, and welcome to SiriusXM's Fourth Quarter 2019 Results Conference Call. Today's conference is being recorded. A question-and-answer session will be conducted following the presentation. [Operator Instructions] At this time, I would like to turn the call over to Hooper Stevens, Senior Vice President, Investor Relations and Finance. Mr. Stevens, please go ahead.

Thank you, Ann. And good morning, everyone. Welcome to SiriusXM's 2019 year end conference call. 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 will be available, as well Jennifer Witz, our President of Sales, Marketing and Operations. Those two will be also available for the Q&A portion of the call. First, I’d 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 upon 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 to not rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I would like to advise our listeners that today's results will include discussions about both actual results and pro forma adjusted results. All discussions of pro forma adjusted operating results assume the Pandora transaction closed on January 1, 2018, and exclude the effects of stock-based compensation and certain purchase price accounting adjustments. With that, I'll hand the call to Jim Meyer.

Thanks, Hooper. And good morning. SiriusXM finished 2019 with strong subscriber growth and financial performance. I’m pleased to reiterate our recently introduced 2020 guidance for growth in subscribers, revenue, adjusted EBITDA and free cash flow. The 341,000 self-pay net additions in the fourth quarter pushed us to 1.06 million for the year. Our results in the fourth quarter and year were powered by steady and very good conversion and churn rates, which we feel great about continuing in 2020. As I mentioned in the press release, I’m incredibly proud that we’re able to exceed our guidance and deliver our 10th consecutive year of 1 million or more self-pay net adds. Not many companies out there in any industry have managed to achieve such a long and consistent track record of success. This is a real testament to the quality of our service, but even more so to the excellent team of people we have that do their jobs relentlessly and effectively day-after-day. SiriusXM, over the past decade has truly become a powerhouse in audio entertainment. With Pandora, we have about a 100 million listeners. And just as importantly, 44 million paying subscribers across our businesses in North America. We spend a ton of time working with automakers on their future platforms, ensuring a strong long-term position there and helping the OEMs solve problems. We know where the OEMs are going, in entertainment and infotainment, and this provides us a tremendous strategic advantage. We will march quarter-by-quarter this year towards an 80% new car penetration rate, and I couldn’t be more pleased with the rising incorporation rate. We have recently renewed many of our OEM deals, extending automakers commitments to SiriusXM for years to come with rising penetration rates. Recently to name a few, we’ve completed Toyota, Honda and Nissan, more extensions are in the works. Because of the long-term visibility of our deals, we are confident our enabled fleet size will grow to more than 220 million in the years to come. Perhaps just as importantly, these arrangements focus on guaranteed prominence and placement in the dash. Remember, the OEMs share in our economics and they certainly recognize this and the added consumer satisfaction that SiriusXM and now SiriusXM with 360L bring to their customers. 360L is now the plan of record with OEMs and its distribution will continue to grow. With many new launches coming in model year '21, our next-gen platform will be distributed this year across six OEMs and 13 of their brands. Total vehicles in operation with 360L should reach 2 million by the end of this year and will accelerate sharply in the years to come. 360L brings a more immersive, engaging and personalized listening experience into the vehicle by marrying satellite broadcasting with two-way Internet connectivity. We expect the superior offering of 360L will improve conversion and churn performance. One of the most exciting things about 360L is that – is that it’s our first platform that can handle significant over-the-ear updates, so we can evolve features across the entire fleet now - not just the newly produced vehicles. This provides a path to move Pandora capabilities into large volumes of cars at some point down the line. Additionally, we expect all of the OEMs to adapt our new wideband chipset over the next few years, with the first OEM actually launching it later this year. As we consolidate our broadcast platforms in the middle of the decade, this new chipset will allow us to expand our content offering and multiply the amount of data we are able to send to vehicles. This should open up new ways to monetize and grow our services. 360L and wideband chipsets are the mainstay/future of our in-vehicle roadmap for many years to come. Although we still have plenty of work to do, I’m pleased with our efforts so far to increase listening and engagement on the SiriusXM platform outside of the car. Late last summer, we made streaming available at no extra charge to the vast majority of our subscriber base. Subscribers streaming this service continue to steadily grow. And we know that increased subscriber engagement leads to increased retention. Trailer trialers are also streaming in greater numbers, and we’re finding that our 100 extra channels are resonating very well. We’re also continuing to build out our video library and highlight the availability of Pandora-driven stations to our SiriusXM subscribers. We are seeing steady growth in the use of our service on connected devices, such as those from Amazon and Google. It’s really never been easier to access SiriusXM wherever you are, in the car, at home, the office or on-the-go. At Pandora, I’m very pleased with the steps we’re taking to position the service for success. In 2019, ad monetization was very strong, and I’m optimistic this can continue. Advertisers seek high value in our programmatic inventory, and we grew programmatic significantly in 2019. This matters because we can still achieve great pricing, while simultaneously making our sales force and client services more efficient. Off-platform and AdsWizz revenue both grew incredibly in 2019 and are poised for double-digit expansion this year. Some of our recent product innovations, such as the all-new mobile app design with For You, landing page designed to showcase even more content and the modes feature for listeners to tune stations for more discovery, crowd favorites, deep cuts and more have recently rolled out after extensive testing and are having a positive early impact. In 2019, we greatly increased the amount of podcast content on the platform, including exclusive contents from SiriusXM radio shows. And we continue to add more story playlist, which are unique blends of podcasting and music where artists and creators can include voice tracks to curated music playlists. In December, we introduced LeBron's UNINTERRUPTED and select content from Howard Stern on Pandora. As a unified company, we’re able to offer a significant amount of compelling content from SiriusXM to Pandora listeners that isn't available on other platforms. We are now using Pandora’s own ad tech to promote new content and increasing the use of orders artists and discovery audio messages during station listening to highlight new and relevant content. Combined with a broader rollout of For You, Pandora listeners will be exposed to a much greater volume of exciting new content as we continue to prioritize discovery. We think this approach is great for engagement and increases the relevance of the service. We are also using our larger combined development resources and new ad tech resources to spread our progress on a variety of fronts. Internally, our approach has been to unify our teams in a better together approach. To give you just one example, more than three quarters of our development resources are now being applied in a combined way that will benefit both the SiriusXM and Pandora digitally-connected products over time. We are breaking down silos and cross-pollinating the strengths of both Pandora and SiriusXM. Because of this, the SiriusXM app is becoming more personalized, easier to use and smarter about servicing relevant content to listeners. In an extension of the off-platform business created by Pandora, later this year we plan to begin utilizing Pandora’s ad tech to sell and serve targeted digital ads to SiriusXM's streamers when they listen to an ad-supported channel. This is a great example of the countless opportunities that now exists because we have both platforms. Our approach to programming and strategy and execution has been elevated since we have acquired Pandora. With Pandora's massive audience and streaming prowess added to our growing SiriusXM subscriber base, we’re able to attract an even higher caliber of talent and media brands. Our creative programming agreements with Drake, Marvel, LeBron's UNINTERRUPTED and U2 are the first examples of that. These are mega stars and brands with enormous value in the music, sports, audio and entertainment worlds. We announced the launch of the new SiriusXM channel and exclusive Pandora content for the superstars U2 called U2X RADIO, which will debut later this year. And we are working with major media brands and superstars not accustomed to the audio space, but with major fan bases. We announced our deal with Marvel to create original content for SiriusXM and Pandora, which will be coming to our platforms in the coming months. In December, as I mentioned, we introduced content from UNINTERRUPTED, the athlete empowered brand founded by LeBron James and Maverick Carter, and a full launch will be coming soon. These exclusive athlete music playlist and content will bring fans closer to their favorite players through music. And around the holidays, we made a selection of Howard Stern's most compelling interviews from 2019 available for the first time on Pandora. As we offer SiriusXM and Pandora listeners special listening experience - experiences - excuse me, these live events also have exceptional programming value. In the days before the Super Bowl, SiriusXM and Pandora presented The Chainsmokers and LIZZO in separate exclusive concerts on back-to-back nights in Miami as part of our new Opening Drive Super Concert Series. We had on display yet more star power live from Radio World. We delivered entire week of programming that merges the worlds of sports and entertainment in extraordinary ways. From in-depth sports talk on our SiriusXM NFL Radio, Mad Dog Sports Radio and a special Super Bowl pop-up channel to entertainment shows hosted by Kevin Hart, Pitbull, Andy Cohen, Jenny McCarthy, Sway Calloway and more. In Los Angeles, Coldplay is a special show at our new Hollywood studios that aired live on SiriusXM's Spectrum channel. In Philadelphia, we had Phish play to its legion of avid fans in a rare small format concert that was broadcast nationwide on the band's full-time channel. Incidentally, Hooper tells me that this was one of our most sought after tickets ever among the analyst and investor community. Not sure what to draw from that conclusion. And Billy Joel did a performance and Q&A from our subscribers - for our subscribers at the Faena Theater in Miami Beach. In my years as CEO, I can certainly say we’ve never been more active than today in creating and sourcing new content and giving our listeners so much access to great live events. David will speak more about capital allocation, but I’m extremely pleased that we were able to efficiently deploy $2.4 billion to our stockholders in 2019. That includes the purchase of about 360 million shares at a price below $6, plus approximately $226 million in dividends. Despite the significant flow of capital to our stockholders, our leverage remained steady and we have tremendous financial flexibility for whatever the future might bring. Make no mistake, we realize we have our work cut out for us in 2020. The cars evolving, consumers and their taste inevitably change and competition for listeners is fierce, but we are moving rapidly as well. In fact, I love our position right now. We are stronger in the car than ever before. We're growing quickly in the home. And we now have world-class skill sets, driving strong revenue engines in both subscription and advertising. And nobody and I mean nobody has our business model. The changes we made in 2019 were significant and position us extremely well for the future. We are investing and innovating across our business focused on execution. And I feel very good about our 2020 guidance. With that, I’ll turn it over to you, David.

Thanks, Jim. Good morning, everyone. Thanks for joining the call. 2019 was another great year for SiriusXM, not only did we notch our 10th consecutive year of 1 million plus self-pay net adds, achieved all of our financial guidance and successfully closed the Pandora acquisition, but we also returned approximately $2.4 billion to our stockholders while doing so. As I discuss our results, I’ll focus on the pro forma results, which combine the two companies for the full period in both years. Auto sales ended the year at $17 million, just about flat with last year's $17.2 million. Our pen rate totaled 73% for the year, but exited the fourth quarter at 75% as pen rate ramped at several programs. We remain confident our pen rate will move to 80% as we move through 2020. The installed base vehicles grew 11% year-over-year to nearly 126 million cars on the road or approximately 45% of the total cars on the road in the U.S. The used car penetration rate was approximately 44% in 2019, up 400 basis points over the prior year and helped lift self-pay gross additions from the used channel to 38% of the total, up from 35% in 2018. Used car trial starts continue to grow solidly at 13%, accelerating from 10% growth in 2018. Used car penetration rate will increase steadily over the next several years, as it climbs towards the new car pen rate. At the end of the year, the total trial funnel stood at 9.3 million, up from 9.1 million at the end of last year. Self-pay net adds at SiriusXM in 2019 of approximately 1.1 million brought the self-pay base to just a hair under 30 million. Conversion rates in our new and used car business remained strong and churn for the year rounded down to 1.7% per month. This was flat compared to 2018 and still below the low-end of our expected range as rising vehicle churn continues to be offset by improving voluntary and non-pay churn. SiriusXM ARPU in 2019 was a record $13.82, growing approximately 4% over the prior year. Together with 3% growth in our total subscriber base, SiriusXM's segment revenue for the year grew 7% to nearly $6.2 billion. Total cost of services, excluding stock-based comp at SiriusXM increased 8% to nearly $2.4 billion. Revenue share and royalties increased only slightly due to the 2018 settlement with SoundExchange. Programming and content cost increased with renewals of several content deals including the Fox properties, as well as investments in the continued expansion of our programming line-up. Lastly, we continued to show exceptional efficiency in our customer service and billing costs. Gross profit totaled $3.8 billion, increasing 7% over the prior year and produced a gross margin of 62% level with 2018. At Pandora, advertising revenue grew 10% to a record $1.2 billion, higher end quarter bookings, strong sell-through and pricing, growth from the AdsWizz platform and contributions from the SoundCloud relationship drove this strong performance. Ad RPMs continue to grow, reaching $80.41 for the full year, approximately 12% higher than 2018. MAU and add hours trends continued with MAUs down 8% to 63.5 million and ad hours down 9% to 13.4 million. Pandora self-pay subscribers grew by 251,000 net additions in the year to a total of 6.2 million. Paid promo subs declined to 49,000 as a result of paid promotional subscription trials with a wireless carrier that were retired in the third quarter of '19. Pandora's subscription revenue was $527 million, up 10% over 2018. Total Pandora revenue for the year grew 10% to more than $1.7 billion. Total cost of services at Pandora were 2% higher since strong growth in our off-platform advertising business drove revenue share costs that more than offset the elimination of the 2018 minimum royalty guarantees. However, Pandora's gross profit jumped 28% to $624 million in '19, representing a margin of 36%, approximately 500 basis points higher than 2018. It’s a revenue growth dropped through to gross profit. For the combined company pro forma revenue grew 8% or $573 million over 2018 to nearly $8 billion. Pro forma gross profit grew 9% to over $4.4 billion and adjusted EBITDA grew nearly 14% or nearly $300 million to over $2.4 billion for the full year. Adjusted EBITDA margin was 30.6% in '19, growing approximately 160 basis points year-over-year. We converted approximately 68% of this adjusted EBITDA into free cash flow, totaling over $1.6 billion in 2019. Full year 2019 GAAP net income of $914 million declined from $1.2 billion in the prior year period, primarily driven by acquisition and other related charges in addition to refinancing expenses and higher depreciation and amortization costs. The company's effective tax rate for 2019 was 23.6% compared to 17.2% in the prior year period, which was driven temporarily lower by the recognition of excess tax benefits related to share-based compensation and a benefit related to state research and development credits. Going forward, we expect our effective tax rate will be approximately 24%. Earnings per diluted share for 2019 on a GAAP basis was $0.20 for the fully diluted average share count of 4.62 billion shares. For 2020, we've issued guidance which anticipates continued growth of the company. We are projecting self-pay net subscriber ads of over 900,000, revenue of approximately $8.1 billion, adjusted EBITDA of approximately $2.5 billion and free cash flow approaching $1.7 billion. For the year, we returned nearly $2.4 billion in capital to our stockholders, our second largest year ever. We repurchased more than 364 million shares last year and paid approximately $226 million in dividends to stockholders. Since the initiation of the stock buyback program, we have purchased more than 3 billion shares at an average price of just over $4. At year-end, our debt to adjusted EBITDA was 3.2 times with the entire $1.75 billion available on our revolving credit facility and just over $100 million of cash on hand. This gives us ample liquidity to continue investing in our business while returning capital to stockholders. With that, operator, let's open it up for questions.

[Operator Instructions] Your first question comes from Ben Swinburne from Morgan Stanley. Please go ahead.

Hey, good morning, guys. Thanks for the question. David, two for you. One, any color on the sales and marketing and G&A growth in the quarter, which I think was up kind of double-digits year-on-year? And then second, as we think about Pandora in 2020, you guys had laid out some synergy targets when you closed the deal, I think you raised them once. Just curious if there is more opportunity in '20 versus '19 as we think about expense trends? I'm trying to understand how to think about Pandora's growth prospects financially in 2020 now that you're lapping some of the heavy lifting done last year? And then, Jim, you always preached patience to us on the auto cycle. But I think you would admit, 360L now is starting to get real distribution on the road. What are the - you mentioned some of these in prepared remarks, but what do you think the biggest one or two benefits to the business will be? And is there anything that surprised you so far in the early rollout of this as you guys head into 2020 and 2021 when the 360L fleet really spikes? Thanks. Thanks a lot.

Let's start with the last…

Okay. So Ben, I'll start with 360L. And I think your observation - it gives me confidence that we might be able to cut through what I meant that 360L is now really starting to accelerate. By the way, don't overlook also the incorporation of the wideband chipset. This is really an important step for us. In fact, without it, we can't accomplish the consolidation of the Spectrum in the middle of the decade. So I’m really pleased that both of those are now seated and that 360L has planned a record with virtually every OEM. As we say, you've got to live long enough to benefit from them because the implementation takes time. First, I’ll give you a couple honest observations. One, the stuff was harder than I thought. As we roll that out, there was more work to be done in coordinating with the OEMs on how the service dovetail together in the vehicle and what the ending result was. And frankly, for SiriusXM with Pandora as a separate area, it’s the first time we really had a mammoth amount of real-time data coming back and figuring how to accumulate that, organize and use that with two. I would say significant challenges for as we launch. We’ve learned a lot from that and we’re confident, we know now is a great place to really step on the gas and for the incorporation rate to begin now to climb significantly. It will jump again significantly in 2021. And I suspect, by 2022, we won’t even talk about it anymore because it will be virtually the standard way that SiriusXM's involved in cars. I think two key points I want to make again is; one, it does allow our service - frankly, it's really simple. It makes our service better. It makes the listening experience in the car more compelling more engaging. And both of those to us mean only two things; higher - better conversion and better retention of customers, which is what we’re all about. The second point, though, I want to reiterate again is 360L is our first backward compatible platform, meaning that it can iterate with the ability from software downloads going future - going into the future. That’s a key point. In that it will let us upgrade features that we evolve into for our customers quicker and I think probably better down the road versus where we've been for the last 10 years. And as importantly, it will allow us at some point to seamlessly introduce Pandora was sitting into the car in a way that we think will be very helpful to subscribers. David?

So Ben, on the synergy targets look forward in '20, we’ve overachieved on the synergies that we originally identified for it. But as we also said earlier in the year, we’re going to reach a point where we’re not really going to be able to track them anymore, which is sort of where we are now. We have consolidated the command structures of the companies, everything is pretty integrated now. We’ve got multiple people who have - who are managing resources that used to be in one P&L or the other. And to be honest, trying to track the synergies from here it's going to be – it’s probably not worthwhile exercise. But I can say with confidence that we solidly overachieved. With respect to your questions on sales and marketing, G&A growth. The G&A growth is predominantly related to a litigation reserve. Other than that there wasn’t much change in G&A. And on the sales and marketing side, to be honest, we were having a pretty good year. And we took the opportunity in the fourth quarter to really step on the gas in a number of areas. We step on the gas with programming investments and we did the same thing with sales and marketing investments that I think across all products and all channels of distribution that we put money to work in ways that we thought were smart. We think that benefited our - the CE distribution with the new in-home devices. We think it could have been a brand building done and then solid amount of performance spending across all of our distribution channels. So it was - for us, we thought a great time to put money to work.

Thank you. Thank you, guys.

The next question comes from Steven Cahall from Wells Fargo. Please go ahead.

Yeah. Thank you. Just a couple for me. Maybe first I think the buyback was a little lighter in the quarter. I know in the past sometimes your grid have kind of gotten in the way a little bit on the buyback when the stock has a nice move in a short period. So I'm just wondering if you could maybe help us put that in context a little bit and how you're thinking about cash deployment for 2020 versus 2019? And then it seems like all the KPIs are pretty strong, but I did see that the trial funnel ticked down a little bit sequentially. I know it was kind of unusually high in Q3. I was wondering if that tied back to the slower shipments of the paid promotional vehicles or how do we just think about the trial funnel trending as we go through 2020? Thanks.

Sure. On the buyback, we - for a long time, we sort of step on the gas on buyback when the stock falls and then we ease up on it as it rises quickly, sort of exactly to your point, but it can run right through the grid. Overall, buying back - returning $2.4 billion in capital to shareholders is a big year for us. So we're thrilled with that. We think we did well. On a going forward, we continue to do buyback. We continue to generate about $2 billion a year in excess capital. And we’ll probably use the same methods this year in terms of sizing the buyback that we’ve used in past years. We’ll look for opportunities to load up on the stock when we think it's a good buy. On the trial funnel, the year did close slowly for some automakers. I wouldn’t say it was really related to the paid promotional trials, there is always some market shift among our manufacturers and we love all our trialers. But the used car business closed a little slowly. The interesting thing - or the new car business closed a little slowly. The interesting thing about that was that the automakers didn’t build a lot of cars at the end of the year. And so actually, inventories were our fleet of vehicles were actually lower this year than they were the year before and it sort of augurs well for 2020 for us.

Yeah. I think, David, on top of that, obviously a few weeks ago I was able to spend a great deal of time at the Consumer Electronic Show with all of our automaking partners as well as certainly at least the two biggest retailers of cars in the country. The mood is good. And so I will tell you at least for me as I’m thinking about all the challenges in 2020, the trial funnel right now is not one I’m particularly concerned with at all right now.

Thank you.

Our next question comes from Jim Goss from Barrington Research. Please go ahead.

Thank you. A couple on Pandora. The ad revenue performance was good, very good and you were describing some of the details. I was wondering if there are any - if you talk about the revenue, ad revenue emphasis and the interplay to any extent between SiriusXM and Pandora now that you’ve had a year to consider those opportunities? And also, are there any other adjustments to the strategy you might have with Pandora one year later that you might point out?

So let me jump in and then David can add any color he chooses. Really pleased with 2019 in terms of our performance in both monetization and utilization. Meaning not only what we’re able to charge for ads, but the mix of which as we were able to sell to optimize higher revenue and how efficient we were to how much of our inventory we're actually able to sell, really pleased. And frankly, that just kept getting stronger during the year. And our performance in the fourth quarter kind of surprised me as strong as it was in November and December. For me, that’s a new normal now. And so we’re pushing the team really hard to be able to continue to deliver those results. We’ll see. And - but I’m really pleased with the focus and with what we're delivering. I think at the root of that is a couple of things. One, being able to have programmatic now available and with a tool that really works well, had some direct sales force quite a bit. And number two, we were able to I think through just frankly haven’t things settling down as an organization, everybody getting back to doing what they know how to do. We’re able to just stay focused and deliver those results. I’m - I will tell you, a year later now after the completion of the merger, one of the things I’m really, really pleased with is the digital audio ad sales force that we have at Pandora and how capable it is and what we’re able to deliver with it. I want to point out; we had great results in SiriusXM as well with ad sales in the fourth quarter. So really ad sales in general, Jim, is something with a lot of momentum exiting 2020. Observations on Pandora in general are, I will tell you, I feel a lot better. I feel great and I love the fact that we own Pandora and Pandora is part now of SiriusXM. 2019 was a challenging year for us in terms of bringing the two companies together and getting through all of the hardships and the difficulties that come. We’re doing that. I’m happy to say that the vast majority of that is behind us. And I’m really pleased with what that sets up for the future.

So Jim, I’d just add two things to that. With - as part of bringing Pandora in, we also brought in the AdsWizz business and Pandora's growing off-platform strategy. And in the last couple of months, SiriusXM has been able to sort of walk into that as almost like a test customer and see what it’s really like to put a product up on the ad tech platform and then have it sold in. And I have to admit that I’m pretty surprised at how simple in approach it is. I think it augurs well for the growth of the off-platform business. In digital audio, there are an awful lot of audio providers out there who simply aren’t big enough for the ad agencies than the direct advertisers to bother to hook into their platform, so just no digital scale. But with what you saw with the SoundCloud relationship with Pandora and then with what the AdsWizz tech stack brings to the party, smaller players like the SiriusXM App can plug into that ad tech, can be integrated with Pandora's sales system and then sold as additional audience reach, giving us an opportunity to monetize that we honestly never really could have done on our own. And I think we'll be able to play that story out for a lot of other customers. So really happy to see that. And then probably the other thing on the strategy side is that we’re just learning what it really means to have reached out to more than 100 million people. And if you include the SoundCloud platform, you’re really looking at 140 million people in North America. And that’s really kind of opened up the box for Scott's team and what they could do from a programming perspective. Jim talked good about it in his comments. But I think that’s an area that we're also going to see a lot of unexpected benefits. People in the industry as their thinking just opens up as to what can be done with our platform.

Okay. And one other thing, you mentioned the wideband chipset. And I wonder - was wondering beyond the transition assisted provides, does it increase the likelihood of having some spectrum you might want to monetize a few years from now once you get to that point where the SiriusXM platforms are completely merged?

So what I would say Jim is we began planning for this more than five years ago in terms of beginning to put in place the tech investment to create this chipset, which has now been delivered and will begin rolling out later this year. Very clearly what that chipset does for us is provide us - I think the best way to say it is with awful lot of optionality in the middle of the decade. How that optionality plays out and where it goes, I’m not ready to comment on right now. But I will tell you, it does provide us the ability to significantly increase our offering to customers, if that's how we choose to use it.

Okay. Thanks very much.

Next question comes from Jessica Reif Ehrlich from Bank of America Securities. Please go ahead.

Okay. Thank you. A couple of questions. First, could you explain the podcast opportunity long-term of how you use the same digital ad sales force for that business? Doesn't seem like there are a lot of incremental costs? And then secondly, can you talk about the benefits that you expect from some of the audience you’ve been finding?. You know, I wanted to ask about Drake and YouTube [ph] but now you moved into sports, which is a really interesting area. Is there room beyond UNINTERRUPTED? And could you just talk a little bit about how you structure these artist deals? Are they – do you pay the fees? Is there a revenue share? What's the incentive for them to stay with you? Thank you.

So Jess, let me make a couple of comments first. Your observation is 100% right. And that is where there are opportunities to sell digital audio advertising, we will maximize those across the sales force that we have. And yes, I agree with you, those should be scalable. And we'll take advantage of that. I really like where some of that's going. And I think David hinted at some other things we can do in that space to scale it further. And I know for me it's a whole new world and we're certainly I think learning quickly what our opportunities are there. So I think your observations are keenly correct. Number two, I will start with a general observation. And I always believe that we're going to have two brands here; SiriusXM and Pandora. I don't - I don't see necessarily, at least certainly in the mid-term, where those would ever cross into kind of one brand. However, I will tell you the thing that surprised me the most over the last year is how well they've dovetailed together and how well the consumer accepts that. So you see it in almost all of our events, particularly even in the last couple of weeks down in Miami how most of our events have been co-branded across both SiriusXM and Pandora. And frankly, at least the talent that we brought, they loves it and they love the size that they're able to be exposed to a platform of that size. And frankly that they're able to be brought forward in a way that can be monetized in more than just subscription and includes advertising. How exactly - how all those deals will work going forward, I'm not sure it's clear and we'll probably evolve. But I can tell you, we don't do a deal, I'll let Scott comment, we don't do a deal with any talent today where we don't think about how does it work on both of our platforms and how does it work with both of our brands in a way that we can optimize it. So Scott?

Yeah. So two things, Jessica. First, we'll cover podcasting briefly and then the UNINTERRUPTED and the artist concept. On podcasting, one of the things we've always done at Sirius and ultimately we'll continue at Pandora is duration. I think that's what we do well. And I think if ever there was a type of audio product that needs duration right now, it's podcasting due to the volume of it and sort of the lack of ability to find everything that might be for you. So I think you could think of vertically-integrated channels of podcasting coming on that very well may organize sometimes the way we did music and other things. So that's number one. Number two, given most of the audio space in podcasting is coming out of scratch, meaning they started from just inception or they are based out of algorithmically-generated companies. A lot of the bigger talent that are signing with us for podcasting and other reasons are with us for our audio production capabilities and what we've done over the last, more than a decade of producing high quality audio content. And as you go up the line in terms of an artist, a brand or anybody else, they want to make sure the audio comes out in the quality and integrity they want. On UNINTERRUPTED, I’m particularly excited about that in general, but also the precedent of where it can go. I mean for the last, more than 50 years, the intersection of sports and music in American culture is pretty firmly intersected. And the idea that these athletes now have bigger social media following than most media companies and they're obviously very interested in music and very passionate about it, we're starting to see some really good traction, not only with the LeBron's playlist that are coming over on Pandora, but many other athletes. Almost every two weeks, there is another group of athletes coming over from that deal that are putting playlist together. Ultimately, as Jim said, it will evolve into a Sirius benefit as we will launch on UNINTERRUPTED radio channel. When Drake and U2 launch, they will have channels and playlist components. So that formula, as we mentioned before, will continue. So we're pretty excited about that.

I just want to - this is Jim. I want to make one more comment on podcasting and that is, I clearly understand podcasting. I also believe podcasting will certainly be a relative part of audio entertainment going forward. And so you should assume we're acutely focused on that as an entertainment, audio entertainment medium. However, we're going to show what we believe is the proper amount of discipline in that space. And enough said there. Number two, we believe that space is probably going to be, at least our direction going to be dominated by brands and by major names and talent. And so I think that's what you're going to see. You're going to see a lot more of that from us as opposed to what I would call perhaps the Santa Monica flea market approach, which is how big can I make it and how much stuff can I have in an environment where nobody can find what they want and it's difficult to really be satisfied. Remember, we’ve always believed in spoken word as part of the audio entertainment experience. It's been part of our culture and our offering for the first day that we introduced our service and you should expect nothing less than that from us going forward.

Great. Thank you.

We will take our next and final question from Zack Silver at B. Riley, FBR. Please go ahead.

Okay. Great. Thanks for taking the question. Based on the revenue and the self-pay sub guidance you guys issued back in January and assuming relatively stable trends at some of the other revenue line, it seems like the guidance assumes a deceleration in satellite radio ARPU growth for 2020 and this just seems a bit odd with some of the price hikes you did for the service back in November on the select and all access plans. Can you talk about what is driving the disconnect there or maybe we just need to go back and rethink some of our assumptions for the other revenue lines?

Sure. It's - when we did the - what drove the ARPU increases in 2019 was the increase in our music royalty fee that we did right at the beginning of the year or maybe the end of '18, that rolls through all of our plans. But the price increase that went through in the late fall only hit some of the plans. And so while we're going to have ARPU growth that's just - because it doesn't hit as many plans, it's just a little bit less than the tailwind that we had in '19. And over time, I think the last couple of years; our ARPU growth has sort of been above the long-term mean that we've been guiding people to. We've been saying for a number of years that you should expect to see sort of inflation life increases in ARPU. And I think if you look back over the last decade, we've averaged out to about 2.5% per year. So you've just seen a little bit of a mean reversion this year.

Got it. And then one more if I could. I think there's been some report and you guys have been testing some cross-selling bundles to either existing Sirius or existing Pandora users for the other service. Can you talk about any early learnings from this testing and when it maybe make sense to bundle Sirius and Pandora as one offering?

That's something that we'll look at over time. I don't think you should think of it is being sort of a key pillar of strategy. I mean the audio market in the United States is pretty saturated at this point with well over 200 million people streaming. And certainly the streaming companies are fully distributed, we’re fully distributed, AM and FM and radio is fully distributed. So it should test these sort of different things. You're really looking for niche interest.

Got it. Thank you very much, David.

Thanks a lot.

Thanks, Zach, and thanks everybody for participating in today's call. We'll talk to you soon.