The company is the only satellite radio operator in the U.S., with significant barriers to entry. It has a large subscriber base, with a stable monthly subscriber churn of slightly less than 2% despite gradual price increases. It depends heavily on U.S. automotive sales for growth. It has long-term vulnerability to intensifying competition from evolving car dashboard entertainment landscape. The company has significant debt leverage, in the 3x-4x range (our calculation), with debt-financed share repurchases offsetting revenue and EBITDA gains. The company has robust cash flow from operations (we expect $1.4 billion to $1.5 billion in 2016). It has moderate capital spending requirements. It has adequate liquidity and covenant headroom. Standard&Poor's Ratings Services' rating outlook on Sirius XM
