§ 382.22 - Calculation of Gross Revenues for SDARS.

§ 382.22 Calculation of Gross Revenues for SDARS.

(a) Gross Revenues are:

(1) Revenue recognized by the Licensee in accordance with GAAP from the operation of an SDARS and comprised of the following:

(i) Subscription revenue recognized by Licensee directly from U.S. subscribers for licensee's SDARS; and

(ii) Licensee's advertising revenues, or other monies received from sponsors, if any, attributable to advertising on channels other than those that use only incidental performances of sound recordings, less advertising agency and sales commissions.

(2) Revenues set forth above to which Licensee is entitled but which are paid to a parent, wholly-owned subsidiary, or division of Licensee.

(b) Gross Revenues exclude:

(1) Monies or other consideration attributable to the sale and/or license of equipment and/or other technology, including but not limited to bandwidth, sales of devices that receive the Licensee's SDARS and any shipping and handling fees therefor;

(2) Royalties paid to Licensee for intellectual property rights;

(3) Monies or other consideration received by Licensee from the sale of phonorecords and digital phonorecord deliveries;

(4) Sales and use taxes;

(5) Credit card, invoice, activation, swap and early termination fees charged to subscribers and reasonably related to the Licensee's expenses to which they pertain;

(6) Bad debt expense; and

(7) Revenues recognized by Licensee (or otherwise received by Licensee if no GAAP “recognition” principles are applicable) for the provision of:

(i) Current and future data services offered for a separate charge (e.g., weather, traffic, destination information, messaging, sports scores, stock ticker information, extended program associated data, video and photographic images, and such other telematics and/or data services as may exist from time to time);

(ii) Channels, programming, products and/or other services offered for a separate charge where such channels use only incidental performances of sound recordings;

(iii) Channels, programming, products and/or other services provided outside of the United States; and

(iv) Channels, programming, products and/or other services for which the performance of sound recordings and/or the making of Ephemeral Recordings is exempt from any license requirement or is separately licensed, including by a statutory license and, for the avoidance of doubt, webcasting, audio services bundled with television programming, interactive services, and transmissions to business establishments.