(6)   Investments in Affiliates Accounted for Using the Equity Method

Liberty has various investments accounted for using the equity method. The following table includes the Company's carrying amount and percentage ownership of the more significant investments in affiliates at March 31, 2024 and the carrying amount at December 31, 2023:

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The following table presents the Company's share of earnings (losses) of affiliates:

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Clean energy investments

The Company has investments in certain clean energy technologies, including industrial carbon capture and storage, that produce tax credits and tax losses. Such clean energy investments are accounted for pursuant to the equity method, as the Company does not have the ability to direct the most significant activities that impact the economic performance of the investments.

In March 2023, the Financial Accounting Standards Board issued Accounting Standards Update 2023-02, Investments - Equity Method Investments and Joint Ventures (“ASU 2023-02”), to allow reporting entities to elect to apply the proportional amortization method on a tax-credit-program by tax-credit-program basis to account for tax equity investments that generate income tax credits. The Company adopted ASU 2023-02 on January 1, 2024 on a modified retrospective basis and recorded a $122 million increase to investments in affiliates, accounted for using the equity method, $124 million increase to other liabilities, $5 million decrease to deferred income tax liabilities and a $3 million cumulative effect adjustment to retained earnings.

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During the three months ended March 31, 2024, the Company invested $179 million in clean energy investments and recognized non-cash increases of $657 million to each of investments in affiliates, accounted for using the equity method and other liabilities, in accordance with ASU 2023-02.

Under the proportional amortization method, the investment balances are being amortized, through income tax (expense) benefit, over the term of the investments based on the current period income tax benefits in proportion to the total expected income tax benefits. During the three months ended March 31, 2024, the Company recognized $4 million of net income tax benefits related to its clean energy investments in the income tax (expense) benefit line item on the condensed consolidated statement of operations, comprised of $25 million of tax credits and other income tax benefits, partially offset by $21 million of amortization expense.

Sirius XM Canada

As of March 31, 2024, Sirius XM Holdings holds a 70% equity interest and 33% voting interest in Sirius XM Canada Holdings Inc. (“Sirius XM Canada”). Sirius XM Canada is accounted for as an equity method investment as Sirius XM Holdings does not have the ability to direct the most significant activities that impact Sirius XM Canada's economic performance.

On March 15, 2022, Sirius XM Holdings and Sirius XM Canada entered into an amended and restated services and distribution agreement, pursuant to which, the fee payable by Sirius XM Canada to Sirius XM Holdings was modified from a fixed percentage of revenue to a variable fee, based on a target operating profit for Sirius XM Canada. Such variable fee is evaluated annually based on comparable companies and is payable on a monthly basis, in arrears.  

Sirius XM Holdings recorded approximately $24 million and $26 million in revenue during the three months ended March 31, 2024 and 2023, respectively, associated with these various agreements. Sirius XM Canada paid gross dividends to Sirius XM Holdings of less than $1 million during each of the three months ended March 31, 2024 and 2023.

SoundCloud

In February 2020, Sirius XM Holdings completed a $75 million investment in Series G Membership Units of SoundCloud Holdings, LLC (“SoundCloud”). The investment in SoundCloud is accounted for as an equity method investment as Sirius XM Holdings does not have the ability to direct the most significant activities that impact SoundCloud's economic performance.

In addition to Sirius XM Holdings’ investment in SoundCloud, Pandora has an agreement with SoundCloud to be its exclusive ad sales representative in the U.S. and certain European countries. Through this arrangement, Pandora offers advertisers the ability to execute campaigns across the Pandora and SoundCloud platforms. Sirius XM Holdings recorded revenue share expense related to this agreement of $15 million and $12 million for the three months ended March 31, 2024 and 2023, respectively. Sirius XM Holdings also had related party liabilities of $20 million as of both March 31, 2024 and December 31, 2023 related to this agreement.