This presentation contains forward-looking...

This presentation contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and are subject to risks, uncertainties, and other factors that could cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: the effects of economic conditions, competition, programming availability and quality, technological developments, developmental difficulties and delays, the availability of capital to finance growth, the impact of government regulations, and other factors detailed, from time to time, in the Company’s filings with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this presentation. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Huge Market Opportunity

The Satellite Radio Industry reached 9M subscribers in only 4 years

This represents less than 5% penetration of the 230M total radiolisteners

XM plans to exceed 20M Subscribers by 2010Implies 2.8M Net Adds per year to reach goal

In 2006, XM plans to add more than 3.1M Net Subscribers, puttingus well on track to achieving our goal

By 2008, annual OEM factory installations of XM will reach nearly 5M vehicles per year

More growth beyond 201020M Subscribers still represents less than 10% of total radio listeners

XM’s Rapidly Growing Subscriber Base

0.00.3

1.4

3.2

5.9

9.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Subs

crib

ers

(mill

ions

)2001 2002 2003 2004 2005 2006

Over 9 Million Subs by year end 2006

Exceeding 20 Million by 2010

Actual Results Guidance

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Net

Add

itio

ns /

Day

Cable TV Internet Cellphone MP3 Players XM

One of the fastest growing consumer electronics products

Source: Greystone Communications

2005 Highlights

Subscriber ResultsAdded 2.7M Net Subscribers exceeding 5.9M at year end

84% YoY Ending Subscriber growth

Extended subscriber lead over competition by approx. 500K

Achieved 6M ending Subscribers within 4 days of year end

Other Major EventsEntered into exclusive arrangements with Toyota, Nissan and Hyundai; XM’s OEM partners now represent approximately 60% of US vehicle sales

Expanded programming relationships in sports, talk and music

Launched service in Canada, leveraging XM’s brand and infrastructure

4th Quarter Marketing Strategy

Defend market share in face of unique Stern introduction and softness in OEM sales

Expand overall appeal of XM Satellite Radio during critical Holiday Season

Promote mass market appeal of XM’s programming by featuring diverse content and personalitiesOffer a portfolio of products at very attractive price pointsEnsure strong inventory levels

Added nearly 900K Net New SubscribersOver three quarters of a million Aftermarket Net Subscriber Additions, approximately 56% increase YoYOver 100K OEM Net Subscriber Additions, decreased approximately 50% YoY - soft GM sales in 4th Quarter (particularly SUVs and trucks) and trial falloff from record June/July sales (employee discountprogram)Roughly 100K Subscriber activations on Christmas DayLarge Holiday gift volumes (Sold But Not Activated Radios) with slower activation rate relative to past years

XM maintained approximately 50% retail market share where consumers had a choice between satellite radio providers

Sirius strong in Stern radio markets; XM strong across the rest of the country

Added unique, diversified programming valued by current and future XM subscribers (Dylan, Ellen, Good Morning America, NHL)

4th Quarter Preliminary Results

2006 XM OutlookOver 9M YE 2006 XM Subscribers, representing 3.1M Net Adds, a YoY Ending Subscriber growth in excess of 50%

New breakthrough products (with MP3 capabilities) and affordable Plug-&-Play radios to drive strong growth

Positive 2006 OEM growth, mainly from GM and Honda, dramatically ramping in 2007 and 2008 with vehicles from Hyundai, Nissan and Toyota

Continue refinement of XM programming with a balanced combination of third-party brands/talent and internally developed content that appeals to the mass market

Effectively market extraordinary content – XM programming is unparalleled in satellite radio and traditional radio doesn’t compare

Grow advertising revenue on our targeted non-music channels

XM – Leading the Industry

XM is the Satellite Radio Industry LeaderWith over 6M subscribers, nearly twice the size of our competitor –extended lead in 2005 by roughly 500K Subs

XM continues to maintain solid market share in the aftermarket and has partnerships with approximately 60% of the OEM market

XM will continue to be the Industry LeaderThe best in music, sports, talk and news to appeal to the mass market

Cutting Edge Technology that delivers features customers want atattractive prices

Distribution strategy that includes partnerships with top retailers and the biggest and fastest growing OEM partners

AGENDAProgramming Strategy Eric Logan

EVP, ProgrammingTechnology Strategy Stell Patsiokas

EVP, Technology & EngineeringMarketing Strategy Steve Cook

EVP, Sales & MarketingOEM Partners

Honda Charles KochManager, New Business Development & Planning

GM Rick LeeVP, Satellite Radio Services

Nissan Larry HaddadCorporate Manager, Cross Carline Product Planning

Hyundai Doug MottramNational Manager, Product Planning

Toyota Jon BucciCorporate Manager, Advanced Technology Department

XM Canada John BitoveChairman & CEO, CSR

Q&A

Content Strategy & Initiatives

Eric Logan

EVP, Programming

XM Satellite Radio

Content Strategy

Appeal to the Mass MarketDeliver programming that broadly appeals to current mainstream demandProvide a diversity of programming not widely available from traditional radio

Target Growth SegmentsCreate programming to reach key growth markets and expand subscriber appeal

Balance the Cost of Content“Franchise” content (MLB)Widely known/desired talent and brands (Ellen, Good Morning America, Dylan)

Develop XM Brands and TalentIncubate Internal Talent by increasing exposure and leveraging our significant subscriber base

Develop Content that is Appealing to Advertisers

Content Focus

Subscriber Target Demographics1. Mainstream America - Persons 25-54 with average age of 35

2. Mainstream America - Persons 18-24 and Persons 55+

3. Growth Segments:

Device - Content – Platform IntegrationCommerce

XM+NapsterAudible

DevicesOn-demand Content

Alternate DistributionXM Radio Online – DirecTV - AOL

Sports Talk/InformationEntertainment

NewsMusic

`

Females Males African Americans Hispanics Other

EthnicitiesLifestyles/Interests

Millennial Generation (12-17)

Talk Stars: Bill O’Reilly, Al Franken, Ellen, Dr. Laura, Opie & Anthony, Tyra Banks

Appeal to the Mass Market

The Most 100% Commercial-Free Music

The Most Play-by-Play Sports

21 Dedicated Channels of XM Instant Traffic & Weather

Hispanic Music, Sports & News

The Most Sports Talk

Aligning with Major Music Brands

Creating New Categories:Comedy, Books and Drama

Program DiversityXM vs. Traditional Radio

XM broadcasts 67 music formats nationwideTraditional radio provides a very limited number of musical formats, both in urban and rural markets

XM features live play-by-play coverage of over 5,000 sporting events per year, satisfying dislocated sports fans wherever they are

Traditional radio provides coverage of only local teams. XM covers the national picture and many sports not covered at all:

XM offers other programming not widely available from traditional radioComedy and Opie & AnthonyWomen’s TalkHispanic Sports, News & TalkAfrican American TalkChristian TalkTruckers’ TalkBooks on Tape

XM’s Technology Demonstrates Fidelity Superiority by broadcasting in 5.1 Surround Sound

Two Channels being broadcast 24/7 in 5.1 Surround SoundInnovation called XM HD Surround

XM’s Exclusive Music ProgrammingTargeting Music Enthusiasts

Over 1,000 Live Performances at XM, including: Paul McCartney, Santana, Coldplay, Wynton Marsalis, Melissa Etheridge, Lenny Kravitz, Phil Collins and Willie Nelson

Original programming including:Artist Confidential Series

Then…Again…Live Series

XM Presents Jazz at Lincoln Center

Country Music Hall of Fame

Bob Dylan in January 2006

Welcome to Da Chuuch with Big Snoop Dogg

Tom Petty's Buried Treasure

From Be-bop to Hip-Hop featuring Quincy Jones

Investing in live programming production capabilities and enabling technologies

Network Live (AOL/XM/AEG): Joint venture producing concert series & original music specials

XM Productions/Effanel: Production experts for Grammy’s, MTV Music Awards

XM Exclusive Play-by-Play XM Original Sports Talk

Major League Baseball

Hispanic Sports and 2006 World Cup

Andres Cantor

Coach K, Tony Kornheiser, TJ Rives

Mark Messier, Phil Esposito

Dale Earnhardt, Jr., Jimmie Johnson, Claire B. Lang

Peter Kessler

Rob Dibble, Kevin Kennedy, Charley Steiner, Mark Patrick, Ronnie Lane, Joe Castellano, Cal Ripken, Bill Ripken, Buck Martinez, Mark Gray, Grant Paulsen, Holden Kushner, Orestes Destrade

Bud Collins

The Most Sports Talk & Live Play-by-Play

Strategic Approach to Key SegmentsExample: Women’s Content

62M Women between 25-54 yrs

Creation of an XM SuperBrandTake 5 – A dedicated Women’s interest and lifestyle Channel

Using Brand Name Talent to attract Subscribers

Leverage the platform to grow XM exclusive personalities

Advertisers desire highly targeted sales opportunities

Additional Target Growth MarketsHispanic

32 Million people 12+ yrs

Fastest growing segment in America

Creation of another XM SuperBrand

XM Deportivo – America’s first 24/7 all Hispanic talk and sports format

Long-form talk focuses on Baseball, Soccer and Boxing

African American

29 Million people 12+ yrs

Creation of XM SuperBrands

The most popular African American and Urban music formats

Utilize major Urban personalities to brand/attract this powerful segment

• Snoop Dogg• Ludacris

Goal: Increase Subscribers’ Usage of XM

XM Subscribers use on average 4 channels per week

Subscribers spend over 22 hours per week listening to XM compared to 19:15 for traditional radio

Challenge is exposing Subscribers to new/innovative and valued content

‘Road Blocking’ of long-form content in high profile times – not weekends

Extensive coverage of major events

• All shows from Live8, at the same time

• Multiple feeds from MLB Playoffs

No competition between XM channels, but “discovering XM” and increasing overall TSL of the XM service by promoting other XM channels and other distribution outlets

XM Radio On-line, AOL, DirecTV

Music Channels:Growing Subscriber Base and High Usage Drive Results

A comparative ranking of XM’s Total listeners against the top traditional radio stations places many of XM’s channels inside the top 20 cuming stations across the country

20 on 20 will cume over 1.6M total listeners each week • Making it the 4th biggest top 40 station in America

XM’s 70’s on 7 will cume over 1.8M total listeners each week • This channel is the 13th largest cuming channel with ALL formats

across America! Oldies is alive!

All of these channels will continue to increase in size as our subscriber base grows

• Many channels will become the number one destination for a given genre – due to size and growth of national audience

Talk & Entertainment ChannelsContent that Appeals to Subscribers…and Advertisers

Advertisers are looking for new ways to reach specific demographics and consumers who are migrating away from the ‘noise’ of traditional media

XM’s channels target highly desired, sellable demographics with a variety of formats and choices not found in traditional media

• Women, Hispanic, Sports, Commuter Traffic, Edgy Talk, Business News, Trucker Talk, etc.

XM’s unique presentation of content provides Advertisers the ability to align their brands and ‘own the event’

• Bank of America sponsors MLB Play-by-Play for all games, all season • Short-form Features across multiple channels that feature expert tips or

information – ‘The GM Drive Time Minutes’

Unique Spot Opportunities, Strategic Partnerships, Exclusive Sponsorships – all in an uncluttered environment

• Platform Wide Initiatives - Black History Month – Showcasing unique programming across Talk, Music and other channels

• Brand Association with Take 5, MLB, World Cup, Hispanic Programming, Event Underwriting, Public Radio and more

Technology Strategy & Initiatives

Dr. Stell Patsiokas

EVP, Technology & Engineering

XM Satellite Radio

Technology Development Strategy

Own Technology and StandardArchitectural controlLimit dependence on third parties for technology development

Reduce CostMinimize entry level costDrive an aggressive technology integration roadmap

Lead design and accelerate introduction of Breakthrough Technology and Applications

Product Pricing Driven by Ability to Reduce Direct Material Costs Over Time

Service/SourceDecoder

AntennaModule

RF TunerModule

ChannelDecoder

PLL

IFIC ADC

IFIC ADCTCXO

TERRDEMSAT1DEMSAT2DEM

CAP

TDMDEMUX

TDMCOMBINE

Control CONTROL

DATAPORT

SPEECHDECODER

AUDIODECODER

CONDITIONALACCESSSERVICEDEMUX

2001

PLL

IFIC ADC

IFIC ADCTCXO


CAP

TDMDEMUX

TDMCOMBINE

Control CONTROL

DATAPORT

SPEECHDECODER

AUDIODECODER


2003

PLL

IFIC ADC

IFIC ADCTCXO


CAP

TDMDEMUX

TDMCOMBINE

Control CONTROL

DATAPORT

SPEECHDECODER

AUDIODECODER


2005

4x

x

5x

Yoda ModuleLNA

AntennaRF Coax

XM Radio Architecture EvolutionXM-ReadyHead Unit XM-RCVR

In Trunk

XM RCVR LNA

Antenna

RF CoaxBus

SKYFi & Roady: Cost Effective Plug and Play devices

Platform 1:

Platform 2:

Avg User Cost*: $500 - $600

4 hours professional installation

Avg User Cost: $140 - $200

Self installation; introduction of radios to the home* Includes installation

XM Radio Architecture Evolution

LNA

Antenna

RF Coax

XM RCVR4-Wire XM Digital Bus

XM-Ready Device

Platform 3:

Connect-&-Play

Avg User Cost: $50

Avg User Cost: $50 - $150

Platform 4:

SKYFi2, Roady2, RoadyXT, & XM2go

Chips on Board

Embed XM Technology in other Consumer Devices: Connect-And-Play

Low cost technology to enable home audio equipment to become XM Ready, introduced at CES last year with 2 manufacturers

Today, over 20 manufacturers with 44 different models committed

Currently shipping: Yamaha, GPX & Eton

XM2go – only truly wearable “Live”satellite radio

Broad Portfolio of Products for All Consumers

Car Stereo

Plug & Play VersatilityPortable

Audiophiles

Compatible with all leading brands

Usable in multiple locations –auto, home, boombox

Complete stereo and home theater systems from respected manufacturers

New Breakthrough Devices Value Added Architecture

Pioneer Inno

Available Date: 1st Quarter 2006

Size: 2.2”W x 3.7”H x 0.6”D

Weight: 4.5 Oz.

Display: 1.7” Color TFT

MSRP: $399.99

Product Features:

Get XM’s 160 digital channels live on the go, in the home and in the car

Record your favorite XM channels (no PC required)

Mix recorded XM with your MP3s and CDs

Create your own unique and original playlists

Manage playlists and files without computers & internet

Hear a great tune, tag it and purchase it online at XM+Napster

Samsung Helix


Size: 2.2”W x 3.7”H x 0.6”D

Weight: 4.5 Oz.

Display: 1.7” Color TFT

MSRP: $399.99

Product Features:

Get XM’s 160 digital channels live on the go, in the home and in the car

Record your favorite XM channels (no PC required)




Hear a great tune, tag it and purchase it online with XM+Napster

Samsung neXus


Size: 1.9”W x 3.4”H x 0.7”D

Weight: 4.4 Oz.

Display: 1.5 in, 8-line

MSRP: $199.99 (512MB), $249.99 (1GB)

Product Features:

Dock your player to get XM’s 160 digital channels live in the home or car

Record your favorite XM channels at home or in the car (no PC required)

Includes XM Passport, which is compatible with other XM Ready products




Hear a great tune, tag it and purchase it online at XM+Napster

Home Stereos

Car Stereos

Portable MP3 Players

Next Generation Connect-And-Play: The Passport

2006 Connect-and-Play Product ManufacturersPassport Compatible

Audiovox GPX Onkyo SamsungCrosley Harmon Kardon Orient Power Sharper ImageDenon JVC Pioneer SonyEton LGE Polk Audio Yamaha

Marantz SDI

Evolving XM Technology Smaller technology and devicesLower power consumption

Leads to integration into other consumer devices (MP3 players, cell phones, PDAs)

And expanding product features Today: artist & song title, stocks & sports ticker 1Q 2006: increased memory, MP3, WMA, internet compatibilityFuture: video, enhanced content downloading

Rapid Evolution of XM Portable Products

XM Advanced Applications/Service Capabilities

XM VideoStreaming or Cached Video

XM WeatherLinkHazardous driving condition alerts

XM NavTraffic with ParkingLinkReal-time traffic with parking space availability

XM VoiceCommandConversational speechinterface

XM DownloadsCached audio books from Audible.com

Marketing Strategy & Initiatives

Steve Cook

EVP, Sales & Marketing

XM Satellite Radio

Key Marketing Strategy: Leverage Investments in Content and Technology to Drive Mass Market Penetration

Market to a range of important consumer segmentsMusic Enthusiasts

Sports Enthusiasts

Women

Drive cost-effective mass adoption by leveraging technology leadExploit growing enthusiasm for Portable Digital Music

Offer appealing hardware features and functionality

Maintain competitive pricing

Expand cost-effective distributionEnhance Aftermarket

Expand factory OEM

Build awareness and encourage trial

Loyalty and retention

Marketing to Important Consumer Segments

• Streaming sports scores• Sportscaster radio

− One-touch sports programming guide

− Preloaded presets (Home Plate, Home Ice, Sports Guide)

− Portable kit

• Most play-by-play− MLB, NHL, PGA, NASCAR, IRL,

World Cup, College• Original sports talk• Best names in sports talk

− Incl. ESPN, ESPN Radio, Fox Sports

Sports Enthusiasts

• New radio fit and finish options

• Ease of installation and portability

• Take 5 channel− Ellen DeGeneres− Good Morning America− Home & Garden Television− Tyra Banks− XM original talk

Women

• XM portable radios• Integrated XM/MP3

functionality• 5.1 Surround sound• Napster

• Artist Confidential• Exclusive artist shows• Largest, deepest playlists• Network Live JV

Music Enthusiasts

Hardware & TechnologyProgramming



Sports Enthusiasts

Women





Expand factory OEM



Leverage Demand For Portable Digital Music

Experienced strong demand for XM2go (portable) products in 2005

Helix and Inno will be the new standard in portable audio

Only XM offers live portable access to over 160 channels with MP3/WMA capability

Hear a song and save it at the push of a button

Nexus offers XM live in the car and the home, plus recorded content on the go

MP3/WMA formats combine with XM recorded content to provide custom playlist creation

$199 price points appeals to entry level market

Full Range of Products and Prices

$59.99XM Home Connect-And-Play System

$69-$99XM Car Direct System

$169.99XM Commander

$59.95AGT Sportscaster*

$79.99Audiovox XM Xpress*

$79.99Delphi XM Roady XT*

$149.99Delphi XM SkyFi2

$199.99Pioneer Airware

$224.99Delphi XM MyFi

$199.99Samsung neXus 25

$249.99Samsung neXus 50

$399.99Pioneer Inno

$399.99Samsung Helix

MSRPMP3XM2GoBoomboxAutoHomeXM Receiver

* Portable accessory kit available

Port

able

Plug

-And

-Pla

yC

ar &

Hom

eSt

ereo

Appeal to the Mass Market Lowering Barriers To Adoption

Maintain appealing subscription pricesFamily plan pricing increases revenue per householdGrow ARPU over time with enhanced programming and ancillary services

Hardware diversityRange of prices provide balanced subsidy portfolioEnhanced functionality creates new growth markets and hardware pricing opportunities

Ease of installation



Sports Enthusiasts

Women





Expand factory OEM



Enhance Distribution – Aftermarket

Early stage growth driven by Best Buy and Circuit City

Grow distribution in Wal-Mart and Target, and expand to other mass merchandisers (Costco, Staples, etc)

The right product for the right retailerElectronic Super Stores (Best Buy, Circuit City) Mass Merchants (Wal-Mart, Target, Costco, etc)Regional and IndependentDirect Sales

* Global Insight, November 2005

Total Vehicle Sales (CY 05 Est.)*

Other

XM is the exclusive OEM factory-installed partner with the largest and the fastest growing automakers

XM’s OEM partners include approximately 60% of the OEM market

Expand Distribution – OEM

54%

56%57%

59%60%

61%

2000 2001 2002 2003 2004 2005

Total XM Aligned

XM-Aligned Auto Makers Have Demonstrated Market Share Growth

Sources: based on GlobalInsight US Unit Sales by manufacturer

0

1,000

2,000

3,000

4,000

5,000

XM I

nsta

llatio

ns (

'000

s)

2002 2003 2004 2005 2006 2007 2008

Calendar Year

OtherHondaGM

Annual XM OEM Installations

Actual Forecast



Sports Enthusiasts

Women





Expand factory OEM



Current “Listen Large” Advertising Campaign Builds The XM Brand And Highlights Breadth Of Programming To Appeal To Core Segments

Music-Focused Program Integration

Promotion of Artist

ConfidentialOutdoor

Advertising

“Listen Large” TV Campaign

Airlines Car MakersRental CarsHotel/Retail

EntertainmentDistributors

Marketing Partnerships Facilitate Trial Of XM’s Programming And Subscriber Acquisition Opportunities



Sports Enthusiasts

Women





Expand factory OEM



Loyalty & RetentionMaintain low churn rate and high customer satisfaction

Dedicated retention teamsWinback programsRadio replacement programs

Improve OEM conversion rateLeverage strength of programmingBuyer experience at point-of-saleContact strategy during trial

Quality customer careSenior call center executive added to management teamMultiple vendor strategyEnhanced automated web and voice capabilities

OEM remarketingWith growth in XM awareness a significant number of used XM vehicle purchasers subscribe to XMCertified pre-owned programs provide new marketing opportunities

Create A Loyal Subscriber Base Of 9 Million In 2006

Maintain focus on key consumer segments

Keep barriers to entry low

Continue to leverage technology lead to offer superior hardware solutions

Maintain and leverage marketing and distribution partnerships

Pathway to 20 million by 2010

AGENDAProgramming Strategy Eric Logan

EVP, ProgrammingTechnology Strategy Stell Patsiokas

EVP, Technology & EngineeringMarketing Strategy Steve Cook

EVP, Sales & MarketingOEM Partners

Honda Charles KochManager, New Business Development & Planning

GM Rick LeeVP, Satellite Radio Services

Nissan Larry HaddadCorporate Manager, Cross Carline Product Planning

Hyundai Doug MottramNational Manager, Product Planning

Toyota Jon BucciCorporate Manager, Advanced Technology Department

XM Canada John BitoveChairman & CEO, CSR

Q&A

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