SIRIUS SETS FEB. 14 THREE-MARKET COMMERCIAL LAUNCH

Sirius executives said they planned additional announcements at Las Vegas CES in Jan., including more specific details on nationwide availability and status of effort to woo automotive OEM support. In conference call with financial analysts, Sirius officials were vague on issue of signing agreements with major automakers, but Co-CEO Patrick Donnelly said company had “continued to make progress and advanced our position” in talks in last 3 months with Detroit. Nevertheless, he and fellow CEO John Scelfo said bulk of Sirius’s 2002 effort would be on building business in aftermarket radios.

First receivers from Clarion, Kenwood, Jensen and Panasonic will be available on store shelves in about 200 storefronts in 3 introductory markets on Feb. 14 start date, Scelfo said. He said receiver companies were preparing to ramp up production quickly to meet anticipated demand, with full production levels possible by April. Scelfo said markets, all of which rank among top 20 population centers, also were chosen on basis of “commuting data, retail spending patterns and marketing opportunities.” For example, he said, more than 800,000 Houston commuters spend average of at least one hour per day driving to work.

Scelfo said Sirius had $375 million cash on hand as of Oct. 31 and reserves would be sufficient to take company through 2002, assuming it could activate 200,000 subscribers through end of next year. He said he was reluctant to issue projections on number of consumer activations, but nevertheless said Sirius officials felt “comfortable” with 200,000 figure.

Facing repeated questioning from analysts why Sirius planned to phase in nationwide service over prolonged period of time, Scelfo indicated it was to maintain command over having adequate supply of receivers in designated launch markets. “Supply won’t be an issue” in Denver, Houston and Phoenix, implying in Q&A that Sirius had learned from XM mistakes in introductory markets of Dallas-Ft. Worth and San Diego, where first allocations of receivers were in short supply at Sept. 25 launch.

Technically speaking, Sirius service will be available nationally, Scelfo said: “Having said that, if for example you were to take the system into another city with a repeater, and your service is less than optimal, it’s simply because we've yet to fully commission that location. But the service is a national service at this point.” Senior Vp- Engineering Mike Ledford said problem was that Sirius couldn’t “optimize” terrestrial network in given city until “fully functional” receivers were available there. As is case with any wireless network, he said, engineers have to go into individual markets and “mitigate” conditions that can cause possible interference. He said “it’s not a particularly time-consuming process, but we think this is about the right time frame for rollout.” Referring implicitly to XM, he said 2-3 months was too short a period to “cram” all that needed to be done for introducing service nationally.

Meanwhile, XM CEO Hugh Panero, at Washington rollout of his company’s service, declined comment on Sirius announcement but said XM would be alone nationally in satellite radio market until at least next summer. He said his company decreased number of terrestrial repeaters to 800- 850 range from original 1,500 across country because “strength of satellites” made use of more repeaters unnecessary. Company previously said it had reduced number of unnecessary repeaters in cost-cutting move, but had declined to disclosed specific numbers. XM again declined comment on number of subscribers it had, instead saying it would divulge that information at year-end after nationwide rollout was complete. XM will issue series of public service announcements intended to encourage tourists to come to Washington “during these trying times,” Panero said.