Sirius XM Radio (SIRI)

Distribution of SIRIUS Radios

Retail

      SIRIUS radios are marketed and distributed under various brands through major national and regional retailers, including Best Buy, Circuit City, Crutchfield, Costco, Target and Wal-Mart. SIRIUS radios are also distributed on an exclusive basis by RadioShack. We develop in-store merchandising materials and provide sales force training for several retailers. SIRIUS radios are also available nationwide at various truck stops, including Travel Centers of America, Flying J, Petro, Pilot Travel Centers and Interstate Connections locations.

      We also sell SIRIUS radios directly to consumers through our website, which we refer to as our direct to consumer distribution channel.

Automakers

      Various automakers factory-install and dealer-install SIRIUS radios in their vehicles. As of the end of 2005, SIRIUS radios were available as a factory-installed option in 89 vehicle models and as a dealer-installed option in 19 vehicle models. In 2006, we expect automakers to expand the availability of SIRIUS radios in their vehicles to over 115 factory programs. We expect that the number of dealer only programs will decrease as a result of the increased availability of SIRIUS radios as a factory-installed option.

      In certain cases, automakers include a subscription to our radio service in the sale or lease price of vehicles. The length of these prepaid subscriptions varies, but is typically six months to one year. In many cases, we receive subscription payments from automakers in advance of the activation of our service. We reimburse various automakers for certain costs associated with the SIRIUS radios installed in their vehicles, including hardware costs and tooling expenses. Such costs are expected to decline as the costs of SIRIUS radios decrease.

      DaimlerChrysler. In October 2005, we entered into a new agreement with DaimlerChrysler Corporation, Mercedes-Benz USA, Inc. and Freightliner LLC (collectively “DaimlerChrysler”), which extends our exclusive relationship until September 2012. This agreement covers all cars and

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light trucks manufactured by DaimlerChrysler as well as Freightliner and Sterling heavy trucks. We share with DaimlerChrysler a portion of the revenues we derive from subscribers using DaimlerChrysler vehicles equipped to receive our service. We also reimburse DaimlerChrysler for certain advertising, hardware and development expenses incurred in connection with the inclusion of SIRIUS radios in its vehicles.

      Ford. In June 2005, we entered into a new agreement with Ford Motor Company and certain of its affiliates, which extends our exclusive relationship until September 2011 or, at Ford’s option, until September 2013. Beginning in January 2009, Ford may elect to become nonexclusive under the agreement, in which case Ford would forfeit its significant future economic benefits. This agreement covers all Ford brands, including Ford, Lincoln, Mercury, Jaguar, Volvo, Land Rover, Aston Martin and Mazda. We share with Ford a portion of the revenues we derive from subscribers using Ford vehicles equipped to receive our service. We also reimburse Ford for certain promotional, hardware and development expenses incurred in connection with the inclusion of SIRIUS radios in its vehicles.

      BMW. In September 2005, we entered into a new agreement with BMW of North America, which extends our exclusive relationship until August 2008. We share with BMW a portion of the revenues we derive from subscribers using BMW and MINI vehicles equipped to receive our service. In addition, we reimburse BMW for certain promotional, hardware and development expenses incurred in connection with the installation of SIRIUS radios in its vehicles.

      Other Automakers. In February 2005, we entered into an agreement with Mitsubishi Motors North America, which establishes an exclusive relationship through February 2010. We share with Mitsubishi a portion of the revenues we derive from subscribers using Mitsubishi vehicles equipped to receive our service. We also reimburse Mitsubishi for certain promotional and hardware expenses incurred in connection with the inclusion of SIRIUS radios in its vehicles.

      In January 2006, we entered into an exclusive agreement with Rolls-Royce Motor Cars, pursuant to which Rolls-Royce will include SIRIUS radios as standard, factory-installed equipment in all of its vehicles through 2008. Each Rolls-Royce vehicle will be sold with a lifetime subscription included in the price of the car. We will reimburse Rolls-Royce for certain hardware expenses incurred in connection with the inclusion of SIRIUS radios in its vehicles.

      SIRIUS radios are also available as a factory or dealer-installed option in various vehicle models offered by Nissan, Infiniti, Volkswagen, Audi, Toyota, Lexus, Subaru and Porsche. We are in discussions with other automakers to include SIRIUS radios in new cars and trucks.

Special Markets

      Trucks. SIRIUS radios are available nationwide at various truck stops, including Travel Centers of America, Flying J, Petro, Pilot Travel Centers and Interstate Connections locations. Freightliner, Sterling, Peterbilt, Kenworth, Volvo and International offer SIRIUS radios as a factory-installed option on the trucks they manufacture.

      Boats. Various recreational boat builders, including Sea Ray, Four Winns, Chaparral, Larson, Glastron, Ranger and Formula, offer SIRIUS radios and a prepaid subscription to our service as a standard or optional feature on their boats.

      Recreational Vehicles. Several leading manufacturers of recreational vehicles, including Fleetwood, American Coach, Winnebago, Gulfstream, Monaco and Newmar, offer SIRIUS radios as a factory-installed option.

Hertz

      We have an agreement with Hertz Corporation to make SIRIUS radios available as an option to its rental car customers. In some cases, our service is included as part of the rental price of Hertz vehicles. In other cases, our service is offered as a premium feature to Hertz customers for a daily fee.

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      As of December 31, 2005, 27,504 vehicles with SIRIUS radios were available to renters of Hertz’s 45 vehicle models. Hertz offers SIRIUS radios at 55 airport locations nationwide.