Robert Peck of Bear Sterns Issued two reports today outlining thoughts on Sirius and XM.

SIRIUS REPORT EXCERPT

Subs Lower, But Market Focused on Merger Outcome

• Sub Growth Below Our/Street Ests.

Sirius reported 4Q net sub adds of 654k, which was below our/st ests of 690k. The year-end sub base was 8.32 mn. All-in churn was 2.2%, at the low-end of the guidance range and better than our est of 2.5%. However, the implied gross sub adds of 1.18 mn was 110k below our projection of 1.29 mn. Recall that Sirius had exceeded growth expectations in the last two quarters primarily on the strength of the OEM channel. In 4Q, however, we est retail gross adds declined 30%-40% YoY (vs 15%-25% YoY decreases in2Q and 3Q07), which likely led to the shortfall compared to our estimates. One of the questions investors will have is how many "subs" represent cars in dealer lots -- at 3Q-end, itwas 11%, up 1%-point Q/Q.

• Our Revised 4Q Expectations.

Key ests include (i) SAC of $96/gross add, up from $90 to reflect the higher proportion of the OEM gross adds, (ii) Revenues of $269 mn, lower than our previous est of $278 mn reflecting the seasonally higher promotional impact, (iii) Adj EBITDA of $(116) mn, higher than our previous est of $(121) mn reflecting lower gross adds. We are projecting FCF of $58 mn in 4Q07, almost double the $29 mn reported in 4Q06, and in line with the "substantially greater" FCF guidance suggested by the company.

• Still Believe DOJ Will Approve Merger.

There has been a significant amount of discussion recently about increasing availability of HD Radio, including a potential iPod-HD Radio boombox, Ford to offer HD Radio across nearly all 2008 models, as well as an iBiquity filing before the FCC requesting HD Radio inclusion in all satellite radios as one of the conditions tothe merger. Moreover, in 2008, wireless operators are planning to roll out subscription-based music services in partnership with RealNetworks and Napster. Given the increasingly competitive landscape for satellite radio, as well as limited traction at retail, we believe the DOJ likely will allow the merger to go through.

XM REPORT EXCERPTS

Tweaking 4Q Estimates

• Marginally Reducing Sub Growth Estimates.

We are tweaking down our retail sub growth estimates for XM for two reasons -- (i) Sirius reported lower than expected 4Q net sub adds,and (ii) NPD stated that mp3 player sales in 4Q were flat. As such, we are now projecting net adds of 462k, below our previous estimate of 508k, and expect the company to end the year with 9.03 mn subs. We are projecting retail net adds at 100k and OEM net adds of 365k. All-in monthly churn is projected at 2.6%, which remains unchanged.

• Our Revised 4Q Expectations.

Key estimates include (i) SAC and CPGA are estimated at$71 and $131, respectively; the CPGA increases marginally as we reduce gross adds expectations, (ii) Revenues of $308 mn, marginally lower than our previous estimate of $309 mn, (iii) Adjusted EBITDA of $(87) mn which is marginally higher than our previous estimateof $(89) mn reflecting the lower gross adds.

• Still Believe DOJ Will Approve Merger.

There has been a significant amount of discussionrecently about increasing availability of HD Radio, including a potential iPod-HD Radio boombox, Ford to offer HD Radio across nearly all 2008 models, as well as an iBiquity filing before the FCC requesting HD Radio inclusion in all satellite radios as one of the conditions tothe merger. Moreover, in 2008, wireless operators are planning to roll out subscription-based music services in partnership with RealNetworks and Napster. Given the increasingly competitive landscape for satellite radio, as well as limited traction at retail, we believe the DOJ likely will allow the merger to go through.

Tyler Savery Position - Long Sirius, Long XM