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Colorado Reader

This quarter XM is widely expected to report flat or even negative net growth in retail sales. That means all of XM’s net additions likely will come from long term exclusive automotive OEM agreements. Although Sirius is likely to continue to show some growth in net retail additions, most of its net subscription additions also will come from its exclusive OEMs agreements. Most analysts believe that the vast majority of growth in satellite radio subscriptions in the future will come from these exclusive OEM agreements, as net retail diminishes even more over time.

So where is the competition today and, more importantly in the future, between Sirius and XM? Where is the constraint on pricing, or even incentive to compete with content, which those opposed to the merger keep touting as the reason these companies should not be allowed to merge? Of course consumers can still go out and put a Sirius receiver in a GM car or a XM receiver in a Ford. But both companies acknowledge that the level of switching is very low and the slowing growth in net retail additions is further proof that this type of activity is not significant.

So back to the above question – where is the competition today? Obviously the competition is with terrestrial radio and not between Sirius and XM when it comes to new vehicle purchases – that by far is the choice most consumers are looking at as an alternative to XM in that GM vehicle, or Sirius in that Ford vehicle. Second choice is Ipods and MP3 players, given the level of sales of those devices. These are just two of the other forms of audio entertainment that are providing price constraints on XM and Sirius in real terms, not some hypothetical monopoly envisioned by merger opponents.