http://xmradio.mediaroom.com/index.p...es&item=3D1423


SIRIUS and XM to Combine in $13 Billion Merger of Equals

Provides Consumers with Enhanced Content, Greater Choices and
Accelerated Technological Innovation

Enables Satellite Radio to Better Compete in Rapidly Evolving Audio
Entertainment Industry

Extraordinary Value Creation for Shareholders

Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to
Serve as Chairman of Combined Company

WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- XM
Satellite Radio (NASDAQ: XMSR) and SIRIUS Satellite Radio (NASDAQ:
SIRI) today announced that they have entered into a definitive
agreement, under which the companies will be combined in a tax-free,
all-stock merger of equals with a combined enterprise value of
approximately $13 billion, which includes net debt of approximately
$1.6 billion.

Under the terms of the agreement, XM shareholders will receive a fixed
exchange ratio of 4.6 shares of SIRIUS common stock for each share of
XM they own. XM and SIRIUS shareholders will each own approximately 50
percent of the combined company.

Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become
Chief Executive Officer of the combined company and Gary Parsons,
currently Chairman of XM, will become Chairman of the combined
company. The new company's board of directors will consist of 12
directors, including Messrs. Karmazin and Parsons, four independent
members designated by each company, as well as one representative from
each of General Motors and American Honda. Hugh Panero, the Chief
Executive Officer of XM, will continue in his current role until the
anticipated close of the merger.

The combined company will benefit from a highly experienced management
team from both companies with extensive industry knowledge in radio,
media, consumer electronics, OEM engineering and technology. Further
management appointments will be announced prior to closing. The
companies will continue to operate independently until the transaction
is completed and will work together to determine the combined
company's corporate name and headquarters location prior to closing.

The combination creates a nationwide audio entertainment provider with
combined 2006 revenues of approximately $1.5 billion based on
analysts' consensus estimates. Today the companies have approximately
14 million combined subscribers. Together, SIRIUS and XM will create a
stronger platform for future innovation within the audio entertainment
industry and will provide significant benefits to all constituencies,
including:

* Greater Programming and Content Choices -- The combined company is
committed to consumer choice, including offering consumers the
ability
to pick and choose the channels and content they want on a more a
la
carte basis. The combined company will also provide consumers with
a
broader selection of content, including a wide range of commercial-
free
music channels, exclusive and non-exclusive sports coverage,
news,
talk, and entertainment programming. Together, XM and SIRIUS will
be
able to improve on products such as real-time traffic and rear-
seat
video and introduce new ones such as advanced data services
including
enhanced traffic, weather and infotainment offerings.

* Accelerated Technological Innovation -- The merger will enable the
combined company to develop and introduce a wider range of lower
cost,
easy-to-use, and multi-functional devices through efficiencies in
chip
set and radio design and procurement. Such innovation is
essential to
remaining competitive in the consumer electronics-driven world of
audio
entertainment.

* Benefits to OEM and Retail Partners -- The combined company will
offer
automakers and retailers the opportunity to provide a broader
content
offering to their customers. Consumer electronics retailers,
including
Best Buy, Circuit City, RadioShack, Wal-Mart and others, will
benefit
from enhanced product offerings that should allow satellite radio
to
compete more effectively.

* Enhanced Financial Performance -- This transaction will enhance
the
long-term financial success of satellite radio by allowing the
combined
company to better manage its costs through sales and marketing and
subscriber acquisition efficiencies, satellite fleet synergies,
combined
R&D and other benefits from economies of scale. Wall Street
equity
analysts have published estimates of the present value of cost
synergies
ranging from $3 billion to $7 billion.

* More Competitive Audio Entertainment Provider -- The combination
of an
enhanced programming lineup with improved technology, distribution
and
financials will better position satellite radio to compete for
consumers' attention and entertainment dollars against a host of
products and services in the highly competitive and rapidly
evolving
audio entertainment marketplace. In addition to existing
competition
from free "over-the-air" AM and FM radio as well as iPods and
mobile
phone streaming, satellite radio will face new challenges from the
rapid
growth of HD Radio, Internet radio and next generation wireless
technologies.

"We are excited for the many opportunities that an XM and SIRIUS
combination will provide consumers," said Gary Parsons, Chairman of XM
Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint
statement. "The combined company will be better positioned to compete
effectively with the continually expanding array of entertainment
alternatives that consumers have embraced since the Federal
Communications Commission (FCC) first granted our satellite radio
licenses a decade ago."

"This combination is the next logical step in the evolution of audio
entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio.
"Together, our best-in-class management team and programming content
will create unprecedented choice for consumers, while creating long-
term value for shareholders of both companies. The combined company
will be positioned to capitalize on SIRIUS and XM's complementary
distribution and licensing agreements to enhance availability of
satellite radios, offer expanded content to subscribers, drive
increased advertising revenue and reduce expenses. Each of our
companies has a strong commitment to providing listeners the broadest
range of music, news, sports and entertainment and the best customer
service possible. We look forward to sharing the benefits of the
exciting new growth opportunities this combination will provide with
all of our stakeholders."

The transaction is subject to approval by both companies'
shareholders, the satisfaction of customary closing conditions and
regulatory review and approvals, including antitrust agencies and the
FCC. Pending regulatory approval, the companies expect the transaction
to be completed by the end of 2007.

SIRIUS's financial advisor on the transaction is Morgan Stanley and
Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal
counsel. XM's financial advisor on the transaction is J.P. Morgan
Securities Inc. and Skadden Arps, Slate, Meagher & Flom LLP; Jones
Day; and Latham & Watkins LLP are acting as legal counsel.

Conference Call and Webcast Information

The companies will hold a joint conference call and webcast on
Tuesday, February 20, 2007 at 8:30 AM ET to discuss this announcement.
The conference call can be monitored by dialing 800-573-4840 within
the U.S. and 617-224-4326 for all other locations, passcode 29490052.
The webcast can be accessed at http://www.sirius.com/ and http://www.xmradi=
o.com/
as well as on their satellite radio services by tuning to SIRIUS
channel 122 and XM channel 200. The webcast will be archived at
http://www.sirius.com/ and http://www.xmradio.com/.



About SIRIUS

SIRIUS, "The Best Radio on Radio," delivers more than 130 channels of
the best programming in all of radio. SIRIUS is the original and only
home of 100% commercial free music channels in satellite radio,
offering 69 music channels. SIRIUS also delivers 65 channels of
sports, news, talk, entertainment, traffic, weather and data. SIRIUS
is the Official Satellite Radio Partner of the NFL, NASCAR, NBA and
NHL, and broadcasts live play-by-play games of the NFL, NBA and NHL,
as well as live NASCAR races. All SIRIUS programming is available for
a monthly subscription fee of only $12.95.

SIRIUS Internet Radio (SIR) is a CD-quality, Internet-only version of
the SIRIUS radio service, without the use of a radio, for the monthly
subscription fee of $12.95. SIR delivers more than 75 channels of
talk, entertainment, sports, and 100% commercial free music.

SIRIUS products for the car, truck, home, RV and boat are available in
more than 25,000 retail locations, including Best Buy, Circuit City,
Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at
http://shop.sirius.com/.

SIRIUS radios are offered in vehicles from Audi, Bentley, BMW,
Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep=AE, Land Rover, Lexus,
Lincoln, Mercury, Maybach, Mazda, Mercedes-Benz, MINI, Mitsubishi,
Nissan, Rolls Royce, Scion, Toyota, Volkswagen, and Volvo. Hertz also
offers SIRIUS in its rental cars at major locations around the
country.

Click on http://www.sirius.com/ to listen to SIRIUS live, or to
purchase a SIRIUS radio and subscription.

About XM

XM is America's number one satellite radio company with more than 7.6
million subscribers. Broadcasting live daily from studios in
Washington, DC, New York City, Chicago, the Country Music Hall of Fame
in Nashville, Toronto and Montreal, XM's 2007 lineup includes more
than 170 digital channels of choice from coast to coast: commercial-
free music, premier sports, news, talk radio, comedy, children's and
entertainment programming; and the most advanced traffic and weather
information.

XM, the leader in satellite-delivered entertainment and data services
for the automobile market through partnerships with General Motors,
Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is
available in 140 different vehicle models for 2007. XM's industry-
leading products are available at consumer electronics retailers
nationwide. For more information about XM hardware, programming and
partnerships, please visit http://www.xmradio.com/.

Forward Looking Statements

This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements include, but are not limited to, statements about the
benefits of the business combination transaction involving Sirius
Satellite Radio Inc. and XM Satellite Radio Holdings Inc., including
potential synergies and cost savings and the timing thereof, future
financial and operating results, the combined company's plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified by
words such as "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "will," "should," "may," or words of similar meaning. Such
forward- looking statements are based upon the current beliefs and
expectations of SIRIUS' and XM's management and are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally
beyond the control of SIRIUS and XM. Actual results may differ
materially from the results anticipated in these forward-looking
statements.

The following factors, among others, could cause actual results to
differ materially from the anticipated results or other expectations
expressed in the forward-looking statement: general business and
economic conditions; the performance of financial markets and interest
rates; the ability to obtain governmental approvals of the transaction
on a timely basis; the failure of SIRIUS and XM shareholders to
approve the transaction; the failure to realize synergies and cost-
savings from the transaction or delay in realization thereof; the
businesses of SIRIUS and XM may not be combined successfully, or such
combination may take longer, be more difficult, time-consuming or
costly to accomplish than expected; and operating costs and business
disruption following the merger, including adverse effects on employee
retention and on our business relationships with third parties,
including manufacturers of radios, retailers, automakers and
programming providers. Additional factors that could cause SIRIUS' and
XM's results to differ materially from those described in the forward-
looking statements can be found in SIRIUS' and XM's Annual Reports on
Form 10-K for the year ended December 31, 2005, and Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and
September 30, 2006 which are filed with the Securities and Exchange
Commission (the "SEC") and available at the SEC's Internet site
(http://www.sec.gov/). The information set forth herein speaks only as
of the date hereof, and Sirius and XM disclaim any intention or
obligation to update any forward looking statements as a result of
developments occurring after the date of this press release.

Important Additional Information Will be Filed with the SEC

This communication is being made in respect of the proposed business
combination involving SIRIUS and XM. In connection with the proposed
transaction, SIRIUS plans to file with the SEC a Registration
Statement on Form S-4 containing a Joint Proxy Statement/Prospectus
and each of SIRIUS and XM plan to file with the SEC other documents
regarding the proposed transaction. The definitive Joint Proxy
Statement/Prospectus will be mailed to stockholders of SIRIUS and XM.
INVESTORS AND SECURITY HOLDERS OF SIRIUS AND XM ARE URGED TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE
SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION.

Investors and security holders will be able to obtain free copies of
the Registration Statement and the Joint Proxy Statement/Prospectus
(when available) and other documents filed with the SEC by SIRIUS and
XM through the web site maintained by the SEC at http://www.sec.gov/.
Free copies of the Registration Statement and the Joint Proxy
Statement/Prospectus (when available) and other documents filed with
the SEC can also be obtained by directing a request to Sirius
Satellite Radio Inc., 1221 Avenue of the Americas, New York, NY 10020,
Attention: Investor Relations or by directing a request to XM
Satellite Radio Holdings Inc., 1500 Eckington Place, NE Washington, DC
20002, Attention: Investor Relations.

SIRIUS, XM and their respective directors and executive officers and
other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding
SIRIUS' directors and executive officers is available in its Annual
Report on Form 10-K for the year ended December 31, 2005, which was
filed with the SEC on March 13, 2006, and its proxy statement for its
2006 annual meeting of stockholders, which was filed with the SEC on
April 21, 2006, and information regarding XM's directors and executive
officers is available in XM's Annual Report on Form 10-K, for the year
ended December 31, 2005, which was filed with the SEC on March 3, 2006
and its proxy statement for its 2006 annual meeting of shareholders,
which was filed with the SEC on April 25, 2006. Other information
regarding the participants in the proxy solicitation and a description
of their direct and indirect interests, by security holdings or
otherwise, will be contained in the Joint Proxy Statement/Prospectus
and other relevant materials to be filed with the SEC when they become
available.

Contacts

SIRIUS
Media Relations
Patrick Reilly
212-901-6646


Investor Relations
Paul Blalock
212-584-5174


Hooper Stevens
212-901-6718


XM
Media Relations
Nathaniel Brown
212-708-6170


Chance Patterson
202-380-4318


Investor Relations
Joseph Wilkinson
202-380-4008


Richard Sloane
202-380-1439


SOURCE: SIRIUS Satellite Radio; XM Satellite Radio

CONTACT: Patrick Reilly, Media Relations, +1-212-901-6646,
, or Paul Blalock, Investor Relations,
+1-212-584-5174, , or Hooper Stevens,
Investors
Relations, +1-212-901-6718, , all of SIRIUS,
or
Nathaniel Brown, Media Relations, +1-212-708-6170,
, or Chance Patterson, Media Relations,
+1-202-380-4318, , or Joseph Wilkinson,
Investor
Relations, +1-202-380-4008, , or Richard
Sloane,
Investor Relations, +1-202-380-1439, , all
of XM

Web site: http://www.xmradio.com/
http://www.sirius.com/
http://shop.sirius.com/