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Karmazin Denies Sirius Merger Talks

1/26/2005 08:53:00 AM Eastern

New York — Despite published reports today that Sirius and XM Satellite Radio are in talks for a merger between the companies, Sirius’ CEO Mel Karmazin this morning denied any such discussions.

“I’ve been with the company for about eight weeks and this is the third rumor with which I’ve been confronted,” Karmazin said on a financial conference call today, adding. “The other company that was mentioned — I have not met with the chairman, I have not met with the CEO, so I have no idea where this came from.” The report about the merger was from a story in the New York Post today.

Sirius announced today widening losses that fell below analysts forecasts, but said that subscriber acquisitions are exceeding company expectations, causing Sirius to revise upward its subscriber forecasts for the year.

Sirius changed its guidance earlier this month to 1.4 million new subscribers forecast for this year, resulting in a total of 2.5 million subscribers at the end of 2005, up from the 2 million predicted only weeks ago.

Sirius said the higher expectations are based “on a spillover effect in new activations” this month, referring to continued activations into January based on holiday sales.

Karmazin said satellite radio as a format is rapidly gaining validity and should eventually surpass satellite TV and cable TV combined.

“We strongly believe that the satellite radio market is even larger than most forecasts,” said Karmazin, adding, “There are 109 million households, 3 million heavy trucks, 3 million RVs, 16 million new cars coming out of the factory every year and 200 million cars on the road. Satellite TV and cable is in approximately 90 million homes. Satellite radio could and should be even bigger than that number.”

In response to analyst inquiries, Sirius said that satellite radio delivered over cellular-phone networks could be a major area for satellite radio in the future. When asked if there were additional deals on the horizon as large in scope financially as that with Howard Stern or the NFL, Sirius said, “I don’t know what would happen if Oprah decided to leave TV and wanted to come to Sirius. But there is nothing on our list today that would be of the scope of Howard Stern, the NFL or Major League Baseball,” said a spokesman.

Sirius also announced yesterday that it will broadcast NBA regular season games, playoffs and the finals nationwide to subscribers as part of a non-exclusive multiyear extension agreement with the National Basketball Association (NBA).

Sirius said it currently broadcasts up to 40 NBA games each week, but the new agreement provides it with expanded trademark and promotional rights. Sirius and the NBA are expected to conduct joint marketing efforts to NBA fans, Sirius said.

In addition, under the new agreement, subscribers will receive live official courtside game stats on their Sirius radio displays, Sirius said.