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Sirius Service Will Launch February 14 In 3 Markets

Sirius Satellite Radio announced a February launch of its service in three key markets, with full national deployment by the third quarter next year.

Given the launch delay from this year’s fourth quarter and with two lawsuits filed against the company, Sirius assured Wall Street analysts during a recent conference call prior to the hiring of former RCA executive Joe Clayton (see p. 1) that it was financially sound.

CFO John Scelfo said Sirius had $375 million in cash as of the end of October, enough to last through at least calendar 2002 with the assumption that it signs up 200,000 subscribers.

During the news conference, Scelfo announced Sirius will deploy satellite service in Phoenix, Houston and Denver on Feb. 14, noting that in Houston more than 800,000 people spend at least an hour a day commuting and 300,000 people commute for an hour or more in Phoenix and Denver.

Scelfo said 200 storefronts will sell Sirius receivers in the initial market launch, increasing to 5,000 for the national rollout. He also vigorously assured analysts that adequate supplies of receivers from suppliers Clarion, Jensen, Kenwood and Panasonic would be on store shelves by the time of the launch.

Participating retailers in the initial rollout will include Circuit City, Best Buy, The Good Guys, Ultimate Electronics, Car Toys, Audio Express and Crutchfield.

Scelfo said receiver manufacturing will begin shortly and that he expects “by April, our partners will have ramped to full production.” OEM sponsored receivers will begin appearing in cars in the latter half of 2002, he said, adding that further details on the aftermarket and OEM rollouts will be presented in January at International CES.

Other Sirius executives joined Scelfo in presenting a picture of enthusiasm and optimism regarding the Sirius launch. The company said it’s recent test marketing met or exceeded expectations in service quality.

Scelfo stressed that consumer research showed commercial free music channels are a key selling point of satellite radio. For that reason, the company has upped its number of commercial free music channels from 50 to 60.

Following the conference, Scelfo said Sirius is maintaining its monthly service fee of $12.95 (while XM’s fee is just less than $10). He said receiver makers have not yet announced pricing but that receivers should carry prices in the $299 to $399 range (including antenna but not installation).

Scelfo said most of the repeater network has been deployed, or a total of 95 repeaters, although the company expects to add low power repeaters in some markets.