2. In the last 6 months, how have your listener’s priorities changed?

9. Personal Priorities Spouse/SO Children Health Faith Career Money Image/style/fashio n Toys Entertainment Travel Spouse/SO Children Health Faith Career Money Image/style/fashio n Toys Entertainment Travel

10. Personal Priorities Spouse/SO Children Health Faith Career Money Image/style/fashio n Toys Entertainment Travel Spouse/SO Children Health Faith Career Money Image/style/fashio n Toys Entertainment Travel

11. Priorities Will Change… In August, a cell phone might have been a convenience- driven purchase or luxury item. Now, it’s a security device. In August, a cell phone might have been a convenience- driven purchase or luxury item. Now, it’s a security device. In August, a new car was fun and exciting. Now, it’s an investment in the economic security of our country.

12. In the last 6 months, how have the priorities of your station changed?

13. The digital revolution isn’t about change… It’s about choice! The digital revolution isn’t about change… It’s about choice!

17. 5 GB’s of Storage Holds 1000 songs Can transfer a complete library in under 10 minutes Now under $200 5 GB’s of Storage Holds 1000 songs Can transfer a complete library in under 10 minutes Now under $200 Apple iPod

18. ATT posted a fourth quarter loss of 1.7 billion in its consumer services revenue Expect declines of 20% this year The number of people with wireless plans that include free long distance service will grow from 20m today to 90m by 2005 Pre-paid calling cards Email Low cast instant messaging $19.95 Unlimited long distance ATT posted a fourth quarter loss of 1.7 billion in its consumer services revenue Expect declines of 20% this year The number of people with wireless plans that include free long distance service will grow from 20m today to 90m by 2005 Pre-paid calling cards Email Low cast instant messaging $19.95 Unlimited long distance

19. Radio’s Greatest Risk Listeners don’t care? Radio is becoming completely irrelevant. –Walter Mossberg, Fall NAB Listeners don’t care? Radio is becoming completely irrelevant. –Walter Mossberg, Fall NAB

20. The Next Big Idea Eight-track tapes... That’s it for Radio! Then CDs... Now Radio is really dead! Now the Internet… This is it…it’s all over now Eight-track tapes... That’s it for Radio! Then CDs... Now Radio is really dead! Now the Internet… This is it…it’s all over now

21. Radio has had challenges But, something or someone has always been there to fight, preserve and protect. Now, are we going to give up? Is there are solution? But, something or someone has always been there to fight, preserve and protect. Now, are we going to give up? Is there are solution?

22. It’s Time to Rock N’ Roll XM’s 2nd satellite Name: Roll Launched May 8th, 2001 Rock was launched on March 18th, 2001 XM’s 2nd satellite Name: Roll Launched May 8th, 2001 Rock was launched on March 18th, 2001

23. AM, FM and Now...XM Service began in Dallas and San Diego Nationwide on November 12th, 2001 100 channels of programming –66 will air commercials –33 are commercial-free Requires a $ 9.95 per month subscription Service began in Dallas and San Diego Nationwide on November 12th, 2001 100 channels of programming –66 will air commercials –33 are commercial-free Requires a $ 9.95 per month subscription

24. XM Up Close After-market units manufactured by: –Sony, Pioneer, Clarion, Jensen, Kenwood, Panasonic Blitzsafe cables (15 minute install) GM will install in up to 350,000 2002 vehicles Will install in 23 2003 nameplates –OnStar is available in 35 nameplates After-market units manufactured by: –Sony, Pioneer, Clarion, Jensen, Kenwood, Panasonic Blitzsafe cables (15 minute install) GM will install in up to 350,000 2002 vehicles Will install in 23 2003 nameplates –OnStar is available in 35 nameplates

25. XM Close Up

26. XM Up Close Sample home unit

27. XM Up Close XM reported 100,000 subs by June 1st of 2002. Expects 130,000 by the end of 2nd quarter 350,000 by the end of 2002 The XM break-even point is 4-million subscribers XM reported 100,000 subs by June 1st of 2002. Expects 130,000 by the end of 2nd quarter 350,000 by the end of 2002 The XM break-even point is 4-million subscribers

29. XM in the News Radio and Records, June 18th 2002 - XM Satellite Radio stock tumbled of concerns about the longevity of their satellites. …solar panel mirrors are developing a cloudy film reducing the ability to operate at full power....Business 2.0 Radio and Records, June 18th 2002 - XM Satellite Radio stock tumbled of concerns about the longevity of their satellites. …solar panel mirrors are developing a cloudy film reducing the ability to operate at full power....Business 2.0

30. XM in the News Radio and Records, April 25th 2002 - XM Satellite Radio burns through 20 to 25 million per month …will need 600 million in capital to carry the company through 2005 when positive cashflow is expected. …Robertson Stephens’ Radio and Records, April 25th 2002 - XM Satellite Radio burns through 20 to 25 million per month …will need 600 million in capital to carry the company through 2005 when positive cashflow is expected. …Robertson Stephens’

31. XM Up Close Does XM Have the Cash to Last?

32. Early Adopters In the first 60-days… –CD Players: 1983 - 7,800 units –DVD Players: 1997 - 8,600 units –Sat. Radio: 2001 - 30,000 XM units/monthly subscribers Sat Radio is one of the fastest growing electronics products In the first 60-days… –CD Players: 1983 - 7,800 units –DVD Players: 1997 - 8,600 units –Sat. Radio: 2001 - 30,000 XM units/monthly subscribers Sat Radio is one of the fastest growing electronics products

33. And Now Sirius Debuted on February 14th Nationwide service available July 1st, 2002 100 channels of programming –40 will air commercials –60 are commercial-free Requires a $ 12.95 per month subscription Debuted on February 14th Nationwide service available July 1st, 2002 100 channels of programming –40 will air commercials –60 are commercial-free Requires a $ 12.95 per month subscription

34. And Now Sirius Features 3 satellites Requires special receiver –Clarion and Kenwood Partnerships with Ford, DaimlerChrysler and BMW 3 million subscribers to break even Features 3 satellites Requires special receiver –Clarion and Kenwood Partnerships with Ford, DaimlerChrysler and BMW 3 million subscribers to break even

35. And Now Sirius 412 subscribers in the 1st quarter of 2002 100-150,000 by the end of 2002 Planning for 300,000 after- market receivers in the retail pipeline by year-end Receiver production continues to be a problem 412 subscribers in the 1st quarter of 2002 100-150,000 by the end of 2002 Planning for 300,000 after- market receivers in the retail pipeline by year-end Receiver production continues to be a problem

37. Both companies say they have no plans for localization.

38. Will listeners pay for Radio?

39. New Product Marketing Alternatives –New product represents a different choice –Do not seek to replace –Take a portion of market share from comp. –Re-position existing competitors Alternatives –New product represents a different choice –Do not seek to replace –Take a portion of market share from comp. –Re-position existing competitors

40. New Product Marketing Substitutions –New product or brand represents a replacement for an existing product. –Take all market share –Seeks to complete replace –The category killer Substitutions –New product or brand represents a replacement for an existing product. –Take all market share –Seeks to complete replace –The category killer

41. New Product Marketing In the world television, what is Cable… –An Alternative? –A Substitution? What is Satellite Radio? –An Alternative? –A Substitution? In the world television, what is Cable… –An Alternative? –A Substitution? What is Satellite Radio? –An Alternative? –A Substitution?

44. Satellite Radio strikes at the heart of Radio’s most sacred piece of real estate… The Dash Satellite Radio strikes at the heart of Radio’s most sacred piece of real estate… The Dash

45. Radio... Radio Radio Owns the Dash... TapesCD’s Home Burned CD’s Cell- phones MP3 New Tech. OnStar Don’t we?

46. The Good News for Radio Radio is mobile Radio is persuasive Radio is local Marketing solutions are cost- effective Radio is high frequency The medium of choice for busy consumers Radio is FREE Radio is mobile Radio is persuasive Radio is local Marketing solutions are cost- effective Radio is high frequency The medium of choice for busy consumers Radio is FREE

47. In just 2 years, near 57% of all start ups went out of business as owners failed to identify a successful profit model. Wall Street Journal, January 2001 RADIO

48. Of the 48 Radio stations on the air in 1922, 27 were dark by 1924 as owners could not find a reasonable way to make money. Wall Street Journal, January 2001