Joseph Titlebaum - General Counsel and Secretary Nate Davis - President and interim Chief Executive Officer Eric Logan - Executive Vice President of Programming Joseph Euteneuer - Executive Vice President and ChiefFinancial Officer Gary Parsons - Chairman of Board of Directors

Jonathan Jacoby - Banc of America Kunal Madhukar - Bear Stearns James Ratcliffe - Lehman Brothers Mark Wienkes - Goldman Sachs David Bank - RBC Capital Markets Eileen Furukawa - Citigroup Benjamin Swinburne - Morgan Stanley

At this time, Iwould like to welcome everyone to the XM Satellite Radio third quarter 2007 financialresults conference call. (Operator Instructions)I will now turn the call overto Joe Titlebaum, General Counsel.

Hello, everyone.This is Joe Titlebaum, General Counsel at XM Satellite Radio. Before we beginour prepared remarks I would like to remind everyone that certain informationon this call may contain forward-looking statements. Due to a number of factorsour actual results may differ materially from those projected in suchforward-looking statements. Those factorsinclude, future demand for the company's service; the potential need toincrease marketing expenses to meet competition or address changing marketplaceconditions; the impact of the merger; the pending CRV ruling; any litigationresults or settlements; and the potential need for additional financing as wellas other risks described in XM Satellite Radio Holdings Inc. Form 10-K filedwith the Securities and Exchange Commission on March 1, 2007 and the rule 4a-12 and 8-K filings morerecently made with the SEC. Copies of thesefilings are available online and upon request from XM Radios' InvestorRelations department. Now I will turnthe call over to Nate Davis, President and CEO of XM Satellite Radio.

Thank you, Joe.Good morning, everyone, and thanks for joining us. On the call with me todayare Eric Logan, Executive Vice President of Programming, who will give you anupdate on XM's programming; Joseph Euteneuer, Executive Vice President andChief Financial Officer, who will give you an update on our financial results,and Chairman of XM's Board of Directors, Gary Parsons, who will update you onthe pending merger. I know ourproposed merger received a lot of press coverage. We remain optimistic aboutour merger application, but everyone here at XM remains very focused onexecuting as a stand-alone company. The goal is to grow our subscriber base andimprove our financial performance and we're doing that with increasingconsistency and stability. Doing so best serves all of our stakeholders andensures that we're well positioned going into the merger. A quick summary ofour results. First, while I'm disappointed, the retail market for satelliteradio had another quarter of slow growth, subscriber growth from the OEMchannel during the quarter more than offset the softness at retail, and infact, net subscriber additions during the third quarter reflected year-over-yearpositive growth for the first time in over a year. We're pleased withthe fact that other parts of our business are also performing as expected. OEMconversion rate, self-paid churn, customer care performance, our continuingimprovement in programming quality, and adjusted operating loss less merger andlegal expenses are all tracking well. Now let me giveyou some updates starting with our OEM results. We delivered arecord volume of OEM gross adds and ended the quarter with 8.57 million subscribersand of those 47% were OEM customers. Third-quarter OEM results were a record700,000. This is the thirdconsecutive quarter in which OEM gross adds increased, that compares to 618,000gross adds in the second quarter 2007 and 553,000 in the third quarter 2006.Our third-quarter OEM net adds were 332,000, that compares with 295,000 in the second quarter of'07 and it's more than a 50% increase over the 217,000 net adds in the thirdquarter of '06. XM SatelliteRadios are now available in more than 140 cars from 10 automakers thatcollectively hold just over 60% share of the U.S.auto market. And as the results demonstrate the growth in XM enabled vehicleproduction continues to accelerate. Our OEM partnersproduced more than 900,000 vehicles with XM radios installed in the thirdquarter; that compares to second quarter 2007 volume of 800,000 and was morethan 80% higher than the third quarter of '06 where OEM production was 470,000. Keep in mind thatOEM vehicles produced but not yet sold constitute a potential subscriptionopportunity for what we call our pipeline. At current production volume thispipeline stands at 900,000 vehicles. Given currenttrends in OEM production volume we now anticipate fourth quarter factoryinstalls will approach 1 million and full-year factory install volume willtherefore surpass our earlier estimate of 3 million for all of 2007. Many of you hadquestioned whether the conversion rate would drop as OEM production ramped up.Results show the conversion rate remains stable even as XM radio penetrationcontinues to accelerate. Third quarterconversion rate was 52.5% maintaining the stability we've delivered for thepast year. And in the midst of escalating OEM volumes we continue to believethe conversion rate will remain stable in the low 50% range. Our ability tomaintain stability in conversion comes from the direct participation of our OEMpartners, including dealership training, dealership incentives wherever our OEMpartner agrees that it's helpful. We've established two U.S.based call centers solely dedicated to OEM subscriber calls and we've improvedour web tools for OEM customers. Combined with an early contact program, thatwe talked about before, we're making it easier for customers to convert. Let me note someadditional OEM highlights. As I mentioned, our automobile partners represent anexcess of 60% of the U.S.auto market and they continue to move increasingly towards implementationacross a large number of models, including entire brands or car lines. In 2008 modelyear, for example, GM will build more than 2.5 million vehicles with XMequipment, roughly a 70% penetration rate based on current sales levels. GMlaunched the 2008 model year with XM included as standard equipment for thefirst time in all Saab, Hummer and Buick models. Cadillac has alsointegrated XM as standard equipment across all its models. And many high-endChevrolet models include XM as standard as well, including the Malibu,the Silverado, the Tahoe, the Cobalt, the Corvette and the Impala. And just last weekCadillac launched a high profile co-branded marketing campaign featuring musicicon and XM radio host, Bob Dylan. This is an innovative marketing campaign forthe 2008 Cadillac Escalade that features Bob Dylan listening to XM. Thecampaign appears on television, online and in print advertising. Integratedcampaigns like this further leverage the power of XM's exclusive programming toreach consumers in nontraditional ways. Toyotawill include XM's service and NavTraffic as standard equipment on anothermodel, the LX 570. As you know, XM isalready standard on virtually all LS 460 models and the 600h model and weexpect to see more announcements from Toyotagoing forward as they accelerate their factory installation program heading into2008. Honda's productionof XM-equipped vehicles continues to move forward as well. In November, Hondawill launch a new integrated advertising campaign for its 2008 Honda Accordthat will highlight XM's availability. The Hyundairollout continues for the 2008 model year with the addition of XM factoryinstalled equipment on the Tiburon, the Accent and the Elantra touring models,and XM is featured in Hyundai communications from brochures to websites todealer kiosks and other collateral material. XM is standardequipment on all 2008 Infiniti models. And Infiniti is providing buyers acomplementary three-year subscription of XM service and XM NavTraffic on its2008 QX 56. This promotion was launched in the second quarter and it's been sowell received that Infiniti extended it for an additional seven months, all theway out through March of 2008. Integratedcampaigns and promotions such as Cadillac's Dylan campaign and Infiniti's QX 56promotion demonstrate the strength and the value of our OEM partnerships. We,XM, benefit from the national exposure and we provide strong differentiationfor the OEM partner. And we'll continue to work with the OEM partners on moreintegrated campaigns like this in the future. Now let me turn tothe aftermarket or retail channel. Third quarter gross adds were 251,000 andthis was down 22% from second quarter 2007 gross adds of 323,000. Over a yearago we first described the softer retail market for the satellite radio category. The softness atretail continues to drive our reduction in retail gross additions. NPD data forthe third quarter reflected an industry wide reduction in gross unit sales atretail stores of approximately 30% year-over-year, but our gross adds were downby a lesser amount simply, because of an increasing percentage of our retailgross adds coming from our own direct channels, like sales from Listener Care, kiosksand websites. Even with a 1/4 millionretail gross additions, churn more than offset these additions. This caused netadds to be negative 17,000, which is down from a 43,000 positive net adds inthe second quarter of '06. And we're obviously not happy with the third-quarterresults for the retail channel. The competition inretail comes from multiple competitors and devices. It includes a proliferationof audio entertainment choices such as new and enhanced MP3 players, HD radio,cell phones and other new audio devices. This competition is contributing to theoverall slower growth in the satellite radio category. Now although thethird quarter is traditionally our lowest volume quarter for the aftermarket,the retail market remains an important distribution channel for us and we doexpect significant retail net adds in the fourth quarter, which istraditionally our strongest retail quarter. Retail helps drive additional subson new and existing accounts and retail listeners are more likely to become OEMsubscribers. In fact, in arecent survey of retail satellite radio subscribers who are considering thepurchase or lease of a new or previously owned vehicle, 91% said that theywould likely get satellite radio in the new vehicle where available. Also on the retailmarket, XM has refreshed the line of feature rich plug-and-play radios. Westreamlined these over the last year. This has simplified the satellite radiobuying experience. bBranded Xpress, this is a set of sleek technologicallysophisticated radios that have a similar look and feel. They're in pricepoints attractive to all listeners, from an entry-level listener to thetechnologically savvy listener who wants advanced capabilities. It starts withthe XpressEZ with an MSRP of $69.99, moves up to the Xpress at $89.99, theXpressR or replay at $129.99, the XpressRC or replay in color at $169.99, andthe Pioneer Inno, our popular portable device at $249.99. The two newestradios are the XpressR and the XpressRC. The XpressR delivered satelliteradio's first split screen display; current channel information is on the leftwhile information on five other channels displays on the right. In addition,the XpressR has a 30-minute pause and replay feature and 30 print channelpresets. And our mostrecent release, the XpressRC, features a full-color bright color split screen,a 60 minute pause and replay feature, and the ability to save 10 songs. TheXpressRC delivers advanced browsing capability for the first time. The leftscreen allows listeners to view channel information, artist names and songtitles, while the right side of the screen displays the same information for upto three different channels. So this newtechnology allows a listener to browse XM content without interruption of theprogramming they're already listening to. The new radios are either on theshelves or will be on the shelves for the holiday shopping season, which makesus well-positioned going into the fourth-quarter retail, traditionally ourbiggest retail quarter. Let me turn tochurn and Listener Care. Based on third-quarter survey results we are verypleased with XM customer satisfaction with Listener Care, which of course helpsto drive higher retention and lower churn. Third-quarter self-paying churn was1.69%, down from 1.84% in the second quarter of '07 and also down from 1.82% inthe third quarter of '06. This is the eighthconsecutive quarter in which churn has been in the 1.6% to 1.8% range. Weanticipate the churn rate will remain stable and in this range. Now a majorcontributor to maintaining consistent churn and, of course a core part of ourbusiness, is XM's great innovative content. Let me turn toEric Logan who will give you an update and some insights on what we're doing tocontinue cost effectively improving our programming.

Thank you, Nate,and good morning to all of you. The new fall lineup showcases XM's excellencein programming and headlines XM's exclusive content. First in music, BobDylan's award-winning Theme Time Radio Hour returned for its second season. XMpremiered new seasons of exclusive shows from multi-platinum Grammyaward-winning artist Ludacris, rock legend Tom Petty, and America'sJazz ambassador, Wynton Marsalis. In addition XM'sacclaimed Artist Confidential show has a new season with exclusive interviewswith performers and genres from country, rock, pop and classical. One of ournewest channels exemplifies the value of XM to our music listeners. We createdXMX, which stands for XM Exclusive, in response to subscriber requests for XM'sExclusive music and artist interview programming on a single channel. It serves as asampler for listeners, a single channel where they can find a favorite programand, on the same channel, discover something new. Channels like XMX leverageour exclusive content, which is a valuable asset. It's too early now to havedefinitive survey data, but I can tell you that we hear from hundreds ofsubscribers who regularly now applaud XMX and its addition to the lineup. Major LeagueBaseball is a key subscriber proposition as evidenced by 1.7 million listenerswho tuned it into as the season began. Just as major league baseball has seenrecord numbers of fans in attendance, we have experienced the same, making it atop 10 channel. By the All-Starbreak an estimated 2.3 million listeners tuned in each week for an average of11 hours. With that kind of following, the pennant races and the World Serieswill undoubtedly be two of XM's most listened to sporting events of the year.Clearly XM's coverage of baseball is an attractive proposition to millions ofdisplaced fans. We believe we canachieve the same degree of success with the displaced college fan. We targetedcollege sports as a key segment for growth this year. XM enables the collegefan to follow their favorite team whenever and wherever they go. XM broadcastsgames from all six-power conferences: the ACC, the Big East, the Big Ten, theBig 12, the Pac Ten and the SEC. Additionally we'veextended our exclusive partnership with the bowl championship series through2010. And finally, we are proud to have Coach Barry Switzer, Hall of Famecoach, as to join XM as our lead football analyst. Third quartermarks our first season as the exclusive satellite radio home for the NHL in theU.S. and Canada,although it's our third season for covering the NHL. New for this season, we'veincreased our commitment to carry every team, every game as evidenced by ourmarketing message. This is a powerful proposition and one that resonates withpotential subscribers. Finally, in thethird quarter we launched the nation's first and only channel dedicated tononstop coverage of the 2008 Presidential Election. POTUS, which stands forPresidents of the United States, is airing nonstop campaign coverage to everyXM radio whether it has a subscription or not. The media coveragein the press from the launch of this channel has been tremendous. Already POTUShas aired exclusive interviews with six of the presidential candidates andyou'll see that roster expand in the coming months. We expect this channel tocontinue to grow in awareness and be a very strong voice in the upcomingpolitical season. XM's programmingstrategy balances sound business economics against content excellence, whichattracts new and retains existing subscribers. Now to review our financialperformance I'll turn the call over to Joseph Euteneuer.

Thanks, Eric. Goodmorning, everyone. As you heard from Nate, the acceleration in OEMs was thedominant feature of the third quarter and as such drove third-quarter financialresults. Building out the OEM channel has been a priority at XM over the pastseveral years, and the record volumes attest to our success. Now let me giveyou the details of the third-quarter results. Totalthird-quarter revenues of $287 million grew by $10 million or 4% compared to$277 million in the second quarter of 2007, and grew by $47 million or 20%compared to $240 million in the third quarter of 2006. Third-quartersubscription revenue also grew by 20% or $42 million to $257 million comparedto the $215 million in the third quarter of 2006. For the first time coresubscription revenue is on an annualized run rate of more than $1 billion. For the seventhconsecutive quarter subscription ARPU was above $10 at $10.17 compared to$10.15 in both the second quarter of 2007 and the third quarter of 2006.Subscription margin was consistent at 67.4% compared to 67.3% in the secondquarter of 2007 and down from the 71.8% in the third quarter of 2006. Non-variable costs,formally referred to as fixed costs, were $143 million in the third quarter, upfrom $127 million in the second quarter of 2007 and $103 million in the thirdquarter of 2006. The year-over-year increase in the third quarter was driven byan additional $25 million of costs included in G&A expense consisting ofmerger related costs of approximately $9 million of which less than $500,000was related to lobbying expenses; separation payments of $8 million to formerXM CEO Hugh Panero which included $3.3 million in stock-based compensation; andother elevated legal and regulatory costs of nearly $8 million. For ease offurther discussion I will refer to these expenses as exceptional merger and legalcosts. Second-quarter 2007 non-variable costs included approximately $12million of exceptional merger and legal expenses. Excluding these exceptionalmerger and legal costs from both the second and third quarter of 2007 gives youa better view to the underlying operating cost in which case sequential,non-variable cost growth in the third quarter of 2007 would have beenapproximately $3 million or just under 3%. Pre-marketingadjusted operating income was $65 million compared to $66 million in the secondquarter of 2007 and $80 million in the third quarter of 2006. Excluding theexceptional merger and legal cost, third-quarter pre-marketing adjustedoperating income would have grown by $8 million or 10% compared to the secondquarter of 2007, and $7 million or 8% compared to the third quarter of 2006. Remember, wecalculate pre-marketing adjusted operating income by adding back totalmarketing, excluding retention and support to adjusted operating loss, asdefined in the financial attachments to our earnings press release. Third quarter SACwas $70 compared to $75, in the second quarter of 2007 and $59 in the thirdquarter of 2006. As we've said before, building the OEM channel impacts ourresults as we incur substantial up-front costs before recognizing OEMsubscribers. Both the second and third quarter SAC for 2007 includedapproximately $10 related to increased factory installation of new OEMpartners. Third quarter CPGAwas $116 compared to $121 in the second quarter of 2007 and $94 in the thirdquarter of 2006. The year-over-year increase is largely attributable to the OEMimpact to SAC this quarter, the decline in aftermarket gross adds, and lowerthan normal marketing and media spend in the third quarter of 2006. Adjusted operatingloss was $47 million in both the third quarter and the second quarter of 2007and $2 million in the third quarter of 2006. Our GAAP net loss for thirdquarter was a $145 million compared to a $176 million in the second quarter of2007 and $84 million in the third quarter of 2006. The adjustedoperating loss increased year-over-year by approximately $23 million and netloss increased by approximately $37 million, after adjusting for exceptionalmerger and legal costs. The adjusted operating loss increase resulted from thegrowth in pre-marketing adjusted operating income, as we just discussed,balanced against increased marketing expense. The additionalyear-over-year change relating to net loss is due to an increase in expensesassociated with the sale-leaseback of XM4 and stock-based compensation. We ended the thirdquarter with total available liquidity of $631 million comprised of $231million in cash and $400 million in credit facilities. A portion of ourliquidity comes from subscriber prepayments. Annual and multiyear prepaymentplan subscriptions represented 44.1% of XM's subscribers, compared to 43.6% atthe end of the second quarter and 43% in the third quarter of 2006. The averageprepayment period for new subscribers remains at nine months. Now let me updateyou on our 2007 guidance. As a preview to the fourth quarter and as normallythe case in the fourth quarter, you can expect that various metrics willexperience seasonal fluctuations. An example is the large percentage of subsactivating in the last week of December, which causes ARPU to have a seasonaldecline. We expect overallgross and net subscriber additions at retail to increase versus the thirdquarter due to holiday sales. Like subscription ARPU, however, fourth-quarterseasonality will lower subscription gross margin results as the large influx oflate December subscribers drive call center and other costs without thecorresponding full month of revenue. In addition, SACand CPGA will increase as a result of holiday promotional efforts. Please keepin mind that this guidance is based on forecasts that could be affected by thepending CRB ruling, any litigation results or settlement, retail marketingtrends and other uncertainties related to the pending merger among otherfactors. We are maintainingour subscriber guidance of between 9 million and 9.2 million subscribers by theend of 2007. We are also maintaining our subscription revenue guidance in the$1 billion range for the full year of 2007. In addition, weare maintaining our adjusted operating loss in the range of $170 million to$180 million for the full year 2007, excluding exceptional merger and legalcosts. We are modifying our CPGA guidance; the changing mix of our grosssubscriber additions resulting from higher than expected OEM growth and lowerthan expected retail gross add will cause CPGA to exceed our previous guidancerange of $111 to $114 into the high teens. With that now letme turn the call back over to Gary Parsons, who will give you an update on ourpending merger.

Thanks, Joe.Actually before I get to the merger update, let me say that Nate, Joe, Eric andfrankly the whole XM management team is doing a great job in keeping their eyeon the ball with XM's stand-alone business in driving the 2007 operational planto a successful conclusion. It's an undeniable fact that pending mergers can bedistracting to management and can frankly slow customer decision-making andproduct adoption as well. That's one of thereasons why it's really important to move the merger process through toconclusion as quickly as possible and a number milestones have been passedalong that path. Most recently, during the third quarter, we described indetail the new pricing plans and the à la carte option that will be availableafter the merger. We filed our replycomments to both the SEC's proceedings both on the license transfer and theproposed rulemaking. In early September, we certified substantial compliancewith the Department of Justice's second request for information. And then inearly October, just after the close of the third quarter, both XM and Siriusfiled the necessary FCC documents and scheduled special meetings ofshareholders for November 13th to approve the merger. Throughout thethird quarter, support for the merger has continued to grow and that growingsupport has been, I think appropriately noted by a wide assortment of analysts,editorialists, as well as investors. For example, at the completion of theSEC's 45-day public comment and reply period more than 5,000 comments had beenfiled and support for the merger was approximately 4 to 1. In addition,numerous officials, who included noted economists, even former SEC chairman orcommissioners, have all written in support of the merger. The list ofsupportive associations, corporations and editorial boards frankly continues togrow. Theseorganizations include groups, as diverse as American Trucking Association,Competitive Enterprise Institute, Hispanic Federation, League of Rural Voters,NAACP, Parents Television Council and in addition, numerous newspaper editorialboards both representing the right and the left as well as various corporationsthat are impacted directly by satellite radio including Circuit City,Crutchfield, Toyota, Hyundai, Honda - all have voiced support for the merger. Let me also notethat groups particularly notable because their constituencies have a stronginterest in a healthy, vibrant and competitive satellite radio service haveweighed in. They include rural groups, women's groups, truckers, religiousgroups, ethnic and minority groups as well as groups that represent free marketprinciples and family values. On the whole itreally is quite an extraordinary collection of groups and a correlation thatundercuts the National Association of Broadcasters' claim that consumers couldbe harmed by a merger. Groups who instead, by the way, see that a mergedcompany provides a stronger alternative to AM and FM radio and other audio entertainmentchoices. A merged company that can put forward a richer and more compellingselection of programming with a wider array of channel offerings and pricingoptions. Our joint pricingand programming proposals have been very well received, and actually thevirtually weekly announcements that have come out of new competitive audioentertainment alternatives continues to reinforce the public interest benefits,in fact, the pro-competitive benefits of creating a more formidable satelliteradio offering in the marketplace. Assessment of themerger continues both at the FCC and at the DOJ. We have provided literallymillions of documents in response to the DOJ's request and both of the agenciesanalyses are ongoing. We remain optimistic that these agencies will completetheir work by the end of the year. We also do take note of public statementsthat that time frame is an objective. At this pointwe're simply concentrating on responding very rapidly to any questions that wereceive, but also maintaining and expanding this base of support for mergerapproval. So, we remain as confident today as we have ever been, regarding boththe prospects and support for the merger. And in closing, asNate indicated when he started this call, we continue to drive forward with the2007 plan, growing new subscribers in a cost-effective manner with very highcustomer satisfaction, attractive new products, very moderate churn, stableconversion rate and what is obviously an increasing OEM penetration of XM innew cars. With that let's goahead and open up the lines for Q&A.

(OperatorInstructions) Your first question comes from Jonathan Jacoby – Banc of America. Jonathan Jacoby- Banc of America: Thanks for takingthe questions. A few here, just you have signed some contract extensions on theOEM side and GM is obviously increasing their penetration rate, that's allgreat news as the OEM story is starting to carry forward here. I'm justwondering if any of that is impacting SAC, CPGA and then Rev Share as we goforward a little bit and how we should think about that going forward. Secondly --andthis, Gary, is probably moreappropriate for you--on the merger side it seems like there's been a little bitof a negative backlash here on the congressional side from [Kevin] Martintrying to sort of fast-track media ownership rules. Do you thinkthat's going to impact the merger? And while you did highlight all the groupsthat sort of for the merger, when I look through the filings there are plentyopposed, even minority groups, distributors, manufacturers; is there any reasonto think that perhaps now things might slow down a little bit because of what'sgoing on with the political backdrop? Thanks.

Let me start withthe SAC, CPGA question first. The extensions that we did, particularly withHonda and Toyota and the new carmanufacturer deals, we don't think will really impact SAC and CPGA directly,although mix change will impact it. The dealsthemselves are good deals for us and we don't think they will increase SAC andCPGA. Those deals basically encourage those car manufacturers to accelerate thenumber of cars that we're penetrating. And as we do that we incur, as we talkedabout, additional expenses for cars as they come on and then count thesubscribers a little bit later. So, we will see sort of a ramp up in SAC andCPGA prior to getting to count them as subscribers. That's really the onlyimpact that we expect.

And Jonathan, letme hit your media ownership question because I think that's bubbled up justrecently, but it really isn't directly related to our assessment. In fact,actually that was a docket that was opened well before, I mean, in the yearbefore we actually ever went forward with an announced merger. So, I think theFCC will assess ours on its own merit and on its own timeline. Clearly, there issome relationship there and both are experiencing all of the expansion of newmedia alternatives that will get to play in it, but the media ownership is amuch broader type of a situation and I think will take its own course. Jonathan Jacoby- Banc of America: Just as afollow-up then, so the radio companies are making the argument that if theownership rules change they should change. None of this is a concern forsatellite radio because there's no concern on the two to one issue you think atthe FCC level or the DOJ level?

Well, I thinkclearly that's issue that is being assessed and what is the relevantmarketplace. And I think that we've made a pretty strong case that, and it's onthe record and in the information of our operating results on an ongoing basis,that we compete against a very broad array of competitors, most particularlyterrestrial radio and the new HD radio. So, I think that that does play into itacross the board. But once again, the issues associated with media ownershipare far broader. Now you do havethe radio groups that obviously have a very difficult time getting on bothsides of the same debate, because clearly they have for a long period of timenoted that they have competition from a wide variety of sources and onlybelatedly have they had to try to determine how they don't compete with us orwe don't be with them. So, that's been a difficult balancing act for them and Ithink that it's made it difficult for them to effectively make their argument.

Your next questioncomes from Robert Peck - Bear Stearns. Kunal Madhukar -Bear Stearns: This is KunalMadhukar for Bob. Thanks for taking the question. The advertising expenses areup 26% year-over-year for the first nine months of 2007, yet aftermarket grossadds are down 27%. In addition, XM has outspent Sirius by about 15% onadvertising year-to-date, whereas its market share has been 60% or higher. Whatwill jump start retail growth?

Let's talk firstabout, remember a lot of this is timing. So the football season happens in thelatter part of the year, baseball season happens early in the year. We'reobviously a baseball driven company and we spend more money advertising withbaseball, they spend more money advertising with football. So the timingdifferences on advertising I think you have to look at across the year and notso much within a particular quarter. But what is going to jump start retail is,I think first of all, retail is going to be very tied to what happens in theOEM market. As the OEMinstallations get better and better people will see less and less of a need tobuy an aftermarket radio and buy more cars. But at the same time it tends toreverse itself over time because the more people that get exposed to XM radioand satellite radio in general, as I mentioned in that study, did intend to buysecond and third radios. And we're seeing that in the number of customers thatbuy second and third radios. So I think theaftermarket grows as the OEM starts to grow more and more and we think that'sone of the factors that will drive it. We also think that product development--we'vealways believed this, we've talked about it before--that we have to continue tostimulate the market with better products. And that's why weput the new product line in place that we've put in place. But there's no doubtabout avoiding the fact that our market is certainly competing with the MP3players and the new devices that are coming out. So, we're going to seeincreased competition. So where can we predict and when it will turn around?I'm not sure that we know how to do that. Also let me makeone additional point relative to because there was an element in your questionthat dealt with marketing efficiency, the gross additions that you get for theamount of dollars that you spend. And I think if you will look at thosenumbers, XM is very positive on that sense. In other words, ina normal quarter XM's gross additions will be the same or larger or sometimes slightlysmaller but very similar to those added by a Sirius and we will generally do sowith a much lower cost to additions. So we feel decentabout the marketing efficiency with which we spend dollars, but we have in factmoved some of our advertising dollars, up to 30% of adds, over to the OEMchannel as we focus on performing better in that channel where the bulk of theindustry is moving. Also remember thatif you compare third quarter of '06 to third quarter of '07, third quarter of'06 was lower in marketing spend because that's the period of time we weregoing through the FCC issues and producing less radios and therefore spendingless marketing dollars. So the year-over-year comparison is a little skewed bythe fact that we were sort of under spinning at that time. Kunal Madhukar- Bear Stearns: Thanks. Actuallywhen I was giving you the numbers I was reading off numbers for the first ninemonths, so that included a couple of more quarter than just the 3Q. Another thing ison the OEM side, Sirius OEMs have been experimenting with various pricingoptions, three-year lifetime packages included in the MSRP and the one-year isvirtually standard. But we haven't seen that kind of flexibility coming in fromyour OEMs whether it is Honda or GM. When do we startseeing multiple pricing options, when do we start seeing the cost of thesubscription included in say the lease price of the vehicle? When do we startseeing those things happening?

Well, as wementioned, the QX 56 has in fact an option like that and that promotion hasbeen extended through March of next year. So, I think we are actually startingto see it. We certainly would like to see more car manufacturers include an XMsubscription in a full year or three to four years and we'll work with the carmanufacturers to do that.

But the one pointthat I would note on that because this is quite an important point, we don'twant to simply pay more to our OEM manufacturers to get them to bundle in ayear's worth of service. If the consumer iswilling to purchase up front and it can be a value without taking away from oureconomics, then that would be great. But we don't see a particular interest injust paying more to lock in a longer trial period, when in fact we are doingvery positively on the conversion rate that comes out of a three-month trialand therefore very rapidly you get that consumer to make the decision does hewant to continue. It's a far more cost-effective thing to do.

(OperatorInstructions) Your question comes from Vijay Jayant - Lehman Brothers. James Ratcliffe- Lehman Brothers: Hello. It's JamesRatcliffe for Vijay. I'd like to talk about churn in two particular areas.First off, it looks like OEM churn, other than conversion losses, has beenrunning little below what we're expecting. And I'm wondering if you can talkabout what you're doing there and how you think that trend is likely to developgoing forward. And secondly, forfamily plan customers, it looks like that percentage has stabilized out atabout 23.2%, 23.4%. Is that an intentional process on your part? And secondly,what does churn look like among family plan customers versus retail as a whole?

I know Gary andJoe have comments on this as well. First of all, on churn we are pleasantlysurprised and pleased with the way customers are satisfied with theinstallation. I talked a little bit about it a minute ago. The quality of theinstallation of an XM radio in a GM car and a Honda car, it's well integrated.So, we've seen less churn as the customers get through their trial, find outthey sort of love it. We get a lot of positive comments. I mentioned alsocustomers who say that if they buy another car or lease another car they wantsatellite radio in that additional car. So, because of the quality installationwe're also seeing some churn be down. The aftermarket,you have to remember, has one factor that I think also affects churn and thatis the life of the radio. The radio itself starts to get old, the technologygets old, so you'll see some aftermarket churn I think that creeps up a littlebit more than you'll see in a car. Because when a radio is installed in a car,well integrated into the navigation system and the steering wheel, so thecustomer tends to love the experience. After a coupleyears of an aftermarket radio, you see it get old, it may get lost, it may getdamaged and so you see a little churn there. So, I think that's why you see alittle churn difference between aftermarket and OEM.

And the lastquestion was the one on family plan and it is fairly stable right now. And justas a note, we don't break it out separately, but yes, you do tend to see alittle bit less churn off of a group or a family that has multiple units; theyare a more loyal customer base.

I think if youlook at it it's grown over the past couple quarters 20, 30 basis points. So, itgoes up a little bit, I think in the third quarter it was a little stable, butstill at a good number and continuing positive growth.

Yes, so obviouslywe're very, very pleased with what we're seeing out of both customersatisfaction levels right now and overall churn.

Your questioncomes from Mark Wienkes - Goldman Sachs. Mark Wienkes -Goldman Sachs: Great, thank you.Good morning. Just wondering, you mentioned the pending CRB ruling a coupletimes. Could you just give us an update on the status of those negotiations?And then how do you think about if their rates do go up. How do you think aboutthat rate increase with respect to your business model in terms of passing someof it through, all of it through or none of it through?

I mean our case isin and largely completed, but we can't give you a whole lot of insight into howthat ruling will come about. We do expect it by the end of the year so it'sscheduled for that time frame. And I think it's public information out therethat our positions and those of the record labels are somewhat different and apretty broad gap between where the two cases have been put forward. So, from thatstandpoint it's certainly one that we're interested in following. I think thatwe've done a good job of presenting the case and certainly the factors that thejudges are supposed to consider include the nature of our business, and thecapital expenditures that we've made and things of that nature, so, we'rehopeful it will have a positive outcome.

Your next questioncomes from David Bank - RBC Capital Markets. David Bank -RBC Capital Markets: Thank you Goodmorning. My question is when you shifted the method of looking at promotionalperiod cars for cars that you were 100% subsidizing versus the GM, Hondabucket. It initially told us for the Nissans and the Hyundais that you'd kindof give us some sort of disclosure about what were the number of cars in thosepromotional periods. And I was wondering if you could give us a little bit of awindow in terms of the number of cars that are in the promotional period. I know you told meto stick to one, but I'm going to throw on another one which is actually notrelated. But could you clarify what is in the other legal costs as well? I getthe merger cost, but just a little bit of clarity on the other legal costs?

Okay, we'll dothat. First let me talk about giving you some insight into the cars that arenot in the traditional conversion rate calculation, the paid trial approach. It'sstill early. Candidly Hyundai and others who are in that new approach, they'veonly had customers that started turning up earlier in this year and they'vegone through the trial period for about the 90-day period which takes us outright into the beginning of the third quarter. So, we still thinkit's too early to draw conclusions and to be able to report anything on that front.However, we have thought about the fact that we do need to do some kind ofdisclosure and we thought about that being sometime in 2008 - most likely early2008. So, you cananticipate that the first quarter 2008 reporting going forward we will probablystart providing some kind of statistic that gives you information. Now, as youknow, we don't report by manufacturer, so, it will be a report that will tellyou all manufacturers together. But our earlyindications tell us that across all the manufacturers we're seeing comparablekinds of customers taking XM service after they get through the trial. Thenumbers vary by manufacturer, but they're comparable to what we're seeing onthe conversion rate and we're comfortable that we won't see a dramatic changein any of those numbers. But again, thedetailed reporting is something we'll probably provide after we see a bettertrend and figure out how to do the reporting.

I think actuallyyour specific question though was to get some insight into how many vehicles inthose new manufacturers have now been installed and people are listening to theservice that we are not reporting as a subscriber today and we'd indicated we'dtry to give you some feeling of that. I think Nateindicated that among all manufacturers, including GM and Honda and others,vehicles that have been manufactured, shipped to dealers but are not yet soldand on our subscriber ranks is about 900,000. A couple hundredthousand of those are represented by new manufacturers because in their case,not only they may have even been sold and they may have a listener attached tothem, but they are not yet in the paid subscriber category. So your best ruleof thumb there is add 900,000 overall if you're looking for the manufacturedshipped to dealers, and you'd add a couple of hundred thousand if we wereaccounting for all of the new OEMs in the same manner we did the other.

And if you want tosee how that number moved over time, a year ago that number was slightly over450,000. So it's gone to 900,000. So we're going from about 470,000 a year ago to 900,000 now.

Then in regards toyour legal question. The big items in there are the CRB, the Inno devicelitigation, the SEC work associated with the class action lawsuit, those sortof what I call big items that hopefully are really non-recurring andexceptional.

Next questioncomes from Eileen Furukawa - Citigroup. Eileen Furukawa- Citigroup: Thanks for takingthe question. I'm just wondering what you're seeing that gives you confidencethat you're going to be able to maintain that OEM conversion rate in the low50s, even as you continue to have deeper and deeper penetration amongst thecars? And also regardingthe 52.5% conversion rate in the quarter, was that pretty much in line withwhat you expected and what do you think is the particular initiative thatyou've done that is working best in keeping the conversion rate at the levelit's at? Thanks.

The conversionrate of 52.5%, yes, is in line with what we expected, so it's pretty much rightin the range that we expected it to be and in the range that we're going toexpect it to be going forward. What have we seenthat's caused us to believe that it's going to stay in that range? As we lookit, we have some early looks at data for the other manufacturers. In additionto looking at the early data we've talked to all the manufacturers about, thepartners about programs we can put in place. We mentioned theQX 56 program where we're selling an additional subscription, the dealertraining programs that we've put in place, the dealer incentive programs we'veput in place. We've seen the reporting that shows how one dealer at a locallevel might be at a 35% conversion rate and another dealer might be at 70%. So we did bestpractices, we looked at the ones that were 70 and tried to take those practicesto the ones that were 30. And we can see an improvement in the ones at the lowend of the range and we're getting help from the OEM manufacturers to do that.So the dealer programs are helping. We also have whatwe call an early contact program. So when a customer first signs up for thetrial, we contact the customer early in the trial in welcome them with awelcome call; we also send them a direct mail and we do that direct mail in away that the dealer supports. In other words it's done with a dealer letterheadin some cases, in some cases our letterhead. So working withthe dealers on these early contact programs, the welcome calls, the direct mailcampaigns, we think all of those things are going to keep the conversion rateup as we get more and more penetration.

Eileen, let me butone more thought out there that I think is somewhat overlooked, becauseeverybody focuses on what's going to happen now that you get new manufacturers,Hyundai and Toyota and Nissan andthings like that. And as Nate, indicated, early results say that those aretracking very nicely. But it's importantto note that we actually have years of experience with General Motors and Hondaand both of those manufacturers, particularly General Motors, have car linesthat span the entire gamut from very, very high end vehicles to very, very muchentry level vehicles. So it's not likewe've only had just a month or two or a couple of quarters worth of experiencewith this. I'll draw your attention to probably one of the most overlookedthings, and when we were talking about so many different models now goingstandard equipment; you don't go standard equipment as a manufacturer unlessyou feel pretty confident about the receptivity of the customer to that. Anddid you notice one of the Chevy models that was added? The Chevy Cobalt. So we've been inChevy Cobalt's now for a good period of time. It's one of the lowest entrylevel vehicles there are in the General Motors line. They're pleased enoughwith how it's reacting that they went ahead and said let's go standard. So I think if yourecognize that we've gotten a pretty strong base of evidence across a prettybroad selection of customer demographics in there without even looking at thenewer ones that are coming on in the future.

There's one lastfactor that we don't talk a lot about, and I think not a lot of people talk alot about, and that is the quality of the installation in the car. Take a lookat an XM satellite radio, its first installation in the GM car three or fouryears ago, and then take a look at the quality of that installation today, itis well integrated. The touch screen of the XM monitor screen, the ability tomove between categories is much easier to use. And it's integrated intosteering wheel controls. So the fact thatit's better integrated into the car makes it easier for people to use and tounderstand. And without getting into what the plans are, we've got someadditional plans at the car manufacturers to make it even better and I think itwill continue to get better and therefore easier to use and therefore it getsmore conversion rate.

Your last questioncomes form Benjamin Swinburne - Morgan Stanley. BenjaminSwinburne - Morgan Stanley: Very good morning,guys. Thanks for squeezing me in. Most of my questions have been answered, buton the fourth quarter, Joe, should we expect, like last year, for deferredrevenue to increase and be a source of cash in the fourth quarter, or are thenew OEM deals going to mute that impact?

No, typically youget the benefit of all those subscribers coming on right at the end. Andclearly if you look at our prepayment numbers that I talked to you about, theycontinue to be in the 40% range and we still have the average at nine months.So I would not think you would see anything different than you've seen in thepast.

But clearly Ithink the your second point on that, which is a very important point, the factthat there is a mix change more over to OEM is very much going to mute the cashimpact that normally you would get out of a heavy retail element there. So,there are kind of offsetting elements. Good pick up in your model actually.

There are nofurther questions at this time.

Okay. Thanks alot, folks. We look forward to a strong fourth quarter here and we'll talk toyou after the end of the year.

This concludestoday's conference call.