Hooper Stevens – VP of IR Jim Meyer – CEO David Frear – EVP, CFO

Barton Crockett – Lazard Capital Markets Benjamin Swinburne – Morgan Stanley Matthew Niknam – Goldman Sachs Jessica Reif Cohen – Bank of America Merrill Lynch Bryan Kraft – Evercore Partners John Tinker – Maxim David Joyce – ISI Group

Good morning and welcome to the SIRIUS XM Radio’s full-year and fourth quarter 2012 earnings conference call. Today’s conference is being recorded. A question-and-answer session will be conducted following the presentation. (Operator Instructions) At this time, I would like to turn the call over to Hooper Stevens, Vice President Investor Relations Finance. Mr. Stevens, please go ahead.

Thank you, (Shelly), and good morning, everyone. Welcome to SIRIUS XM Radio’s earnings conference call. Today Jim Meyer, our Chief Executive Officer, will be joined by David Frear, our Executive Vice President and Chief Financial Officer. At the conclusion of our prepared remarks, management will be glad to take your questions. Scott Greenstein, our President and Chief Content Officer, will also be available for the Q&A portion of the call. First, I would like to remind everyone that certain statements made during the call might be forward-looking statements as the term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based on management’s current beliefs and expectations and necessarily depend upon assumptions, data or methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For more information about those risks and uncertainties, please view SIRIUS XM’s SEC filings. We advise listeners not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them. As we begin, I would like to advise listeners that today’s results will include discussions about both actual results and adjusted results. All discussions of adjusted operating results exclude the effects of stock-based compensation and certain purchase price accounting adjustments. With that, I will now hand the call over to Jim Meyer.

Thank you, Hooper. Good morning. 2012 was a great year for SIRIUS XM as we reached a number of records and milestones and earlier this year we issued guidance for meaningful growth in 2013 to our subscriber base and financial performance. In 2012, we added more than 2 million net new subscribers, the largest number of new subscribers in a single year since 2007. At 1.7 million net additions, our 2012 self-pay subscriber growth was up 36% over 2011 and 69% over 2010’s self-pay net additions. Self-pay churn and conversion rates were steady at 1.9% and 45% respectively despite and increase in our base price, notably, the first core price increase ever at SIRIUS and only the second one ever at the XM base. We believe these statistics indicate strong demand for and satisfaction with our service and I believe this bodes very well for the future. These 2 million net additions exceeded our original guidance on the strength of lower-than-expected churn, higher auto sales and improved used car additions. We exceeded all of our 2012 financial guidance as well. Revenue was a record high, up 13% to just over $3.4 billion versus our guidance of approximately $3.4 billion. Adjusted EBITDA climbed 26% and reached a record $920 million compared to guidance of approximately $900 million. And free cash flow jumped a massive 71% to $709 million, beating guidance of approximately $700 million. Auto sales certainly provided a tailwind to our growth in 2012 with SAR climbing 12% in the fourth quarter to around $15 million and growing about 13% to $14.4 million for the full year. Consensus estimates call for auto sales to rise at a slower rate in 2013, just under 5% to $15.1 million. Earlier this year, we announced that Toyota is increasing its penetration rate of satellite radio over the next two to three years. Every Toyota that features the In Tune Multimedia System will also feature satellite radio. I think this is an important indication that auto makers see multiple technologies coexisting in the vehicle for a very long time. And rising penetration of the Japanese OEMs like Toyota will mean that we should see less variability in our penetration rate due to market share shifts among the OEMs. Our overall penetration rate was 68% in the fourth quarter and 67% for the full year 2012. We expect to be in this range over the next few years as OEMs remain very committed to satellite radio, including the deployment of our new 2.0 radios in additional models as well as at additional OEMs. SIRIUS XM ended 2012 with approximately 50 million satellite-equipped vehicles in operation in the United States, roughly a 20% penetration rate of all registered vehicles on the road and up from about 40 million vehicles at the end of 2011. This trend just keeps going. Driven by rising auto sales and our strong new car penetration rate, we expect the number of enabled vehicles to approximately double in the next five years. The rising number of pre-owned vehicles on the road combined with our marketing initiatives are certainly boosting our subscriber additions for previously-owned cars. Our used car trial program has now been implemented at over 8000 dealer locations across the country, including all of those run by many large retailers such as CarMax, AutoNation and Penske. As more and more of the satellite radio enabled vehicles turn over to the first or, yes, even second time, our opportunities in the used car market will continue to grow. As the average car on the road today is over 10 years old, our penetration rate in the pre-owned vehicle market will steadily increase over time. It’s really just a numbers game and we want to be prepared to capitalize on these opportunities as they become more material to our business in each passing year. As we mentioned last year, we expected to do approximately 1 million gross ads in the used car channel in 2012. We surpassed this number and in 2013 we are targeting used car gross additions in the range of 1.5 million. We will continue to grow our pre-owned business by adding more dealers to our current programming, launching new initiatives with both franchises and independent dealers and by riding the meaningful increase in SIRIUS XM pre-owned vehicle sales. At the end of the day, however, it’s our brand name talent, commercial free music and exclusive content that continue to attract and retain listeners. We continue to deliver unique subscriber experiences that make for the best in audio entertainment and we remain aggressive about making sure we provide the best available programming to our listeners. We’ve expanded our online sports offerings in 2012 to make play by play available from the NFL, major league baseball, NASCAR, the NBA and the NHL and added a number of high profile sports personalities to our rosters of hosts. Our town hall and artist confidential series are drawing some of the biggest names in pop culture and entertainment to deliver exclusive interviews and performances to our subscribers, including Quentin Tarantino, Jane Fonda, One Direction, KISS, Aerosmith, Taylor Swift, Alicia Keys and Willy Nelson, just to name a few. We were also adding new programming in the important comedy area, such as Comedy Central Radio, launching this spring with the biggest brand name in comedy, and a new daily talk show with Martha Stewart. We have the best audio entertainment content in the country and are constantly looking for unique, innovative programming to improve our offering even further. We’ve also been expanding our streamed offering. In fact, we are in consumer data now on an exciting new feature called (My SXM). We are very excited about the upcoming launch of (My SXM), which empowers our subscribers to create their own versions of their favorite commercial-free SIRIUS XM music channels when listening online. Whether it’s more rock on 70s on 7, more of tomorrow’s hits on Hits 1 or more dance pop on (8PM), (My SXM) users will now hear more of the music they love tailored to how they want to hear it. If they happen to hear a song they don’t like, (My SXM) will let them skip it. Most important for us, we are not asking listeners to start from scratch, like other personalized services. One of (My SXM)’s core strengths is that it starts with channels our subscribers already know and love, channels that have been crafted and curated by our music experts. Now, they can take those music channels and personalize them to their taste and moods. With (My SXM), listeners also don’t need to constantly lean forward to create a tailored listening experience. They can just tune to the music channels they already like and adjust the channel’s unique slider controls and set them once for good or change them any time they want. And since our music libraries are hand curated by SIRIUS XM’s expert music programmers, (My SIRIUS XM) further enhances an already robust music discovery experience for our subscribers. This new feature will further enhance our IP offering, which has been greatly improved over the past year and now includes the ability to time shift up to five hours on many stations, start songs at the beginning when tuning to a music channel and the ability to play thousands of hours of talk and entertainment from over 300 shows from our library of on-demand content. All of these features, including (My SXM) and on-demand access, will be available across all of our internet platforms, including our Android and iOS apps for smartphones and tablets. Last summer, we reorganized areas of our company with the purpose of improving our IP development, delivering better streaming offerings and apps and speeding up the process of innovation in this area. In October, we added Enrique Rodriguez to our team, a former leader at Microsoft and a proven technology senior executive as our EVP Operations and Products to assume responsibility for our streaming, infotainment and telematics business as well as our product and technology operations. We believe we are beginning to see the fruits of some of these efforts in IP. Ultimately, these enhanced online capabilities will make their way into automobile seamlessly as well. Having both a satellite connection and an IP connection into vehicles will prove to be a durable advantage versus IP-only competitors in a connected car world. Stay tuned. As you know, in addition to audio entertainment, we also offer a variety of infotainment services in the car. Real-time traffic, in particular is a valuable service that today many of our subscribers are using and paying for. In September, SIRIUS XM announced our first entry into the telematics space with our Nissan agreement. We are developing a comprehensive suite of services for Nissan vehicles such as automatic crash notification, stolen vehicle tracking, roadside assistance and other safety and convenience features. The deployment of telematics is the logical next step for broadening our in-vehicle technology and strengthening our relationships with auto makers. We intend to pursue more such agreements in the future. As you know, we’ve had a lot of change in the last six weeks here at SIRIUS XM. Liberty Media has purchased additional shares in the open market and converted their remaining preferred shares, bringing their ownership of our common stock to more than 50%. And we recently welcomed three new directors to our board. What is not changing is the consistent focus by everyone here at SIRIUS XM from on-air talent to senior management on delivering a great service that will help us grow our subscriber base and drive free cash flow growth to enhance value for all of our shareholders. To remind everyone, we have a very unique and powerful business model that is unmatched by any of our competitors in the audio entertainment space. We have a reoccurring subscription revenue model with low marginal costs that enables us to keep the vast majority of our incremental revenue. By monetizing our listeners better than any other audio service to generate lots of revenue, brining that revenue in at higher incremental margins and tightly controlling fixed costs, we were able to produce significant operating leverage as we grow. This is the heart of our margin expansion story and our high monetization means we can continue offering our subscribers extensive and exclusive content that is simply unavailable to most of our competitors, particularly in the IP world who primarily tend to rely on music content that is available to everyone ubiquitously. In December, the Copyright Royalty Board issued its decision setting our performance royalties for music over the next five years and nothing in the CRB decision change the way our model will work. This should be very comforting to our shareholders. Our company has no significant debt maturities for nearly two years, an underleveraged balance sheet, no need to pay significant cash taxes for several years because of our NOLs, only small investments required for satellites over the next few years and our cash flow from operations is growing quickly. This means that SIRIUS XM is in a very strong position to increase our investments in our business, particularly in areas such as telematics, IP technology and other long-term strategic investments. We continue to actively evaluate M&A opportunities and will, as always, apply a very disciplined approach to ensure any future transactions meets a high threshold for value creation. But even with all of this opportunity to invest, we expect to have plenty of capital to return to our shareholders over the coming years. In December, we announced and paid a $327 million special dividend to our shareholders making the first time in the history of our company that we have returned capital to our shareholders. We also announced in December a 2 billion share repurchase program. We expect the company to continue returning capital to our shareholders as our free cash flow grows and we maintain a prudent level of leverage in the 3.5 times range. The first question I usually get from investors is what should we expect from you and what’s going to change at SIRIUS XM under your leadership? Well, I can tell you that you will see a lot more of the same with a focus on self-pay subscriber growth and a very tight focus on costs. Internally, we are constantly asking ourselves how our decisions will improve the subscriber experience. We will keep our subscribers front of mind when we make business decisions and we will keep our focuses tight as ever on operational excellence. If we do a good job satisfying our subscribers, I truly believe that the ultimate result should be very rewarding to our shareholders as well. With that, I’ll turn it over to David for additional comments.

Thanks, Jim. The fourth quarter was another extraordinary performance by SIRIUS XM turning in our best quarter for self-pay additions since the merger. We adding 529,000 self-pay subscribers in the quarter driving full-year total subscriber additions to 2,008,000 and bringing total subscribers to 23.9 million. In the course of 2012, we raised subscriber guidance three times and ended up beating our original guidance by more than 50%. The beat was broadly based. Auto sales were better; second owner additions were stronger; and most importantly, self-pay churn was better than our original expectations. Self-pay churn continues to show long-term consistency. The year rounded up to 1.9%, the third year in a row at that level. The fourth quarter at 1.8% was our best quarterly performance since Q3 ’08. You can really see the strength of the business in our self-pay subscriber additions which, for 2012, were at 10 times their 2009 level. In the depths of the 2009 financial crisis, our first full year of operations as emerged company, we added 154,000 self-pay net additions. That jumped to 983,000 as the recovery got underway in 2010 followed by 24% growth in 2011 to 1.2 million and 36% growth in 2012 to 1,662,000 self-pay net apps. A slow but steady progressing economy seemed to shake off both the effects of Hurricane Sandy on the northeast and year-end concerns over the fiscal cliff as seasonally adjusted auto sales in the fourth quarter reached $15 million, the strongest quarter since Q1 ’08. Asian automakers continued to gain share versus the prior year period and market share continued to shift towards small to mid-size cars, both of which tend to put downward pressure on conversion rates. The new vehicle conversion rate was 44% for the quarter and remained at 45% for the year, both within our 44% to 46% expectations. There are now more than 50 millions SIRIUS XM enabled vehicles on the road. Our penetration new vehicle production remained at about 67% in 2012 and for the first time, new vehicle installations eclipsed the 10 million mark for the year. That is nearly three times the level of installations we had in 2006. As these new car installations move into the used car market over the next several years, SIRIUS XM will become an easily available entertainment options for millions of new potential customers, a great continuing growth opportunity for us. Growth in new and used car sales has led to consistent growth in the inventory of trial subscriptions, which ended the year at 6.1 million. As of today, over 8000 franchise and independent auto dealers have signed on to our used car program. RPU is up 4.4% over the prior year, helping to fuel our strongest quarter of the year for revenue growth, 13.8% in bringing quarterly revenues to nearly $900 million for the first time. With more than $3.4 billion for the full year, revenues grew by 12.7% over 2011. Cash operating expenses increased by 7.3% for the quarter and 8.5% for the year. As has been true throughout the year, roughly 90% of the increase in cash operating expenses was related to increases in variable costs. While contribution margin improved slightly over the prior year in Q4, for the full year it was down 0.6% to 70%, largely due to the statutory increase in music royalty rates. Subscriber acquisition costs were up 7% for the quarter and 8.7% for the year on the strong growth of new car installations while fact per growth ad fell $1 to $54 for both the quarter and year. Fixed costs grew just 2.2% for the quarter and 1.9% for the year as the company’s successful focus on cost efficient growth continues. Adjusted EBITDA grew 37.8% in the quarter, our fastest pace of the year to $230.5 million. Full-year EBITDA of $920.3 million comfortably exceeded guidance, represented 25.9% growth over 2011 and represents a record full-year adjusted EBTIDA margin of 27%. Free cash flow increased 40% in the quarter to $269.5 million and nearly 71% for the year to $709 million, exceeding guidance. We generated more free cash flow in the fourth quarter alone than in all of 2010 and we generated more in the second half of 2012 than in all of 2011. SIRIUS XM’s growing free cash flow and improving credit quality has allowed us to dramatically improve leverage and reduce our borrowing costs. As a result, interest expense showed a 40% improvement over 2011’s fourth quarter, dropping to $45.5 million from $75.2 million. We ended the quarter with $521 million in cash and $2.4 billion in debt. Gross debt to EBITDA is at a very conservative 2.6 times. During the quarter, we completed the company’s first bank financing, a $1.25 billion revolver that was undrawn at year-end, providing the company with ready access to a substantial amount of capital to support our stock buyback program and pursue strategic opportunities. The Copyright Royalty Board, as Jim mentioned, rendered its decision on sound recording performance royalties for the 2013 to 2017 period for our satellite radio service in December. While the decision resulted in an increase in our royalty rates, the increase is substantially less than what was thought by the music industry. Effective January 1, 2013, the rate increased from 2012’s 8% rate to 9% and then it will grow by 0.5% each year, reaching 11% in 2017. As a result of the decision, we increased US music royalty fee from $1.42 to $1.81 on our basic $14.49 package as of February 1st. In our 2010 earnings call two years ago, we spoke to investors about the company’s strong business model, growth prospects and the coming opportunity for substantial returns of capital to shareholders. In the fourth quarter, we began delivering on that promise. SIRIUS XM paid a special dividend of $0.05 per share, totaling $327 million and announced a $2 billion stock buyback program or approximately 10% of our current equity capitalization and 20% of the public float. In our earnings release this morning, we announced that Liberty Media is not required to participate in our stock buybacks. SIRIUS XM is one of the best growth stories in media. In 2012, we grew revenues by 12.7%, adjusted EBITDA by 25.9% and free cash flow by 71%. Our 2013 guidance issued a few weeks ago continues our record of cost effective growth. We expect to see another strong year with $1.6 million net self-pay subscriber additions as total subscribers will grow to 25.3 million. Revenue will exceed $3.7 billion, nearly 10% growth over 2012. Adjusted EBITDA will grow more than 20%, exceeding $1.1 billion, and free cash flow will continue to grow faster than EBITDA as it approaches $900 million. Free cash flow per share is also growing at a rapid rate and it will grow faster as we begin to buy back stock. Based on our reported fully diluted shares and free cash flow, free cash flow per share grew from roughly 6.4 cents in 2011 to 10.3 cents in 2012. Now, just for the sake of argument, if you assumed retire about 600 million shares in our $2 billion buyback program and assume our guidance of approaching $900 million in pre-cash flow for 2013, free cash flow per share would trend towards $0.15 or roughly 40% growth over 2012’s level. We have a great product that our customers love and we are constantly working to make it better. We also have a great business model with great long-term growth prospects and that should drive great results for investors. Operator, let’s open it up for questions.

(Operator Instructions) Your first question comes from the line of Barton Crockett – Lazard Capital Markets. Barton Crockett – Lazard Capital Markets: Two questions, if I could, first on one of the numbers in the financial statement was customer care and billing expenses went up a decent amount year-to-year per average subscriber and I was wondering if you could talk about what’s going on there and whether this is the new level that should persist going forward or whether this was an unusual investment.

So we did a couple things. One is I think you’ve seen the numbers be up year-over-year for a few quarters now. We’ve made the decision – I think we’ve talked about this in prior calls – to invest a little more in customer care. We believe that it is showing up in our churn rate beating expectations. That was certainly true in the fourth quarter that one of the things we did this year that was a little bit different than prior years is that we actually kept our staffing levels at higher levels rolling into Christmas, that instead of reducing staff in the fall – in the early part of fall – and then rehiring and retraining going into December to meet the Christmas bump, we just a kept a sustained higher level of staffing throughout the quarter. We think it showed up in better customer service and then better churn rates with the churn being the best we’ve seen in four years for the quarter. Barton Crockett – Lazard Capital Markets: So in the past you guys have had some scale there, some improvements in spend per average subscriber. Is that basically ending or should we see that resume for the next couple of quarters?

Barton Crockett - Lazard Capital Markets:

Benjamin Swinburne - Morgan Stanley:

Benjamin Swinburne - Morgan Stanley:

Matthew Niknam - Goldman Sachs:

Jessica Reif Cohen - Bank of America Merrill Lynch:

Jessica Reif Cohen - Bank of America Merrill Lynch:

Jessica Reif Cohen - Bank of America Merrill Lynch:

Jessica Reif Cohen - Bank of America Merrill Lynch:

Jessica Reif Cohen - Bank of America Merrill Lynch:

Bryan Kraft - Evercore Partners:

Bryan Kraft - Evercore Partners:

John Tinker - Maxim:

John Tinker - Maxim:

David Joyce - ISI Group: