XM Radio 2002 Annual Report Download

In 2002, XM opened its state-of-the-art performance studio, which featured
performances from Wynton Marsalis, Melissa Etheridge, YES, Graham Nash,
Jay-Z, and Billy Joel, plus many more, bringing live music back to radio.
Subscribers are tuning in and connecting to XM. We average 50,000 telephone
calls a month from listeners eager to interact with our on-air talent, requesting a
song, asking questions about an artist or simply using XM as a trusted companion. XM recently demonstrated its
ability to serve its listeners’ changing needs. A 2003 survey of XM news channel listenership during the recent conflict
in Iraq showed an increase of more than 50% in subscribers tuning in to our news broadcasts from FOX News
Channel, CNN, CNN Headline News, ABC News & Talk, BBC World Service, CNBC, Bloomberg and C-SPAN Radio.
XM Satellite Radio, with its 101 digital channels, has established itself as the outstanding provider of compelling
radio content, with an extraordinarily talented team of music directors, program directors, producers and
on-air personalities. XM has one of the largest broadcast facilities in the
country with 80 all-digital studios, and offers the best in music, news, sports,
talk and variety, comedy and children’s programming, with many channels
commercial-free. In 2002, we took our programming to even greater heights, with the
introduction of CNN and ESPNews, and new channels devoted to live concerts and interviews, folk music,
beautiful music, neo soul, hard alternative rock, classic radio, books and drama, and our first premium channel.
Dear Shareholders
2002 was an exciting and successful year
for XM Satellite Radio, representing our
first full 12 months of operations since we
introduced the American public to this
new form of mobile entertainment and
information. We ended 2002 with more
than 347,000 subscribers, compared to
28,000 subscribers at year-end 2001. We
have come a very long way.
In fact, as you read this, we’ve already
surpassed half a million subscribers and
have begun our 2003 “March to a
Million.” This current effort comes on
the back of a number of significant
achievements during 2002 that included:
Significant Subscriber Growth: Of the 347,000 subscribers we achieved in 2002, 147,000 came in the fourth
quarter, by far our biggest quarter to date. XM was a hot holiday gift and we hit our year-end subscriber numbers
in the face of a weak economy, declining consumer confidence and soft sales in the consumer electronics industry.
Launch of XM into the Home and Portable Market: With the introduction of the critically-acclaimed SKYFi line
of XM radios from Delphi — including the SKYFi boom box — XM aggressively moved into the home and portable
market segments. Walter Mossberg, the well-known Wall Street Journal technology critic, wrote “SKYFi is simply
the best satellite radio around today.” In 2003, look for XM’s retail expansion into 2800 Wal-Mart stores.
Expansion of XM Radio factory-installed across 25 GM 2003 vehicle lines: By year-end 2002, we signed up
more than 50,000 GM subscribers. In 2003, GM will expand the availability of factory installation to 44 of 57
GM 2004 vehicle lines or 77% of all GM models. American Honda, another key XM strategic partner, announced
that in 2003 it will make XM available factory-installed on a variety of Honda and Acura models, including the
top selling Accord.
Focus on Creating Great Programming and Serving Listeners: We established ourselves as a creator of quality
music content. Each month, tens of thousands of people called XM to interact with our on-air personalities;
we recorded over 700 live performances in our all-digital studios in Washington, DC, Nashville and New York
City. We also launched a live performance channel and added CNN to our channel line-up, among other
changes. Our 11 news channels today keep our listeners connected to world events in the car, in the home and
everywhere in between.
Additional Financing: Bolstered by the terrific business execution in 2002, we were successful in attracting a
$475 million financing package in December 2002. This major financing, which closed in early 2003, gives XM
a solid foundation and a clear path to cash flow breakeven.
We want to thank all of our shareholders for supporting us during 2002. Please join us on our “March to a Million”
subscribers in 2003.
Gary Parsons
Chairman Hugh Panero President and CEO
Gary Parsons Chairman Hugh Panero President and CEO
XM for Any Car or Truck.
XM for New Vehicles.
XM for the Home, Office or On the Go.
XM was the first to introduce satellite radio as a factory-installed feature in new vehicles. In 2002, XM was factory-installed across
25 GM 2003 model year vehicles. XM Radio will be a factory installed option in 44 of 57 GM 2004 models beginning in the
summer of 2003, accelerating one of the fastest new technology rollouts in automotive history. XM will also be a factory-installed
feature or dealer accessory in 2004 models of many other leading automobile brands.
XM continued to execute on the retail front with an outstanding group of retail partners, offering a broad range of XM-ready car stereos
from Pioneer, Alpine and Sony, as well as universal XM receivers that can connect to any existing car stereo. In October 2002, XM
introduced the critically-acclaimed Delphi XM SKYFi receiver, with the the ability to connect to any car or home stereo, or the new XM
boom box, at an extremely attractive price point. In the spring of 2003, distribution of SKYFi will expand to include all 2,800
Wal-Mart stores nationwide, in addition to our distribution in Best Buy, Circuit City and many regional consumer electronics retailers.
Clearly the star of 2002 holiday season was the Delphi XM SKYFi receiver — the first
XM product designed specifically for the home, office or boom box. The advanced five-
line display enables the listener to see what’s playing on other XM channels, and has a
large font display for easy readability across the room along with 20 channel presets.
The SKYFi receiver connects to the new Delphi XM SKYFi Audio System, so you can
take XM to the office, beach, park or backyard. This boom box is powered by batteries
or AC adapter, making it the first truly portable satellite radio product.
The Best in Music
The Best in News
The Best in Sports
The Best in Talk and Entertainment
101 Digital Channels Including: