Shares to facilitate hedging for XM Exchangeable Note Offering
Shares will not be considered outstanding for accounting purposes

SIRIUS Satellite Radio Inc. announced today the
commencement of an offering of shares of its common stock. The common
stock being offered represent shares of SIRIUS common stock that SIRIUS
will be lending to affiliates of Morgan Stanley & Co. Incorporated
and UBS Investment Bank, the share borrowers, pursuant to share lending
agreements between SIRIUS and each of the share borrowers. It is
estimated that, based on current market values, approximately
$375,000,000 of SIRIUS common stock will be sold in a fixed-price
public offering described below, and up to approximately $65,000,000 of
SIRIUS common stock will be sold as described below from time to time
at prevailing market or negotiated prices. The exact number of shares
of SIRIUS common stock to be offered will depend on the terms of the
concurrent offering of exchangeable senior subordinated notes described
below and the hedging to be conducted by investors in such notes. While
the borrowed shares will be considered issued and outstanding for
corporate law purposes, SIRIUS believes that under U.S. generally
accepted accounting principles currently in effect, the borrowed shares
will not be considered outstanding for the purpose of computing and
reporting earnings (loss) per share because the borrowed shares are
required to be returned to SIRIUS.

The
common stock offering is being conducted concurrently with a private
offering by XM Satellite Radio Inc. of $550 million aggregate principal
amount of Exchangeable Senior Subordinated Notes due 2014 (”Notes”)
which will be exchangeable into shares of SIRIUS common stock. The
terms of the Notes, including the interest rate and exchange ratio,
will be determined at the time that such offering is priced. The Notes
have not been registered under the Securities Act or any state
securities laws and may not be offered or sold in the United States or
to U.S. person absent registration or an applicable exemption from the
registration requirements of applicable securities laws.

In
connection with the common stock offering, SIRIUS will enter into a
share lending agreement with each of the share borrowers, pursuant to
which SIRIUS will lend shares to the share borrowers. The share
borrowers will sell a portion of the borrowed shares in a fixed-price
public offering expected to close concurrently with the Notes offering.
After the closing of the fixed- price offering, the share borrowers
will offer and sell the remaining borrowed shares in one or more
registered public offerings at prevailing market or negotiated prices.
Over the same period that the share borrowers sell the remaining
borrowed shares, the share borrowers or their affiliates expect to
purchase at least an equal number of shares of SIRIUS common stock on
the open market and/or enter into derivative transactions providing it
with a synthetic long position equal to such number of shares. SIRIUS
will not receive any proceeds from the sale of its common stock by the
share borrowers other than a nominal loan fee equal to $0.001 per share
issued to the share borrowers. The share borrowers will be required to
return the borrowed shares pursuant to the share lending agreements
following the maturity date of the Notes or their earlier retirement.

Morgan
Stanley & Co. Incorporated and UBS Investment Bank will act as sole
underwriters for the sale of the borrowed shares. A prospectus can be
obtained by contacting Morgan Stanley & Co. Incorporated, 180
Varick Street, New York, NY 10014; Attention: Prospectus Department or
by email at prospectus@morganstanley.com or by contacting UBS
Investment Bank, Attention: Prospectus Department, 299 Park Avenue, New
York, NY 10171, (888) 827-7275.

This press release shall not
constitute an offer to sell or a solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities
laws of any such state or jurisdiction.

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