In the last 5 months,

how have your listener’s priorities changed?

In the last 5 months,

how have your listener’s priorities changed?

Personal Priorities

• Spouse/SO• Children• Health• Faith• Career• Money• Image/style/fashion• Toys• Entertainment• Travel

Personal Priorities• Spouse/SO

• Children• Health• Faith• Career• Money• Image/style/fashion• Toys• Entertainment• Travel

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 new car was fun and exciting.

• Now, it’s an investment in the economic security of our country.

In the last 5 months,

how have the priorities of your

station changed?

The digital revolution isn’t about change…

It’s about choice!

• 5 GB’s of Storage

• Holds 1000 songs

• Can transfer a complete library in under 10 minutes

• Now under $200

Apple iPod

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

Radio’s Greatest RiskListeners don’t care?

Radio is becoming completely irrelevant.

–Walter Mossberg, Fall NAB

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

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?

It’s Time to Rock N’ Roll

• XM’s 2nd satellite

• Name: Roll• Launched

May 8th, 2001• Rock was

launched on March 18th, 2001

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

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

XM Close Up

XM Up Close• Sample

home unit

XM Up Close•XM reported 30,000 subs by

January 7th of 2002.•350,000 by the end of 2002•The XM break-even point is

4-million subscribers

MarketingWASHINGTON, Aug 10 (Reuters) - XM Satellite

Radio on Friday rolled out its $100 million national advertising campaign in preparation for the satellite radio service's planned commercial launch on September 12.

...debuting 60-second commercial spots on more than 19,000 movie screens in 3,000 theaters across the country.

Fortune New Product of the Year

"Of all the new technologies of 2001, XM Satellite Radio is way, way, way above the rest. It's the first major advance in radio since FM emerged in the 1960s, and the best thing to happen to mobile music since the dashboard CD player . . .

XM Early Results•94% of responds rated the

overall service as excellent •92% sound quality as

excellent–Graystone Communications

Survey

XM Up Close

Does XM Have the

Cash to Last?

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

And Now Sirius•Debuted on February 14th•Houston, Phoenix, Denver and

Jackson•100 channels of programming

–40 will air commercials–60 are commercial-free

•Requires a $12.95 per month subscription

And Now Sirius•Features 3 satellites•Requires special receiver

–Clarion and Kenwood •Partnerships with Ford,

DaimlerChrysler and BMW •3 million subscribers to break

even

Both companies say they have no plans for localization.

Will listeners payfor Radio?

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

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

New Product Marketing

•In the world television, what is Cable…–An Alternative?–A Substitution?

•What is Satellite Radio?–An Alternative?–A Substitution?

• 85-86 Cable PT Shares - 7.5%

• 98-99 Cable PT Shares - 34.7%

• Grow at the expense of FREE tv

Cable Household Shares

Cable’s Growing Ad Revenue

Source: CAB

Satellite Radio strikes at the heart of Radio’s most sacred

piece of real estate…

The Dash

Radio...Radio

Radio Owns the Dash...

TapesCD’sHome

BurnedCD’s

Cell-phonesMP3 New

Tech.OnStar

Don’t we?The new BMW 7 series comes with

a 40-volt battery

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

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

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