NEWS RELEASE XM SATELLITE RADIO AND STARBUCKS ENTER INTO STRATEGIC MARKETING ALLIANCE 4/3/2004 "STARBUCKS HEAR MUSIC®" CHANNEL WILL LAUNCH THIS FALL ON XM RADIO Washington D.C., August 03, 2004 -- XM Satellite Radio, Inc. (Nasdaq: XMSR), the nation's leading satellite radio provider, and the Starbucks Coffee Company (Nasdaq: SBUX) have entered into an exclusive, multi-year strategic marketing alliance. As part of the agreement, the "Starbucks Hear Music" channel, featuring music programming from Hear Music, the voice of music at Starbucks, will debut this fall for XM Radio's more than 2.1 million subscribers. Beginning in 2005, millions of Starbucks customers will be able to listen to the "Starbucks Hear Music" channel programming and be exposed to XM in more than 4,000 Starbucks locations nationwide. According to Hugh Panero, President and CEO, XM Satellite Radio, "XM's presence at Starbucks locations will greatly accelerate awareness of our popular satellite radio service. This is an exciting marketing alliance matching Starbucks, one of the world's best known and respected brands with a huge and loyal customer base, with XM Radio, one of the hottest entertainment products to launch in the last 20 years. The Starbucks customer and the XM customer share similar lifestyles and music passions, and it is only natural that they share a latte and listen to music together." "XM Radio shares our passion for music, which has always been an integral part of the Starbucks music and entertainment experience," said Howard Schultz, Starbucks chairman. "Through the XM 'Starbucks Hear Music' channel, we will continue to build recognition of the Hear Music brand, which is an important building block in 1 growing and extending the music experience at Starbucks." "We are thrilled to be working with XM as we both strive to bring innovation to the music industry in bold and unique ways," said Ken Lombard, president, Starbucks Entertainment. "Through the "Starbucks Hear Music" channel on XM, people will be able to take the Starbucks music experience with them wherever they go, and millions of loyal Starbucks customers will be exposed to XM in our stores nationwide." Earlier this year, Starbucks opened the first Hear Music Coffeehouse in Santa Monica, California, giving customers the opportunity to create personalized CDs in about the time it takes to order a latte. Later this fall, Starbucks also plans to roll-out a CD burning service to select Starbucks Company-operated locations. About Starbucks Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with more than 8,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The Company is committed to offering the highest quality coffee and the Starbucks Experience while conducting its business in ways that produce social, environmental and economic benefits for communities in which it does business. In addition to its retail operations, the Company produces and sells bottled Frappuccino® coffee drinks, Starbucks DoubleShotTM coffee drink, and a line of superpremium ice creams through its joint venture partnerships. The Company's brand portfolio provides a wide variety of consumer products. Tazo Tea's line of innovative premium teas and Hear Music's exceptional compact discs enhance the Starbucks Experience through best-of-class products. The Seattle's Best Coffee® and Torrefazione Italia® Coffee brands enable Starbucks to appeal to a broader consumer base by offering an alternative variety of coffee flavor profiles. About Hear Music Founded in 1990, and acquired by Starbucks Coffee Company in 1999, Hear Music is dedicated to helping people discover great music. Not a traditional record label or distributor, Hear Music, with a catalog of nearly 100 CD compilations, handpicks songs from new and classic records to create CDs that help people discover music they might not hear otherwise. Hear Music creates music programming and CDs for Starbucks coffeehouses worldwide and operates four innovative retail stores in California and Seattle. Hear Music CDs are featured at Hear Music and Starbucks retail locations, as well as at www.hearmusic.com. About XM Satellite Radio XM Satellite Radio is America's #1 satellite radio service with more than 2.1 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City and Nashville, Tennessee at the Country Music Hall of Fame, 2 XM's 2004 lineup includes more than 120 digital channels of choice from coast to coast: 68 commercial-free music channels, featuring hip hop to opera, classical to country, bluegrass to blues; 33 channels of premier sports, talk, comedy, children's and entertainment programming; and more than 20 channels of the most advanced traffic and weather information for major metropolitan areas nationwide. Affordable, compact and stylish XM satellite radio receivers for the home, the car, the computer and boom boxes for "on the go" are available from retailers nationwide. In addition, XM is available in more than 80 different 2004 car models. XM is a popular factory-installed option on more than 40 new General Motors models, as well as a standard feature on several top-selling Honda and Acura models. Passengers on JetBlue Airways and AirTran Airways will be able to listen to XM's programming in-flight later in 2004. This fall, XM will offer XM NavTraffic, a new service that will provide real-time traffic information for vehicle navigation systems. For more information about XM, visit http://www.xmradio.com. Factors that could cause actual results to differ materially from those in the forward-looking statements in this press release include demand for XM Satellite Radio's service, the Company's dependence on technology and third party vendors, its potential need for additional financing, as well as other risks described in XM Satellite Radio Holdings Inc.'s Form 10-K filed with the Securities and Exchange Commission on 3-15-04. Copies of the filing are available upon request from XM Radio's Investor Relations Department. Contact Chance Patterson Phone: 202-380-4318 [email protected] 3.