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At XM, Boldly Going

Under Hugh Panero, Satellite Radio Is a Hit. Just Ask Howard Stern And Mel Karmazin.

By Annys Shin
Washington Post Staff Writer
Monday, November 29, 2004; Page E01

Hugh Panero has never had much patience for naysayers.

As a young man, after being turned down for a job reporting on the cable industry for a trade journal, Panero created his own version of the publication, complete with original stories and a mock cover. He sent it in and was hired, said Doug Panero, one of three younger brothers.

XM Satellite Radio chief executive Hugh Panero, who joined the company in 1998, keeps his office door open, shouting over to Chairman Gary M. Parsons during the work day. (Katherine Frey -- The Washington Post)

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As one of the early pioneers in pay-per-view TV, Panero overcame doubts that consumers would ever pick pay-per-view over the video store.

Six and a half years ago, he believed in subscription radio service when few others did. Secure in that belief, Panero turned a staff of fewer than a dozen working out of a windowless basement office in downtown Washington into the leading satellite radio service, with more than 500 employees and 2.5 million subscribers. Its only direct competitor, Sirius Satellite Radio Inc. of New York, has 800,000 subscribers.

Satellite radio has now come into its own, and competition is sizzling.

XM Satellite Radio Inc. offers more than 100 channels for a $9.95 monthly fee, with highlights that include popular newscaster Bob Edwards from National Public Radio. In the works for the spring is a 24-hour baseball channel -- the result of a broadcasting and marketing deal worth up to $650 million over 11 years that XM signed with Major League Baseball in October. The District-based company last month introduced the first wearable satellite radio receiver, called the MyFi, expanding its service to outside of the car and home.

Sirius this fall lured shock jock Howard Stern away from FM radio with a $500 million, five-year deal. That was after it agreed in December 2003 to pay $220 million in cash and stock to the National Football League to broadcast its games and related content on a new, 24-hour channel. Sirius, which offers listeners more than 100 channels for $12.95 a month, capped its headline-making announcements on Nov. 18 with the news that former Viacom Inc. chief operating officer Mel Karmazin was joining as chief executive, effective immediately.

Analysts called Karmazin's jump to Sirius a blessing for satellite radio. "We believe this news is good for the satellite radio industry overall because it involves the hiring of one of the most respected managers in the entire media industry," Legg Mason media analyst Sean P. Butson wrote in a Nov. 19 research note.

Following the announcement, Sirius's share price rose 38 percent, to $6.51. XM's stock closed Friday at $37.61, up 8.5 percent over the same period.

Panero's reaction to his new official nemesis was more sanguine.

"A short time ago, [Karmazin] was telling anyone who would listen that satellite radio would never amount to anything. All I can say is [Karmazin's appointment] an interesting confirmation of the validity of satellite radio," he said. "We set the groundwork for people realizing this is the new platform for entertainment. I'm glad we could provide Mr. Karmazin with gainful employment."

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