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At XM, Boldly Going

A little in your face. But chief executive Panero, who grew up in the Bronx, isn't the kind of executive who gets his nails manicured. But having led XM through a series of professional and personal trials, he's comfortable doing a little hazing.

A Step Ahead

Back in 2001, when the attacks of Sept. 11 looked as if they would sink XM's scheduled launch, Panero never betrayed any doubt in the company's prospects, recalled Gary Hahn, XM's vice president for advertising and creative services. Hahn worked with Panero at his previous employer, Request Television Inc., a pay-per-view company in Denver. "He led by that day-in and day-out relentless pursuit of goals. You tend to look at a leader if you have second thoughts. He had none," Hahn said.


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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At XM, when capital ran short or articles appeared questioning satellite radio's viability, Panero and his team kept themselves going with the vision that they were helping to create a new medium, Hahn said.

Panero describes the management style at XM as collaborative. But his colleagues at XM credit him with making key early decisions. One big one was moving technology development in-house.

Sirius, by contrast, contracted out the development of the microchips needed to deliver the radio service to consumers. The outside contractor could not get the chip sets ready as scheduled. So, even though Sirius put its satellites in orbit first, XM was able to begin selling its service nearly a year ahead of Sirius.

XM remains several quarters ahead of Sirius in the development of its chip sets, which enabled it to roll out a wearable receiver in time for Christmas. Sirius officials said they expect to have a similar device ready next year.

Panero and XM Chairman Gary M. Parsons also focused early on how to distribute their satellite service. They were able to forge relationships with General Motors Corp. and Honda Motor Co., which became investors in XM, owning 5 and 8 percent stakes, respectively. General Motors and Honda offer XM as a standard, factory-installed feature in more than 100 models of cars and trucks. For the 2004 model year, GM installed XM radios in 1 million cars, while Honda installed them in 200,000. The two automakers also promote XM Satellite Radio in their print and television ads and through dealers.

Sirius also has partnerships with automakers to install Sirius in more than 50 models but has no car companies as investors. And Sirius partners, including DaimlerChrysler AG and BMW, don't install Sirius receivers as standard equipment.

As a result, Sirius has focused more on distribution through retail outlets such as Best Buy. But it needs to persuade its automotive partners to commit to installing Sirius in more cars if it wants the subscriber growth XM has experienced, said April Horace, a Janco Partners Inc. media analyst . The auto market has been one of the biggest drivers of XM's subscription growth, analysts said.

Hedging his bets, Panero is testing a variety of other distribution channels for XM's content, including airlines such as JetBlue and AirTran and Internet streaming. XM earlier this year signed a deal with Starbucks Coffee Co. to create XM's Hear Music channel, which features adult contemporary music that evokes the Starbucks lifestyle. The channel will eventually be piped into Starbucks stores. Microsoft recently imbedded XM in its new Media Center.

"In this kind of business, what you did today is forgotten quickly," Panero said. "We have to find new and innovative ways to reach people."


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