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Tuesday, September 27, 2005

What Is He Smoking?

I am an investor in Sirius and XM satellite radio, though more Sirius than XM these days. I strongly believe in the services and feel there is nothing but upside in this industry. There are many technical issues that these guys need to overcome, but I am sure they will at a much faster pace than the Cable or Satellite television companies did. I remember when I was a kid and the Horist's that lived down the block were testing out the new idea of Cable television as Karen worked for Cable One. It was cool and I did not even question that everyone would have cable TV one day.

Anyway, I am really amazed by Hugh Panero and his leadership, or lack there of. He appears to be spewing propaganda for his service and trying to use the media to prop up the XM service. I am not sure how he can state in public that the XM service is superior to the Sirius service. One of the quotes that proves the guy is drinking the kool-aid...

He (Stern) is a half-billion-dollar gamble on the part of my competitor. His announcement gets headlines, and what we're about is getting subscribers. Since the announcement that he's moving to our competitor, we have added 2 million subscribers. They come on because we offer the best sports, the best music and the best talk. - USA Today - 9/27/2005

How can this guy really think that XM is offering superior service to Sirius. If anything Sirius has the upper hand on programming. The advantages XM have today are many, including, but not limited to: superior equipment, deals with big technology brands (i.e. Apple), travel partnerships (i.e. JetBlue), exclusives with Honda and GM, and first to market advantage (5MM subs). The only real advantage Sirius has today is the programming and innovation. Sirius has the upper hand in content, with exclusives with the NFL, NBA, NCAA, Martha Stewart, BBC Radio 1, Richard Simmons, and of course Howard Stern. The only real exclusives that XM have are MLB and O&A.

These guys really need to work as a constructive duopoly for this industry to work. With the business genius of Mel Karmazin at the head of Sirius, Hugh Panero needs to recheck his approach to differentiation in the marketplace. This would be like McDonalds saying they are superior to Morton's Steak House for Steaks. Highlight your strengths Mr. Panero, and work on developing your weaknesses.

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