Updating CEO’s Who Need to Leave: Sirius & XM

Back on December 19, we were not just continuing the call for a merger between XM Satellite Radio (XMSR-NASDAQ) and Sirius Satellite Radio (SIRI-NASDAQ).  We gave a blueprint for the merger and how the combined company could look and what it would save, but we also noted that the combined operator would have to choose which CEO would survive the merger. 

Here was what we said at the time: Sirius’ (SIRI) Mel Karmazin and XM’s (XMSR) Hugh Panero are in a deadtie for who needs to go and depending on which month it is you have sixof one and a half-dozen of the other.  Please don’t take this the wrongway.  It wouldn’t be good for either of these heads to step downimmediately.  XM & Sirius need to announce a merger first and thenthe contest can begin for the surviving face man.  Remember, this is strategic and longer-term.  If you want to can thefamous guy then it’s Karmazin; if you want to boot the unknown then youpick Panero.  We have been vocal that both XM and Sirius needed to do alot more for shareholders since summer……….What the companies could even try doing is make one of the CEO’s thehead of the divestitures and responsible for the inevitable new productlaunches.  Wall Street would probably accept that, particularly if youthink of contingency and instant back-up plans if disaster everstruck.  The CEO’s could even do a coin toss over who gets to be theface man.   Both are considered deal makers on the street, so it isn’tthat either is irrelevant.  It isn’t like one or both have to lookforward to feeding park pigeons for the rest of their days.  But onlyone of these two can can remain as the CEO and front face man after themerger………….

So Hugh Panero of XM was the one to go.  Time will tell if this was the right man to leave, but no one is really pondering on his role now.  You can probably assume he is being well taken care of in this exit, and he’ll most likely either end up at a satellite venture that continues to work in the sector or at another digital content operation.  This merger is going to take some time for everything to close and for all of the necessary concessions to be made to secure the hoped-for approvals from government regulators and Congressional oversight. 

So out of our "10 CEO’s Who Need To Go," this really marks 4 out of 10 that have gone now that Rollins, Nardelli, and Pressler have all been shown the door.  Here is a summary of all 10 that we re-ran on December 30, 2006.  There are actually a couple of updated CEO’s on this list that may have actually done the necessary steps needed to save their jobs, but there are still some changes that need to occur out of this list. 

Jon C. Ogg
February 21, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.