Rivals, and Friends?

To hear the executives at Sirius and XM talk, peace has broken out in the world of satellite radio.

The president of XM Satellite Radio Holdings Inc., Hugh Panero, was the first to make nice.

In November, when Sirius Satellite Radio Inc. hired Mel Karmazin as chief executive, Panero publicly welcomed the former Viacom Inc. executive, saying he brought "a new level of maturity" to the fledgling industry.

Karmazin, whose move into mostly commercial-free, subscriber-based satellite radio capped a career built largely in the traditional AM/FM market, was quick to reciprocate.

"There was a time when both companies thought of each other as the enemy," Karmazin said in a recent interview. "That's not my viewpoint today. Our real competition is terrestrial radio."

Some analysts are heartened by the apparent cease-fire. For more than a decade, media gurus have said satellite radio would revolutionize broadcast music the way cable upended television. But although XM and Sirius have spent hundreds of millions of dollars in the competition for subscribers, satellite radio has failed to lure more than 3% of the nation's 229 million radio listeners.

When trying to persuade people to pay $12.95 a month for a medium they already get for free, a truce makes good business sense.

But is it for real?

"Karmazin and Panero are both very competitive," said Tom Eisenmann, a professor at Harvard Business School, who is watching the outbreak of collegiality with skepticism. "Neither of them want to be in second place."

That competition, say some investors, has been a problem since 1997, when Sirius and XM were the sole winners of Federal Communications Commission satellite radio licenses. Soon after, both rushed to launch satellites capable of nationwide broadcasts to specially designed radios.

New York-based Sirius was first in orbit, launching three satellites by 2000. But then the company stumbled, choosing to outsource development of key components and disappointing investors with repeated delays.

Washington-based XM rushed into the breach, beginning broadcasts in 2001 to almost 30,000 paying listeners. When Sirius finally began transmitting, in 2002, it took the company six months to lure an equal number of subscribers.

Since then, each company has spent billions of dollars building networks that carry more than 120 channels apiece. Each has touted its ability to offer listeners more choice and eclectic channels -- such as all Elvis, all the time -- with no or few advertising interruptions.