Written in the Stars

If there were any questions about Sirius's target demographic, the Howard Stern deal zapped them for good. Sirius is betting everything on the dudes -- men between the ages of 18 and 49. The evidence: First, Sirius inked exclusive deals to broadcast the NBA and NHL.

It brought in the buxom one, Pamela Anderson, to do some promos. Then, when it had just a few hundred thousand subscribers, Sirius capped its sports mojo with a $220 million blockbuster to broadcast the NFL over the next seven years.

The Stern deal is in a league of its own. But was Sirius throwing a Hail Mary? While Stern's $500 million contract is a great win for him, the payoff for Sirius is harder to see. Though Sirius claims that Stern has a fan base of 12 million, the industry magazine Talkers puts that number at closer to 8.5 million. To offset his $100 million-a-year paycheck, Stern must convert 1 million of his listeners into Sirius subscribers.

Radio pros argue that Stern should not be underestimated. "The two biggest talents in talk radio are Rush Limbaugh and Howard Stern, and they are remarkably similar," says Unmacht. "If you strip away the act -- the superconservative and the supersexed -- they're doing classic radio. Stern will drag people across to Sirius."

XM, for its part, has pursued an entirely different theory of deal making, one that is alternately restrained and unfettered. For a company that has taken on a few of its own death-defying risks, XM can be remarkably pragmatic. Panero believes that the unsung part of deal making is having the discipline to make no deal at all. XM waited out Sirius's high-profile sports and celebrity agreements, and then it pounced. This past October, the very month that Sirius landed Stern, XM launched its own spending spree when it locked in its mammoth $650 million, 11-year broadcasting and marketing arrangement with Major League Baseball. Baseball will deliver many more hundreds of hours of programming than football, but it will also add something of equal value to XM's nonmusic channels: every demographic beyond the age of 12.

XM is working to ensure that its deals add up to a diverse lineup that will draw the widest possible audience. Shock jocks Opie and Anthony (infamous for broadcasting a live report of a couple having sex in New York's St. Patrick's Cathedral) are likely to draw a different audience than former NPR host Bob Edwards, after all. Sirius counters that it, too, aims for variety and says many of its channels appeal to women, kids, and older listeners. Add in deals for football, basketball, and hockey, and Karmazin will have the programming in place for a big boost in ad revenue from Sirius's nonmusic channels. Karmazin, after all, did as much as anyone to bloat conventional radio with commercials. He now has the chance to deploy the same off-putting strategy via satellite.

Panero is betting that the race for brand-name content will continue indefinitely. But as XM and Sirius drive to sign up an estimated 25 million subscribers over the next five years, it's likely that the showdown is entering a different phase -- one where the outcome will depend more on execution than strategy. Now that each company has settled on its theories for technology development, partnering, programming, and deal making, they must take on the big question that confronts every entrepreneurial effort: Can you get it done? "It all comes down to the hard work of managing in a complex, multifaceted business," says Panero.

Media analysts generally agree that Sirius can prosper without winning. But author and stategy guru Gary Hamel disagrees, arguing that this is a zero-sum game. "These battles to build new markets look like a marathon," he says. "But they're more of a 100-meter hurdle. In the end, the winner is the one who clears all the critical hurdles that will turn the effort into a genuine business. Sirius stumbled at the very first one, and business history shows us that it's very difficult to catch up." Karmazin, who's generally credited as one of the toughest operators in broadcasting, could well find a way to kick-start Sirius and launch a whole new race. But right now, the sprint for the stars is XM's to lose.

Bill Breen is Fast Company's senior projects editor.