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Conversations in Management

James B. Lee, Jr.

The truly good leaders are also optimists.

James Lee, Vice Chairman of J.P. Morgan Chase was describing his friend, Mel Karmazin, when he made this observation. Karmazin was the co-founder of Infinity Broadcasting and later became the President and CEO of CBS. When Viacom bought out CBS, Karmazin became that corporation’s President and COO under the prickly leadership of Sumner Redstone. Tiring of filling a subordinate role, Karmazin became the CEO of Sirius Satellite Radio in 2004. It was in this capacity that Lee took note of his friend’s optimism.

Satellite radio got its start in the late 1980s when CD Radio (which would become Sirius Satellite Radio) and American Mobile Satellite Corp. (which would become XM Satellite Radio) began experimenting with the technology to bring digital audio receiving services to the U.S. market. In 1997 each company was awarded one of only two licenses for satellite digital audio receiving services (SDARS) issued by the Federal Communications Commission (FCC). In essence, SDARS did for radio what cable did for television. As subscription based services Sirius and XM greatly expanded the content available for listeners and offered edgier entertainment than that available on broadcast radio. Shock Jocks like Opie and Anthony and Howard Stern found homes on satellite radio when local stations found them too hot to handle. Tamer fare also made its way to satellite. Personalities such as Oprah, Martha Stewart and Bob Edwards all developed followings on either Sirius or XM. What’s more, politics, sports, old-time radio and every conceivable type of music was made available on hundreds of satellite channels. XM was the first to launch its commercial service in September 2001. Nine months later it was joined by Sirius. Within seven years, the two providers went from zero to a combined 19 million subscribers. But Karmazin wasn’t satisfied with that kind of growth. Sirius and XM used incompatible technologies and fiercely competed for talent and dashboard space. He reasoned that this approach increased the cost of the product and depressed subscriber growth. He believed that the best way to grow satellite radio was to merge Sirius and XM. That’s where the optimism came into play. When the FCC issued the two SDARS licenses to Sirius and XM, they specifically stipulated that the two companies wouldn’t be allowed to merge. It was a ruling that they would reiterate in January 2006 amidst rumors that company executives were, in fact, exploring merger options. But Karmazin was undaunted. Despite the FCC position and the advice of outside counsel, he had persisted and gradually convinced both Sirius and XM leadership that a deal could be worked out. One month after the FCC’s ruling prohibiting a merger the two companies announced their intent to do just that. Five hundred and twenty-five contentious days later the deal closed and the new Sirius XM Radio was open for business.

Optimism is one of the most important traits of a leader because it’s the engine of forward motion and positive change. The belief that something can be done is the impetus to get it done. In the absence of optimism, folks see only barriers. Their world closes in and they worry about not reinventing the wheel. The optimist, on the other hand, suggests that while reinvention might not be called for, reengineering might be a good idea—that’s why we drive on steel-belted radials rather than wooden wheels. Optimism is a reminder that things can always get better—the sun always rises, calm always follows a storm and you do have what it takes to make a good showing. If you’re facing uncertain times or simply tired of business as usual start thinking in terms of possibilities and opportunity. Shape your own future.

—Ebert