Sirius might want ‘greedy’ Imus, but …

SAN FRANCISCO (MarketWatch) — Sirius Satellite Radio Chief Executive Mel Karmazin told shareholders Wednesday that the company would be interested in another high-profile radio host such as Don Imus, but only if it could reach cash-flow profitability faster by doing so.

Karmazin, responding to questions during the annual Sirius shareholders’ meeting in New York, reiterated that the company is likely to be finished with large contracts like those it currently has with the NFL, the NBA and radio celebrity Howard Stern.

The NFL package alone is valued at $220 million, while Stern is picking up $100 million to jump to Sirius from Infinity in January 2006.

“If you look at large contracts like that, they’re mostly for sports,” he said. “[In satellite radio] all of those deals are done.”

The only way the company would pursue another high-profile radio personality — such as Don Imus, whom he was asked about at the meeting — would be if that person would help Sirius reach cash-flow profitability sooner than it anticipated.

“Imus, if he was available, would be [great], but it comes down to the math. He’s very greedy,” Karmazin said, eliciting a wave of laughter from the crowd.

expects to reach cash-flow profitability by 2007, Karmazin added.

See also  Bourbon lovers: Wander these off-the-beaten-path bars, distilleries and restaurants on Northern Kentucky’s back roads

The chief executive also underscored the Sirius estimate that if just 1 million of the 12 million estimated Stern listeners become Sirius customers, Stern’s contract will pay for itself. Karmazin added that the figure might be conservative.

“If you’re a Howard Stern fan, you probably don’t understand this, but a lot of people don’t want to admit they listen to Howard,” Karmazin said. “When you hear people say that he has 12 million listeners … we believe he has a lot more than that.”

Stern’s show will air far fewer commercials on Sirius than the 20 minutes per hour heard during his Infinity broadcasts. “Because people are paying $12.95 per month, we think the listening experience should be better,” Karmazin added. “One of the criticisms you do hear from his listeners is that he’s running too many commercials.”

Sirius will not change its business plan if it decides to launch a fourth orbital satellite, according to Karmazin, because the company has enough cash on hand to execute that launch.

Sirius is still debating internally whether to launch a fourth satellite that is sitting on the ground, or to keep it earthbound as a spare. Some investors have been concerned that to launch the satellite, Sirius would have another secondary stock offering to raise the necessary funding.

See also  Baltimore Sun editorial shreds Trump’s ‘Pavlovian’ response to Fox News

One argument for launching the satellite, Karmazin said, is that it gives the company “more redundancy and more security” if something happens to one of the three that are currently in orbit.

One shareholder asked whether Sirius is negotiating with Apple Computer
about an a Sirius-enabled iPod, or if it is pursuing such a deal with another maker of MP3 players. “We’ve had discussions with everyone,” the executive acknowledged, including makers of cell phones, digital music players and other devices. He said that he’d had dinner Monday night with Apple Chief Executive Steve Jobs and other digital entertainment-related executives at a conference.

“Will there be MP3 players that include satellite radio? Sure. The technology’s easy,” Karmazin added. The issue, he elaborated, is whether such an agreement would cannibalize existing Sirius business, and how much of its $12.95 monthly fee the company would have to split with a manufacturer.

“If we don’t do a deal, our current business plan is just fine,” Karmazin said.

Sirius will ultimately have a portable radio that is comparable to the MyFi radio offered by its rival, XM Satellite Radio
Karmazin assured investors. “The wearable market is a very small market in radio, and this goes back to the Sony Walkman,” he indicated. “We have been focusing on the auto market and the home market. … But we recognize there are customers who want it.”

See also  Alexion Pharmaceuticals Inc. stock rises Wednesday, outperforms market

On other issues, Karmazin said that while Sirius and rival XM are working, under an agreement with Federal Communications Commission, on a radio that can receive signals from both satellite radio services.

However, he noted, satellite television providers DirecTV
and EchoStar
don’t have interoperable receivers, implying that perhaps their radio counterparts may not be required to do so, either. “If it’s in the interest of our shareholders, we’d be open to that,” Karmazin added.

Sirius shares fell 3 cents to $5.63 Wednesday.

View more information:

Articles in category: moneyist

Leave a Reply

Back to top button