Sirius might want 'greedy' Imus, but ...
0 views
Skip to first unread message
Victor Healey
May 25, 2005, 6:24:46 PM5/25/05
to XM_Radio, Xmsatradio
Sirius might want 'greedy' Imus, but ...
By David B. Wilkerson, MarketWatch
Last Update: 4:22 PM ET May 25, 2005
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.
Sirius (SIRI: news, chart, profile) expects to reach cash-flow
profitability by 2007, Karmazin added.
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.
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 (AAPL: news, chart, profile) 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 (XMSR: news,
chart, profile) , 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."
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 (DTV: news,
chart, profile) and EchoStar (DISH: news, chart, profile) 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.
By David B. Wilkerson, MarketWatch
Last Update: 4:22 PM ET May 25, 2005
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.
Sirius (SIRI: news, chart, profile) expects to reach cash-flow
profitability by 2007, Karmazin added.
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.
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 (AAPL: news, chart, profile) 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 (XMSR: news,
chart, profile) , 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."
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 (DTV: news,
chart, profile) and EchoStar (DISH: news, chart, profile) 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.
Reply all
Reply to author
Forward
0 new messages