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Mel Karmazin to step down as chief executive of Sirius XM

October 23, 2012|By Joe Flint
  • Mel Karmazin will be leaving as CEO of satellite radio company SiriusXM next year.
Mel Karmazin will be leaving as CEO of satellite radio company SiriusXM… (Associated Press )

Sirius XM Radio Inc. Chief Executive Mel Karmazin will resign from the satellite radio broadcaster on Feb. 1.

The move was not unexpected. Liberty Media, the largest shareholder in SiriusXM, is in the process of taking control of the company and Karmazin had previously indicated he would likely leave as a result.

Karmazin's contract with SiriusXM expires at the end of this year. He said he is staying on an additional month to ensure a smooth transition. He will also resign from the SiriusXM board.

"I am incredibly proud of what we have accomplished," Karmazin said Tuesday in a statement. "SiriusXM has a strong foundation to build on for the future and there is a great team in place to keep the company moving forward." In a letter to the SiriusXM staff, Karmazin called the last eight years an "amazing ride."

No successor for Karmazin was named. A search committee comprised of Sirius XM Chairman Eddy Hartenstein, Liberty Media President Greg Maffei and SiriusXM board member James Mooney has been established to find a replacement. Hartenstein is also the chief executive of Tribune Co., parent of the Los Angeles Times.

Karmazin, 69, a well-known media executive who held senior positions at CBS and Viacom, has run Sirius XM since November 2004. When he joined Sirius, it had 700,000 subscribers, but in 2007 Karmazin helped engineer a merger with its chief rival XM Radio, and it now has about 23.4 million subscribers.

The merger, which took 17 months to receive government approval, saddled the company with a heavy debt load. In 2009, Liberty Media, the cable programming company controlled by mogul John Malone, lent SiriusXM $530 million and ended up with 40% of SiriusXM stock and five seats on the board.

Over the last year, Liberty has increased its holdings in SiriusXM with an eye toward taking it over. Liberty now owns just under 50%. It has told the Federal Communications Commission that it would like the regulatory agency to approve it as the outright owner of the satellite radio broadcaster when its stake passes 50%.

Malone said he regretted Karmazin's decision to leave and praised his leadership, saying he had done a "tremendous job" at SiriusXM.

Although SiriusXM last year had a profit of $427 million on more than $3 billion in revenue, there have been concerns that the growth of Internet radio services such as Pandora and Spotify could eventually take a bite out of Sirius.

SiriusXM's biggest personality is morning-show host, Howard Stern, who has close ties to Karmazin. The two worked together for years in terrestrial radio and Karmazin followed Stern to satellite. Stern is almost two years into a five-year contract with SiriusXM and is often dropping hints that he may be ready to hang it up after the current deal expires. Of course, many see those hints as nothing more than negotiating ploys.

ALSO:

SiriusXM's Karmazin expects to resign

Liberty Media clears path to control of SiriusXM

SiriusXM wins over radio listeners with niche play

Follow Joe Flint on Twitter @JBFlint.

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