Word: karmazin
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...more than pays for his $100 million a year in operating expenses, which also goes toward production costs for his show and two 24-hour channels he plans to program. Throw in ad revenues and he?s raking in profits for his corporate parent. Indeed, Sirius boss Mel Karmazin aims to generate $100 million in ad revenues by 2007, up from less than $10 million now. Stern is essential to that equation. Karmazin, after all, has long had faith in the nation?s premier radio bad boy to bring in the bucks, going back decades to their days at Infinity...
...Wall Street isn?t entirely convinced by Karmazin?s math. No one can say how many listeners Sirius would bring in without Stern, or precisely how many listeners he's responsible for attracting. XM, after all, expects to add nearly 1 million subscribers in the fourth quarter without a blowout personality in its lineup. Which leaves Wall Street flummoxed as to Stern's true value. ?Howard will be big but [his] actual impact remains unknown,? Bank of America analyst Jonathan Jacoby wrote in a recent research note...
...folks who know the old Karmazin, the idea of splurging on content sounds like a remarkable change of heart for a guy who became a cult figure on Wall Street as a radio adman, the Infinity boss and a media consolidator focused on the bottom line. After selling Infinity to Westinghouse (which had swallowed CBS a year earlier) for $4.9 billion, he became head of CBS in 1999 and then sold the whole thing to Viacom for $40 billion. He found himself the No. 2 guy at Viacom, behind chief Sumner Redstone. The two clashed famously, in part over personalities...
...Karmazin concedes that he didn't foresee the potential of satellite radio and raised doubts about its viability as a business model. Just a week before being named CEO of Sirius, he told a broadcasters' conference in Portugal that while Stern made a "brilliant" deal for himself, "the jury is out on whether or not it is good for anybody else." To the old guard at Sirius, Karmazin certainly seemed like a saboteur. "They thought my agenda was to hold back satellite radio," he says of talks he had with Sirius in 2003 about a link with Viacom. What changed...
Some call Karmazin an opportunist--or, more unkindly, a traitor to the old radio business--but nobody ever called him stupid. His strategy of seeding the Sirius lineup with high-priced stars makes sense if it's going to challenge XM, the market leader. XM's chipsets and audio technology, developed in-house, are a generation ahead of Sirius' hardware. Last fall, XM was first to market an iPod-like portable-radio device. The company in 2004 began serving up traffic data in major urban markets, fed directly to a car's navigation system, a feature that Sirius has announced...