AllThingsD » Mel Karmizan

Sirius XM Is Finally Free … to Raise Prices

John Paczkowski — Tue, 02 Aug 2011 21:05:32 +0000

Sirius XM Radio hasn’t raised its base subscription fee since it first launched nearly a decade ago. But it will do so next year, now that the Federal Communication Commission has decided not to extend the price freeze that has hamstrung the company for the past three years. During a call held to discuss the company’s strong second-quarter earnings, CEO Mel Karmazin said the company expects to raise its prices come 2012.

“We continue to believe it would be appropriate for us to increase our pricing to be able to continue investing in and delivering the best audio content in the world,” Karmazin said. “Early next year, for the first time since the merger, we will be able to price our service as we see fit.”

He offered no further details beyond that and said nothing about the size of the increase the company is mulling. But the company’s clearly aware it’s treading toward dangerous territory here. As CFO David Frear observed during the call, higher prices could result in subscriber attrition, something the company would prefer to avoid.

“Generally, when you raise prices you tend to dampen demand,” Frear said. “But I think you’ve heard us say that pretty clearly that overall, for this business, that we think that price increases make a lot of sense, given the programming we’re delivering and given how long we’ve left the price unchanged. It just makes a lot of sense to increase it in the future.”

I’m sure it does. With aggregate subscriber levels that exceeded 21 million this quarter, Sirius is by far the most popular music subscription service in the world (Spotify isn’t even a distant second with a self-reported 1.6 million). With the federally mandated freeze lifted, it’s time to milk it for all it’s worth.

Call Me Mel "Save-My-Own-Keister" Karmazin

John Paczkowski — Fri, 13 Feb 2009 15:49:06 +0000

Sirius XM (SIRI) is ready to seek bankruptcy protection. The company has warned investors that it’s prepared to file Chapter 11. It has hired bankruptcy and restructuring advisers. And it has filled out the necessary paperwork. But it may never file it.

“People familiar with the situation” tell The Wall Street Journal that Sirius CEO Mel Karmazin and satellite mogul Charlie Ergen are moving closer to an accord that would save the struggling satellite radio outfit from having to file Chapter 11. Apparently, Ergen has agreed to allow Karmazin to keep his job if he agrees to a deal, and that’s been concession enough to keep him at the negotiating table, though he continues to pursue an alternative, and perhaps fantastical, deal with Liberty Media (LINTA).

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Call Me Mel "Save-My-Own-Keister" Karmazin

John Paczkowski — Fri, 13 Feb 2009 15:49:06 +0000

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Sirius-EchoStar-Liberty: Ménage-à-Blah

John Paczkowski — Thu, 12 Feb 2009 20:16:56 +0000

As entertaining as news of a Sirius XM-EchoStar-Liberty Media three-way might be, research houses don’t appear to be giving it much credence. Already a few have issued reports dubious of the idea of Liberty accepting the white knight role in this debacle.

In a note to investors this morning, Collins Stewart analyst Thomas Eagan described the possibility of Liberty acquiring or even investing in the struggling satellite radio concern as “highly doubtful.” Explaining his skepticism, Eagan notes, “We do not believe that Liberty initiated the dialogue with [Sirius]. Additionally, we believe [DirecTV] management does not want [Sirius] combined with its operations. [DirecTV] certainly does not need it. Their operations lead the industry.”

Over at Barclays Capital, James M. Ratcliffe and Vijay Jayant are equally skeptical of an alliance between Sirius (SIRI) Liberty (LINTA). “Liberty involvement is more likely an effort by Sirius XM to attract a competing bidder, in our view–we don’t believe the company is fundamentally interested in becoming involved in the satellite radio business,” they wrote, adding that a Sirius bankruptcy is still a distinct possibility. “Chapter 11 would allow the restructuring of above-market OEM revenue share contracts and branded programming contracts, improving operating cash flows,” they explained. “On the other hand, it would result in aggressive competition among the various capital stakeholders and create a significant management distraction for as much as eighteen months.”

For Sirius, bankruptcy may be a more attractive option than cutting a deal with EchoStar’s (SATS) Ergen, but that’s not really saying much. Anyway, Sirius has about a week to decide between the two.

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Sirius: Give Me Liberty or Give Me Ergen

John Paczkowski — Thu, 12 Feb 2009 13:44:01 +0000

The Sirius XM fiasco is fast becoming high drama. Hoping to avoid bankruptcy and fend off an unsolicited takeover attempt from satellite mogul Charlie Ergen’s EchoStar, which has been acquiring its debt, Sirius has approached Liberty Media about a possible transaction. “People briefed on the negotiations” say talks between the two companies are advanced, but it’s not yet clear how much Liberty would be willing to invest in Sirius and whether it’s even interested in taking control of the company.

Like EchoStar (SATS), Liberty Media’s interest in Sirius (SIRI) revolves around the company’s physical assets–satellite and terrestrial repeaters, towers that bolster satellite radio services with Liberty’s DirectTV (DTV) satellite television services. Said Stanford Group analyst Fred Moran: “All of these companies are satellite-delivered media. If you can cross-market, cross-promote and intertwine services between satellite video and satellite audio, you could strengthen your competitive position.”

Question is, is Liberty Media (LINTA) interested in such a thing and is it willing to repay Sirius XM’s debts and buy out the company’s existing shareholders to do it? If it’s not, Sirius may well be forced into bankruptcy, which company officials reportedly claim is preferable to inking a deal with Ergen and EchoStar. Seems Sirius CEO Mel Karmazin can’t bear the thought of giving up control of the company to Ergen.

Sirius shares are trading higher this morning on the news after being viciously beaten down Wednesday by reports that the satellite radio company is mulling a Chapter 11 bankruptcy filing.

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Potential Sirius Delisting Postponed Until November

John Paczkowski — Wed, 28 Jan 2009 17:13:09 +0000

Sirius XM Radio caught a lucky break recently when NASDAQ added another three months to a suspension of its delisting rules. With a share price below the $1 minimum price requirement to remain listed on the exchange, the struggling satellite radio broadcaster’s delisting seemed imminent. No longer. Now that NASDAQ has extended the suspension of the $1 minimum price requirement until Monday, April 20, 2009, Sirius (SIRI) has quite a few more months to bolster its flaccid share price. Even if its shares are still trading under $1 on April 20, the company won’t receive a delisting notice until 30 days after that–May 19. Then it will have another 180 days to meet NASDAQ’s minimum price requirement. So Sirius essentially has the better part of the year to set its lands in order. If it’s to be delisted, it won’t happen until mid-November.

UPDATE: As the commenter below notes, Sirius could file for an extension in November. If it were granted, the company would then have another 180 days to meet NASDAQ’s minimum bid requirement, which would take it all the way into 2010.

Trade You 77 shares of SIRI for 1 Month of "Sirius Everything"

John Paczkowski — Wed, 03 Dec 2008 20:41:46 +0000

Given Sirius XM’s low stock price, Mr. Karmazin said he would love to take the company private. But given the state of the credit markets, ‘How do you find [the money] today?’ If the company were generating positive cash flow, which he expects it to do for the full year in 2009, privatization would become much more feasible, he says.”

– Wall Street Journal, Sept. 15, 2008

Looks like Sirius XM (SIRI) CEO Mel Karmazin won’t be taking the company private anytime soon, although given its current stock price there’s no reason he couldn’t. At its current value, you’d have to sell off more than 70 shares of SIRI to purchase a one-month subscription to Sirius Satellite Radio.

Speaking at the Reuters Media Summit in New York Wednesday, Karmazin said he’s optimistic about the troubled satellite radio provider’s fourth-quarter revenues. Karmazin sees double-digit growth in 2009, despite the current economic environment, which he bemoaned on an earnings call last month with a very blunt, but entirely apt: “This environment sucks.” And though he was happy to discuss privatization with The Journal just a few months ago, that option seems to be off the table. “We don’t feel that we need to be acquired,” he said. “You should assume the company is not for sale.”

For now, anyway.

Trade You 77 shares of SIRI for 1 Month of "Sirius Everything"

John Paczkowski — Wed, 03 Dec 2008 20:41:46 +0000

Given Sirius XM’s low stock price, Mr. Karmazin said he would love to take the company private. But given the state of the credit markets, ‘How do you find [the money] today?’ If the company were generating positive cash flow, which he expects it to do for the full year in 2009, privatization would become much more feasible, he says.”

– Wall Street Journal, Sept. 15, 2008

For now, anyway.