Karmazin: Sirius XM Will Be Profitable
October 14, 2008

Sirius XM Radio CEO Mel Karmazin was the keynote speaker at this morning's Media & Money Conference, telling attendees that the merged satcaster has a bright future ahead. "We're probably one of the top 25 media companies today," Karmazin said, according to CNet. "I think it's very clear that we will be the most successful company in the audio entertainment industry. I know certainly, as ranked by revenue, we'll be there soon. Now we just need to grow our free cash flow and demonstrate that."

As for Sirius XM's chances in the current economic climate, Karmazin noted, "You need to make money, and in this particular environment, with Wall Street being what it is today, I think the companies that get rewarded today are companies that have an awful lot of cash flow, that make a great balance sheet. And that's not us today."

He said that the satcaster's 19.5 million subscribers make it the second-largest subscription-based media company, after Comcast. The satcaster CEO also boasted that Sirius XM is also the second "most successful company in the audio entertainment industry," after Clear Channel.

Karmazin was also optimistic about the future of satellite radio in automobiles. He hypothesized that "[what if] in 2009 there were only 12 million cars sold. That could happen, but no one has forecast that number as low. Of the 12 million, 6 million will leave the assembly line with satellite radio installed. So that would get us 6 million gross adds, and then there's a conversion rate. About 50 percent of those people choose to keep satellite radio...That would mean we're going to add about 3 million new subscribers just from that OEM platform."

As for the proposed legislation forcing the addition of HD Radio in cars alongside satellite, Karmazin said, "The consumer ought to decide. The government shouldn’t be requiring HD Radio just because the content is not compelling enough on its own to get people to buy these radios."

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Manny Simon
VP/Adult Formats,
Republic Records

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