Karmazin Talks Sirius Cash Flow, Stern Lawsuit
April 3, 2006

In a wide-ranging interview with The Wall Street Journal, Sirius CEO Mel Karmazin discussed a variety of issues surrounding the satcaster. First off, Karmazin predicts that the company will turn a profit beginning in 2007, saying they will have $1 billion in revenue, and become "free-cash flow positive." He adds that "when that $1 billion grows to about $3 billion, which is in our plan at 2010, we will have a billion dollars of free cash flow available to us. Free cash flow is what enables you to make acquisitions [and] pay down debt... I'm not sure that net profit is anything that I have ever looked at or focused on with the company."

When the topic of CBS' lawsuit against Howard Stern came up, Karmazin said that he believes his former employer has a "clear-cut vendetta against Howard." He added, "Most of the people who have seen or commented on the lawsuit think it's pretty bizarre. We have said in our regulatory filings that we don't believe that the lawsuit has any merit at all. What it's done is it's put Howard back into the headlines again. I've never seen anything like this. I've been around the broadcasting and media business, but I can't find another example of where a large company, after a talent left that made them a whole lot of money, has chosen to file a lawsuit against the talent. Particularly, about things that were said on the radio when they were in control of the radio station. They're telling [the FCC] that they're in charge of their station, and that they are making sure that [nothing legally indecent] is mentioned and yet, they were surprised to learn that he was talking about Sirius. All I had to do was listen to their radio station."

As for the new S50 receiver, which can also record songs, Karmazin told the WSJ, "We don't see that as being a great business model for us. We don't need to own a downloading service. We think that we could outsource that store. But buying music is something that we're open to. If you, the consumer, hear a song on Sirius and you want to buy that song on our device, we're going to enable you do it. But you can go to Yahoo and do it, or you can go to some other third party to do it."

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