Conversation with Mel Karmazin

Monday, June 19, 2006

Kai Ryssdal talked with SIRIUS CEO, Mel Karmazin.. Read it all here from marketplace.publicradio.org.. (Mel is making the rounds he talked to broadcastingcable.com over the weekend)

This interview was from Public Radio.. you could tell there was an anti-Satrad spin on the questions. Mel did not let that fly; here are some clips..

RYSSDAL: Let's talk about this company for just a second. It's been around for a good long while, yet still isn't really turning a profit, though.

KARMAZIN: Well, I don't know what you mean "a good long time." We got our first subscriber in 2002, and here were are in 2006, and we're saying that we're going to have over six million subscribers. And we said that we will make a profit - that we will have free cash flow as recently as the fourth quarter of '06. So if you were to compare SIRIUS to many other start-up businesses, I think that it's a great accomplishment.

The other thing about the business is that it's a high fixed cost business so that when - before we got our first subscriber, we had to spend $1.5 billion in putting up satellites. Obviously, no one was going to subscribe to a service if the service didn't exist. So we spent $1.5 billion on satellites. We then had to provide all of the programming because, again, if you're going to - before you get a single subscriber, you need to have the programming offering. So all of these fixed costs were in there already before we got a single subscriber. Now we're dramatically adding subscribers, and the revenues that you generate fall to the bottom line, and therefore you make the turn pretty quickly.

RYSSDAL: You brought him here in a $500 million deal. Isn't that a whole lot of the company's money to plow into one guy?

KARMAZIN: Just for the facts - you know, I did not bring him here. I joined the company after Howard did, but stand behind the decision that was made and absolutely was a tremendous amount of money. There's no way of saying that that's not a lot of money. The difference is that Howard's - that decision has paid off significantly for SIRIUS. That we sell subscriptions at $12.95 a month - a very low price in our opinion - and if in fact Howard were to bring a million subscribers, then we would have more than paid for itself. So we would have brought in well over $140 million as a result of Howard, pay him about $100 million, and therefore there was a profit in it for us in making that decision.

When Howard was announced that he was joining SIRIUS, we had 700,000 subscribers. Today we have over 4 million subscribers. It's our belief that Howard was responsible for more than a million of those incremental subscribers. And obviously if he did that, not only did he increase the awareness and the visibility and the promotion, but he also paid for himself with the additional subscribers.

Read it all here

0 Comments:

Post a Comment

<< Home

Get Around GSI

GSI: Blog Home
GSI: Home
EMAIL/SEND SIRIUS TIPS

Inside SIRIUS Alliance

TSS Radio

Sirius radios, sirius antennas, sirius accessories

SIRIUS Stock Watch

The Coffee Fool

About GSI

We are 100% independent from SIRIUS, unlike other SIRIUS related pages, who have agreements and arrangements with SIRIUS. We do not sell SIRIUS related products and thus we do not worry about any business relationship with SIRIUS. GSI: is a not for profit blog, we do not do this for money like others; with do it out of love for the product. *Some GSI team members are SIRIUS shareholders

Archives

07/01/2005 - 08/01/2005 08/01/2005 - 09/01/2005 09/01/2005 - 10/01/2005 10/01/2005 - 11/01/2005 11/01/2005 - 12/01/2005 12/01/2005 - 01/01/2006 01/01/2006 - 02/01/2006 02/01/2006 - 03/01/2006 03/01/2006 - 04/01/2006 04/01/2006 - 05/01/2006 05/01/2006 - 06/01/2006 06/01/2006 - 07/01/2006 07/01/2006 - 08/01/2006 08/01/2006 - 09/01/2006 09/01/2006 - 10/01/2006 10/01/2006 - 11/01/2006 01/01/2007 - 02/01/2007 02/01/2007 - 03/01/2007 10/01/2007 - 11/01/2007

TSS Radio

Sirius radios, sirius antennas, sirius accessories

Powered By