Two stories surfaced on Reuters regarding the future of SiriusXM. One about distribution and the other a story we've seen before--Mel and Howard getting ready to do the contract dance. Hadn't seen these stories in the trade press yet--thought you might find them interesting.
Sirius, Liberty could do WorldSpace deal
NEW YORK (Reuters) - Sirius XM Radio Inc (SIRI.O: Quote, Profile, Research, Stock Buzz) could team up with Liberty Media Corp (LINTA.O: Quote, Profile, Research, Stock Buzz) to take its satellite radio offerings global through a partnership with WorldSpace Inc (WRSPQ.PK: Quote, Profile, Research, Stock Buzz), Chief Executive Mel Karmazin said on Monday.
"We understand that Liberty has expressed an interest in WorldSpace," Karmazin said at the Reuters Global Media Summit in New York.
But if a partnership with Liberty does come about, Sirius would not invest any money, he added.
"We would put our expertise and experience in the pot and Liberty would put their money in the pot," Karmazin said.
Liberty Media, controlled by cable pioneer John Malone, rescued Sirius from a possible bankruptcy filing earlier this year with a loan of $520 million. In return, Liberty secured a 40 percent equity stake in the company.
Through a subsidiary, Liberty Media has also bought up the debt of WorldSpace recently, leading to speculation that Malone would seek to combine Sirius and WorldSpace. Most of WorldSpace satellite radio's subscribers are in Asia and Africa.
"So one would think that if Liberty were to do something there that they would want as strategic partner somebody who has successfully done satellite radio in 5 percent of the world," Karmazin said.
Such a partnership could involve Sirius bringing its relationships with car makers and expertise in building satellite radio gear to WorldSpace's operations, he added.
(Reporting by Anupreeta Das and Yinka Adegoke; Editing by Tiffany Wu and Richard Chang)
It’s been five years since Sirius lured shock jock Howard Stern to satellite radio with a $500 million contract. Whether Stern can re-up with a similar deal when his contract expires at the end of next year is anyone’s guess, but it ought to be entertaining. Sirius XM CEO Mel Karmazin is preparing himself for negotiations with the self-proclaimed King of All Media.
In a meeting with reporters at the Reuters Media Summit on Monday, Karmazin gave us a thumbnail sketch of his version of “The Art of the Deal.”
“I could tell you, it will start with Howard feeling that he is working too hard and doing too many shows and not making enough money. Our side would say, ‘We want you to do more, and get less money,’” Karmazin said.
“That would be how we would go into the room once the time came to go into the room. And the hope would be that we would come out with Howard staying with our service,” he said.
Karmazin praised Stern as “a talent like no other in radio,” but would not say whether such a talent was still worth a half billion dollars.
“You have to now assume that the negotiations are at a stage where everything is in print, so if I were to say, yes, we got every penny’s worth, Howard would come in with that piece of paper and say ‘See? I sold myself too cheap,’” he said.
Stern is one of the biggest draws of Sirius XM’s satellite radio service, which counts 18.5 million subscribers. His decision to exit FM radio for Sirius in 2004 is credited with establishing satellite radio as an established form of media, though some analysts have also noted that high-priced contracts like Stern’s contributed to financial woes that pushed Sirius to the brink of bankruptcy earlier this year.
Stern is not the only big personality whom Karmazin may face at the bargaining table; Oprah Winfrey’s contract for her Sirius talk show ends in 2011. While Karmazin said he has not yet had talks with Oprah, he said that satellite radio could become a more valuable promotional tool for Oprah once she quits her broadcast TV show.
Asked whether Oprah or Stern was the tougher negotiator, Karmazin said both previously got the best of him.
“I’ll tell you who was the worst negotiator: It was always Mel because they got all that money from me.”
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