Sirius XM to Slash $400M in Costs, Much of It from Advertising Budget

Mel Karmazin, CEO of the newly combined Sirius XM Radio, plans to slash $400 million in annual costs.

Much of it will come from the two companies’ enormous advertising budgets and from eliminating duplicate jobs, according to The New York Times.

Neither XM nor Sirius has ever turned a profit, and since announcing their plans to merge, they have added $1.2 billion in debt. Shares have dropped from $3.74 at the time of the announcement to $1.43, and the auto market, which has been responsible for a large part of the companies’ revenue from factory installed units, is plummeting.

Karmazin looks forward to integrating the two companies and cutting costs. When he first arrived at the fancy Sirius offices in midtown Manhattan’s McGraw-Hill building, he reportedly said, “Oh, my God. We have a lease here? Do we know we’re losing money and this is radio?”
Analysts have been skeptical about whether the company can succeed beyond simply cutting costs. Citigroup released a report that suggests that weakness among auto makers is “worrisome” for near-term subscription growth, which will offset some of the positives of the merger.