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Confidence Becomes Karmazin

Mel Karmazin is not one for modesty. During a keynote at the Media & Money Conference Tuesday, Karmazin - Sirius XM Radio CEO - said the company is clearly soon to be the most successful company in the audio entertainment industry and is probably on the list of the top 25 media companies today. The company is well on its way to becoming profitable, he said.

But as Wall Street sees it, the company is in trouble. The merger was long and costly, landing the company with $2 billion in debt. Both Sirius and XM footed huge bills for personalities like Howard Stern and Oprah Winfrey. And lagging new car sales are shrinking one of the company’s best bets for new subscribers, writes CNET News.

Karmazin thinks Wall Street is short-sighted. “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,” Karmazin said, adding (via paidContent), “but that’s us in the future.” Karmazin points out that Sirius XM has 19.5 million subscribers, making it the second-biggest subscriber base in the cable-satellite space, behind Comcast.

Karmazin spelled it out, saying that even if only 12 million cars are sold next year (and no one has forecast that it will be that low), 6 million will leave the assembly line with satellite radio. Surveys show that 50 percent of the people who are offered satellite with their new car take the option. “That will get us to $300 million revenue growth even if Detroit has a very bad year.”

With about 95 percent of the company’s revenue coming from subscription fees, Sirius XM is unlikely to be badly harmed by the upcoming downturn in the advertising market. Still, many analysts consider satellite radio as a pricey experiment that failed.