Mel's Sirius Decision

Former Viacom (NYSE: VIA  ) Chief Operating Officer Mel Karmazin being named CEO at Sirius Satellite Radio (Nasdaq: SIRI  ) shouldn't have come as much of a surprise. Just over a month ago we had written about that possibility when Howard Stern told his radio audience that some of his friends from Viacom might be joining him at the satellite radio upstart.

Ever since Karmazin resigned from Viacom back in June, we wondered where he would wind up. Helping guide CBS to the top of the television ratings heap looks good on any resume. and he had often been mentioned as a potential successor to Michael Eisner over at Disney (NYSE: DIS  ) .

Yet Sirius is a perfect fit for Karmazin. Succeeding at Sirius would mean that both XM (Nasdaq: XMSR  ) and Sirius will have nibbled away decisively at free radio's market share, and that would sting his former company given its exposure to traditional commercial radio.

Having a prolific name at the helm also gives Sirius instant credibility. Karmazin's contacts should help secure more big-name broadcasting talent interested in making the migration to satellite radio. It's definitely been good for the shares of Sirius, as the stock was trading at $5.60 last night after Karmazin's post was officially announced.

Last month, I proposed that Sirius was worthy of being considered for our new Rule Breakersgrowth stock newsletter, and it has risen by better than 50% since. We can't ignore valuation. We can't dismiss the fact that the company has tacked on $2.5 billion in market cap over the past month.

Pullbacks are bound to happen. It comes with the high-flying territory. Yet with Stern and now Karmazin on board, it's hard not to like Sirius' chances in the long term.

Did Karmazin's move to Sirius take you by surprise? What did you think of Stern's performance on David Letterman's show last night? All this and more -- in the Sirius discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz thinks that satellite radio will be a huge industry in the years to come. He owns shares in Disney but not any of the other companies mentioned in this story. He is a member of theRule Breakersanalytical team, seeking out tomorrow's great growth stocks today.


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