Mel Karmazin may not be at Sirius XM Radio
With Liberty Media
"My instincts today are that Liberty does not need me at the company," Karmazin said at an investor conference on Wednesday.
Is the longtime media CEO simply jockeying for leverage, or trying to pin his plans for retirement on a scapegoat? It's hard to say. Karmazin didn't do a good job of selling himself.
"I have historically been expensive," he argued against his favor. "It's very clear to me that if I were Liberty, I would sit there and say I'm not sure we need Mel."
Historically expensive? At 69, it's hard to tell if Karmazin is gunning for a big payday, or orchestrating a proud retirement. Karmazin has certainly made no bones about slashing costs on the content end of his company, even as contracts of some of its more magnetic stars came up for renewal.
Cheap is fashionable
Sirius XM's content and programming costs have declined by 3% over the past year, even though revenue and subscribers have moved higher.
Sirius XM has a major advantage that its satellite television siblings do not. As DirecTV
Deals with professional sport leagues and music royalties may move higher, but Sirius XM can stuff the rest of its channels with proprietary content. It's easier than you think to find capable on-air talent that welcome the opportunity to reach Sirius XM's 22.9 million subscribers without commanding big contracts.
Maybe it's time for fresh thinking
Karmazin was the right CEO at the right time. He helped draw top talent to Sirius. He orchestrated the combination of Sirius and XM as a merger of equals, even though Sirius had fewer subscribers. He has kept costs in check to the point where profitability and cash flow are growing a lot faster than the media giant's top line suggests.
However, it may be time for a change.
Liberty Media's John Malone recently criticized Karmazin, calling his focus "short term" at a time when the company should be ramping up its Web services.
Sirius XM is certainly moving in that direction. The introduction of Sirius XM 2.0 late last year, and the recent rollout of on demand programming for its streaming customers, show that Karmazin isn't afraid of the Web-tethered future.
Before the end of the year -- in what may be Karmazin's final act as CEO -- Sirius XM plans to introduce customized radio to its online accounts.
Taking on Pandora
Karmazin may not be that person. He may not want to be that person, either.
During the company's second quarter call, Karmazin said that the situation regarding his contract should be resolved by the Sirius XM's next conference call in early November. It was easy to believe that he was working on negotiating a contract extension at the time, but maybe it's just a farewell party to give the company a few weeks to drum up a succession plan.
Sirius XM is alive today because of Karmazin. If it thrives tomorrow, it may be because of somebody else.
Running of the bulls
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Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story, except for Liberty Media. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.