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High-flying radio station faces closure
By James Callan |
February 16, 2009, Monday
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Print Edition
Print Edition
MEL Karmazin pushed Sirius shares to US$6 when the company announced his hiring in November 2004. Now his combined Sirius XM Radio Inc faces bankruptcy and the stock is trading at about 10 cents.
Over a career of more than 40 years, Karmazin, 65, drove radio-advertising sales teams to produce double-digit gains, regardless of economic conditions. He orchestrated mergers that reshaped the radio industry and befriended talk-show host Howard Stern. As president of Viacom Inc, under Chairman Sumner Redstone, he oversaw the Paramount film studio and CBS network.
"In the past, it has never paid to ultimately short Mel, but this is a tough one," Bishop Cheen, a bond analyst at Wachovia Securities in Charlotte, North Carolina, said in a Bloomberg News interview last week. "This is absolutely his biggest challenge."
Karmazin took over at New York-based Sirius after clashing with Redstone because he couldn't get the top job at Viacom, one of the world's largest media companies. Sirius, a pay-radio business, had started airing about two years earlier. The company said on Friday that it may file for protection from creditors as early as tomorrow if it can't reach an agreement to refinance debt.
On that day, Sirius XM must repay US$175 million in bonds held by EchoStar Corp, the satellite group run by Charles Ergen. EchoStar bought some of Sirius XM's debt after the firm turned down an unsolicited takeover bid, said a person familiar with the plan. Karmazin is also in talks with John Malone's Liberty Media Corp, which controls DirecTV Group Inc, about a possible deal, people with knowledge of that matter said.
Malone offered Sirius a bridge loan of several hundred million dollars to pay the maturing debt, the New York Post said on Friday, citing a person close to the situation.
Sirius XM has traded below US$1 on Nasdaq since September, when investors worried Karmazin wouldn't be able to manage the debt or meet growth projections.
Over a career of more than 40 years, Karmazin, 65, drove radio-advertising sales teams to produce double-digit gains, regardless of economic conditions. He orchestrated mergers that reshaped the radio industry and befriended talk-show host Howard Stern. As president of Viacom Inc, under Chairman Sumner Redstone, he oversaw the Paramount film studio and CBS network.
"In the past, it has never paid to ultimately short Mel, but this is a tough one," Bishop Cheen, a bond analyst at Wachovia Securities in Charlotte, North Carolina, said in a Bloomberg News interview last week. "This is absolutely his biggest challenge."
Karmazin took over at New York-based Sirius after clashing with Redstone because he couldn't get the top job at Viacom, one of the world's largest media companies. Sirius, a pay-radio business, had started airing about two years earlier. The company said on Friday that it may file for protection from creditors as early as tomorrow if it can't reach an agreement to refinance debt.
On that day, Sirius XM must repay US$175 million in bonds held by EchoStar Corp, the satellite group run by Charles Ergen. EchoStar bought some of Sirius XM's debt after the firm turned down an unsolicited takeover bid, said a person familiar with the plan. Karmazin is also in talks with John Malone's Liberty Media Corp, which controls DirecTV Group Inc, about a possible deal, people with knowledge of that matter said.
Malone offered Sirius a bridge loan of several hundred million dollars to pay the maturing debt, the New York Post said on Friday, citing a person close to the situation.
Sirius XM has traded below US$1 on Nasdaq since September, when investors worried Karmazin wouldn't be able to manage the debt or meet growth projections.
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