Mel Karmazin, the hard-charging broadcasting executive who left Viacom Inc. after clashing with chairman and chief executive Sumner M. Redstone, is taking command at Sirius Satellite Radio Inc., which will reunite him with longtime ally Howard Stern.
Landing Karmazin yesterday was the second high-profile coup for New York-based Sirius, which has nearly 800,000 subscribers but stunned the industry last month with a five-year, $500 million deal to lure radio shock jock Stern from Viacom at the start of 2006.
"I had absolutely no interest in running another large company," Karmazin said in an interview. "I had been there and done that. Given a choice of climbing the mountain or sitting on top and looking out, I'd choose to climb the mountain."
While he did not discuss the move with Stern, whose career he nurtured at Viacom despite mounting fines from federal regulators, Karmazin said of his new company: "When they made that decision to hire Howard, it truly transformed satellite radio." He also cited Sirius's deal to carry National Football League games.
The hiring steps up Sirius's competition with Washington-based XM Satellite Radio Holdings Inc., which has 2.5 million subscribers and recently signed longtime National Public Radio host Bob Edwards. Last month, XM also won the right to air Major League Baseball games.
The job of Sirius chief executive was not vacant, but the current chief executive, Joseph P. Clayton, said he decided not to pursue an extension of his contract, which expires next month. Clayton will remain chairman of the board. "When you have a chance to draft A-Rod," a company cannot pass it up, Clayton said, referring to baseball superstar Alex Rodriguez.
Industry analysts praised the hiring. "Karmazin is the showman, he's the ringmaster who's going to bring in the next half-dozen NFL- and Stern-sized deals," said radio consultant Holland Cooke.
Karmazin "brings a lot of star power," said Tom Taylor, editor of the trade publication Inside Radio. "He's been a star on Wall Street for a couple of decades. The klieg lights just got turned on at Sirius. And Mel is nothing if not a workaholic."
Hours before the announcement, Stern handed out about 1,000 satellite radios and coupons for free radios in Manhattan's Union Square to entice people to subscribe to $12.95-a-month Sirius. XM's monthly fee is $9.99.
Karmazin, who began his career as a $17,500-a-year ad salesman for New York's WCBS radio in 1967, is largely responsible for the success of Viacom's Infinity Broadcasting Corp. He and two partners founded Infinity with three stations for $10 million in 1981, played a key role in syndicating Stern and Don Imus, and later sold the company to Viacom for $18 billion, Karmazin said. Now he will be taking on not just his former employer but also what industry officials call traditional "terrestrial" radio.
"I don't think of myself as competing against Viacom at all," Karmazin said. "Viacom has amazing assets. But satellite radio is good for the radio business. . . . There's a pretty big pie out there."
Karmazin was widely seen as the likely successor to Redstone after the company bought CBS in 2000. But he resigned as president in June after a lengthy power struggle, saying that "this issue of Mel-Sumner . . . is not going away." Karmazin collected $35 million in bonuses and salary under his unusual contract.
Asked about moving from a $60 billion conglomerate to a $6 billion fledgling firm, Karmazin said Sirius's assets are "not chump change." He said he spent a month negotiating the deal, studying the Sirius business plan and performing "due diligence" on its finances. Besides, he said, "I love the radio business."
While Stern said he is jumping to Sirius in large part to escape the regulatory oversight of the Federal Communications Commission, which has repeatedly fined stations carrying his sometimes raunchy show, Karmazin said that is not a concern of his. Even without the FCC, he said, "we still want to attract advertisers" and be a "responsible broadcaster."
Sirius has added nearly 200,000 subscribers since announcing the Stern deal, and Karmazin seemed undeterred by the challenge of persuading more people to pay for a medium of music, sports and entertainment that has always been free. At some point in the future, he said, "I can't imagine there will ever be a car sold without satellite radio."