Sirius CEO Karmazin Says Malone May Remove Him With Takeover
Sirius (SIRI) XM Radio Inc. Chief Executive Officer Mel Karmazin said he assumes Liberty Media Corp. will remove him as CEO as part of its plan to take over the satellite radio broadcaster.
“My instincts today are that Liberty does not need me at the company,” Karmazin said today at the Bank of America Merrill Lynch Media, Communications & Entertainment Conference in Beverly Hills, California. “I have historically been expensive. It’s very clear to me that if I were Liberty, I would sit there and say, ‘I’m not sure we need Mel.’”
Karmazin’s contract with Sirius is up on Dec. 31. Liberty said in an Aug. 16 filing with the Federal Communications Commission that it plans to increase its stake to more than 50 percent of Sirius to take control of the company.
Liberty raised its stake in Sirius by 30.9 million shares, the Englewood, Colorado-based company disclosed in a regulatory filing yesterday. The purchases bring Liberty’s common-stock holding to 558.6 million shares, in addition to preferred shares that are convertible into about a 40 percent stake.
Liberty Media CEO Greg Maffei said in June that Liberty liked Karmazin and wanted him to be CEO.
Karmazin said he hasn’t spoken with Liberty about his contract status. His 2011 compensation was about $10.7 million, according to data compiled by Bloomberg.
Sirius fell 3 percent to $2.43 at the close in New York. The shares have gained 33 percent this year. Liberty Media, up 31 percent this year, fell 0.8 percent to $102.52 today.
Liberty intends to spin off Sirius as a publicly traded company once he gains a controlling stake, Chairman John Malone said in July. Gaining control of the company will allow Liberty to execute a Reverse Morris Trust, which involves splitting off Sirius as a separate entity. Liberty Media could then distribute the shares to Liberty shareholders while avoiding paying taxes on the separation.
Maffei said last month that a Reverse Morris Trust is unlikely to happen in the next six months. Karmazin’s contract would expire by then. Karmazin said today he would consider staying if Liberty spins off the company to public shareholders.
“There is no question eventually Sirius will be an independent company,” Malone said in July. “The question is, in what time frame and in what circumstances?”
Malone got the Sirius stake after providing a $530 million loan in 2009 that kept the satellite broadcaster out of bankruptcy. The investment agreement barred Malone from attempting to gain control of the radio provider for three years.
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