NEIL CAVUTO, HOST: Sirius Radio (search) really is serious. You thought getting Howard Stern (search) was big? Well, now Sirius Satellite Radio is going video, beating rival XM to the punch. It's teaming up with Microsoft.
Starting in 2006, Sirius subscribers will be able to access two or three channels of video service in their cars. The programming will be geared, in the beginning at least, towards kids.
Joining us now from the consumer electronics show in Las Vegas is the man making all of this happen, Mel Karmazin (search).
Mr. Karmazin, happy New Year to you.
MEL KARMAZIN, PRESIDENT, SIRIUS SATELLITE RADIO (SIRI): Happy New Year to you, Neil.
CAVUTO: Tell me how this will work.
KARMAZIN: Well, I'm not sure that I deserve to get the credit for making this all happen. There are an awful lot of people at Sirius Satellite Radio that have been working at this for a long time.
The automobile companies — Ford, Daimler-Chrysler, BMW, our partners — are interested in making the driving experience as pleasurable as possible. And having a Sirius satellite Radio in the car is a step in that direction.
Because of the great popularity of the DVD in the rear seat of the car, the ability for them to have live television be offered is enhancing the experience. So our partners wanted it.
We developed it. We made an announcement with Microsoft. As a matter of fact, I just left a meeting to do this with Bill Gates, and how many people would leave Bill Gates to do you, Neil?
CAVUTO: Wow. I'm very honored.
KARMAZIN: I did that. OK? But you know, we're very excited about the ability in '06 to be able to have live television with quality as good as you get in the home available to you in the rear seat of a car.
And what that's going to do is to enhance the sales of the product. And from a Sirius point of view, you'll become a Sirius Radio subscriber at $12.95 a month and, for an additional fee, a reasonable additional fee, we'll be able to also give you video along with that.
CAVUTO: Let me ask you about some of the troubles that one of your biggest hires has been having, Howard Stern. A number of conventional radio stations that carry him have been dropping him, because they don't like him constantly promoting Sirius.
What do you make of that?
KARMAZIN: Well, I mean, that's up to these individual radio stations. You know, I've had the benefit of Howard working with me for almost 20 years. He makes you an awful lot of money. He gets you an awful lot of audience.
So you know, if you had to sit there and say there's good and bad about every deal, I would sit there and say, having Howard on my radio station, you know, is an asset.
I can tell you that Howard, for as long as he has been on the air, has talked about his life and what goes on around him. So as an example, when I was at Infinity and Howard was doing a movie with Paramount Pictures, "Private Parts," Howard would talk about that film al the time.
KARMAZIN: You know, we had no financial interest in it, but it was part of his life.
CAVUTO: Yes, but Mel, this is a little different, right? I mean, if you were still running it today and he was still doing this, you'd say something to him, wouldn't you?
KARMAZIN: Well, you'd have to assume that if, in fact, I was there, the question is whether or not he would be leaving.
CAVUTO: Touché. Touché.
KARMAZIN: But let's assume that that happened. I would want to derive the benefits.
I mean, I think people have to focus on the consumer. I know that's something that Sirius Satellite Radio does. And if you're going to focus on the consumer, you have to, I think, keep Howard there. And if Howard says a few things that you may not like, so be it. He's making you an awful lot of money.
But from my point of view and from Sirius' point of view, you know, we're not in that battle. I mean, it's really between Howard and his employer. You know, we have a deal for Howard to start in January of '06. And we're excited.
We're selling an awful lot of radios in anticipation of it, and Howard is a major catalyst in how successful we were in doing our holiday sales.
CAVUTO: Let me ask you a little bit about that. There are a number of analysts on Wall Street who said the initial pop in your stock was unjustified, that it's come back down a little bit since that initial run up, particularly with your hiring, amid concerns that it had run up too far, too fast.
And others who say, Mel, that you can't have two vibrant satellite radio players, and it's either you or XM.
What do you say?
KARMAZIN: Yes. I think they're totally off the mark. I think this is definitely a Coke-Pepsi situation. This is not a Beta Max, VHS.
I think people have underestimated dramatically the size of this market. If you were to take today the size of the satellite television and cable television market, you're looking at almost 90 million subscribers.
So let's assume that satellite radio doesn't get there. I have every reason to expect that it could, because in addition to being in the home, you're also able to get in it your car. You're able to get it in your boat, places where traditional cable and satellite are not.
So maybe you should get 60 million. Maybe it will be 70 million subscribers. And clearly, having a duopoly, two companies in that business, hopefully with Sirius Satellite Radio being No. 1, I think is a viable business for both companies.
CAVUTO: OK. Mel Karmazin, thank you. We have to go to commercial now. But thank you, sir. Best of luck to you. We appreciate it.
KARMAZIN: Good talking to you. Happy New Year.
CAVUTO: Mel Karmazin.
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