Sirius Stocks Up on Karmazin Hire

NEW YORK – Sirius Satellite Radio Inc. (SIRI) is bringing in another big gun from the media world, tapping Mel Karmazin (search), the former president of media giant Viacom Inc. (VIA.B), to be its CEO. Its shares climbed 10 percent Friday in the wake of the news.

The announcement late Thursday came just a few weeks after Sirius sealed a $500 million deal with Howard Stern (search), the radio shock jock who has a massive and ferociously loyal following among millions of young men. As it happens, Karmazin was Stern's old boss at Infinity Broadcasting.

In bringing in Karmazin, Sirius has snared a respected, hard-charging and experienced media executive — who also has a deep grounding in radio. Karmazin worked his way up from being a station manager to running Infinity, which became a major radio company that was eventually purchased by CBS, which was in turn bought by Viacom.

In midday trading, Sirius shares were up 47 cents at $5.19 on the Nasdaq Stock Market. That is above its 52-week closing high of $5.01 a share.

Karmazin left Viacom in June after repeatedly clashing with the company's CEO Sumner Redstone. His departure set off a succession battle between contenders MTV chief Tom Freston and CBS head Les Moonves.

In an interview, Karmazin said that after leaving Viacom he longed to return to a rapidly growing company. After discussing potential acquisitions with investors but finding nothing that interested him, Karmazin talked with executives at Sirius and found a perfect match. "It's not just the right thing — it's the only thing," he said.

"I was really blown away by the fact that they had done something with Howard," Karmazin said. "I got really turned on by the people, the organization and what they have accomplished over the last three years."

The hiring of Karmazin is the latest escalation in an increasingly heated competition between Sirius and its larger rival, XM Satellite Radio Holdings Inc. (XMSR), which has more than 2.5 million subscribers versus some 700,000 for Sirius.

Two weeks after Sirius announced its deal with Stern, XM countered with an 11-year, $650 million deal with Major League Baseball (search) that will allow XM to carry games from every major league team beginning next year. Sirius has also signed up the NFL.

Both companies — which have lost a combined $2.5 million over the past 12 years — are spending heavily in hopes of capturing enough subscribers to make back their money and to dominate the emerging market for satellite-delivered radio which, unlike local radio stations, can be heard anywhere in the country.

The news, which was announced after the close of regular stock trading, sent Sirius' shares sharply higher in after-hours trading on the Nasdaq Stock Market, where they gained nearly 19 percent to $5.60. In regular trading, the shares had closed down 23 cents at $4.72.

Karmazin will replace Joseph Clayton as CEO of Sirius. Clayton will stay on as chairman.

Both Sirius and XM are looking to the auto industry for growth, and both have significant investments from automakers. Both broadcasters offer more than 100 channels, many of them focused on specific music genres and talk shows, and users pay subscription fees of $9.95 to $12.95 a month.

Karmazin was considered a highly effective, straight-shooting media executive who was well-liked by investors. Born in modest surroundings in the New York City borough of Queens, Karmazin rose quickly through the ranks of the radio business, eventually becoming the CEO of Infinity Broadcasting in 1981.

He joined CBS in 1997 when it acquired Infinity, and he became CEO of CBS the following year. At Viacom, he was in charge of day-to-day operation of the company's vast media properties, which include CBS, MTV, VH1, the Paramount movie studio and the Simon & Schuster book publisher.