Nine CEOs Who Will Go By The End Of The Year
Sirius Satellite (SIRI) Mel Karmazin only had the No.2 spot at Viacom. After falling out with controlling shareholder Sumner Redstone, Karmazin decided to take his considerable skills as a media executive elsewhere. At the end of 2004, he took over as CEO of Sirius. He engineered a merger between his company and rival XM Satellite Radio (XMSR) well over a year ago, and that engagement is still hung up in government bureaucracy.
It must have dawned on Karmazin some time ago that, even after a merger, the chances that satellite radio will be a big money maker are exceedingly small. Everything from the Apple (AAPL) iPhone to cell phones and HD radio now compete in the mobile music and programming industry. Sirius and XM are no longer growing rapidly. They depend on new car sales for a large portion of the customer acquisition. Each company has over $1 billion in debt and negative operating income. This is not a good environment for refinancing junk debt. Karmazin may stay to see the deal approved, but there is no reason for him to stay beyond that. His creation has collapsed before it could be finished. This is a job for a restructuring expert.
I know Mel has the reputation for building up business and then selling them off. But do you really think he will bail on SIRI so soon, before all the work he put into negotiating the merger has its effect on the stock price long-term? He is going to want his name to be associated with the turn around of the companies.
The only way I see him gone is if the combined entity is bought out.