Mr. Karmazin’s corner office on the 37th floor is a flight of stairs up from Mr. Stern’s studio. He and Mr. Stern have known each other since 1985, when Mr. Karmazin hired the shock jock at Infinity. But he is not responsible for Mr. Stern’s jump to Sirius, having joined the company after that deal.
“Would I like to have seen Howard get less money?” Mr. Karmazin asks. “Yes. But I think any company that deals with content would say the same thing.”
Mr. Karmazin, when asked if he thinks Mr. Stern has lost his place in the culture, says: “I think the size of the audience is less today. And I think one of the things Howard was looking forward to with the merger is that we’ll have twice as many subscribers potentially available to listen to him.”
Mr. Stern declined to be interviewed for this article, but his travails are emblematic of satellite radio and Sirius XM’s own shrinking horizons.
It seems that if Mr. Stern were to stay beyond his current contract, which expires at the end of 2010, he would have to accept less money, given the finances of the company and the fact that there are no longer two satellite radio companies battling each other.
“I really can’t speak for what Howard would do,” Mr. Karmazin says. “You know, heavy expectations believe that he would stay. Because why wouldn’t he stay? He’s having a good time. He’s enjoying himself. He’s paid fairly for it.”
But some Stern watchers think otherwise. “I’m starting to think that he might actually retire,” says Mark Mercer, who since the mid-1990s has written a daily blog about the Stern show, which has become a nearly minute-by-minute account of each program.
“I love the show, and I’ve got nothing better to do,” says Mr. Mercer, 40, who lives in Califon, N.J. Even Mr. Mercer, as diehard a Stern fan as there is, acknowledges that Mr. Stern’s gig doesn’t have the same influence it once did.
“Once you get used to hearing it on Sirius, it’s not as shocking as it was when you heard him on terrestrial radio and they’d be bleeping him out,” he says.
SIRIUS XM’s annual meeting on Dec. 18, held in a basement auditorium of a skyscraper elsewhere in Midtown, featured a crew of shareholders holding forth at two microphones in the aisles; a gray-haired man in a brown suede blazer indignant over the loss of his favorite folk music channel; a self-professed inventor who said he developed a computerized golf cart and had an idea about interactive advertising; and a burly, goateed man who claimed to have lost $1 million on Sirius XM stock and stood in the lobby saying, “It’s time for Mel to go, in my opinion.”
With pursed lips and admirable restraint, Mr. Karmazin addresses every question, from the germane to the ridiculous. His famous temper never goes beyond the quip, “I think it would be helpful if we dealt with facts.”
He stays on message, even though the dynamics of his company — continued revenue and subscription growth, but nothing left in the bank at the end of the day — cannot continue forever.
Mr. Karmazin doesn’t duck responsibility by laying his corporate problems on the economy. He tells shareholders at the annual meeting to consider him the company’s Joe Torre and blame him for any and all problems.
“There’s no question, this company needs to make money,” he tells shareholders. “This company has a lot going for it, but it has never made a dime.”
Shareholders approved two measures that analysts consider to be last-ditch possibilities. One, a reverse stock split, would be a way to avoid a delisting from the Nasdaq; if it weren’t for the recent suspension of rules that threaten the pink sheets for stocks that fall below $1 for more than 30 days, Sirius XM would already be facing banishment.
Another measure, to raise money by selling more stock, would be an extreme preventive measure against bankruptcy. A stock sale is seen as unlikely because it would be dilutive to existing shareholders, but executives want this option in their arsenal in case they cannot refinance the debt.
MR. KARMAZIN is one of the few executives who can say his business really is rocket science. Next year Sirius XM will send another satellite into orbit, at a cost of $250 million to $300 million.
Three rocket scientists report to Mr. Karmazin. Whenever he receives e-mail from the person in charge of the satellite — even if it’s just a birthday wish or a thank-you note — the first words of the message have to be “the satellites are fine.”
“If something’s wrong with the satellites, I’m going to panic,” he says.
Mr. Karmazin likes to say that the company competes against technology — things like digital music players and Internet radio that can be streamed through an iPhone and played in the car — rather than other companies.
Dave Zatz, who lives in Rockville, Md., and writes a blog about digital media, was an XM subscriber but dropped the service after his favorite channel, Chrome — “which is sort of a disco station,” he says — was dropped. Now, he says, he streams Pandora, a popular Internet radio service, through his iPhone while driving.
“The price is right and you can get whatever music you like,” he says.
But those competitive threats remain secondary to the urgency of Sirius XM finding a way to extract itself from the financial vise visited upon it by its heavy debt. Mr. Cheen, the debt analyst at Wachovia, has this stark assessment: “The bare economics of it cannot appropriately service the capital load.”
During the shareholder meeting, Mr. Karmazin acknowledges that bankruptcy is a possibility if the company cannot reach agreement with lenders, but he says it is unlikely.
“You have to play the hand you’re dealt,” he says in the interview. “Right now, I don’t like my hand. But we’ll play it.”