Business and Policy Leader Events

Mel Karmazin, CEO of SIRIUS Satellite Radio, Keeps Students “Tuned In” at Stern’s CEO Series

On November 15, Stern students and alumni packed Cantor Boardroom to get the inside scoop on all the headline news being generated about SIRIUS Satellite Radio from the company’s CEO, Mel Karmazin. The audience eagerly received Karmazin’s down-to-earth attitude and forthright discussion about his extensive experience, including 20 years as president and CEO of Infinity Broadcasting and former head of Viacom and CBS. Born and raised in Manhattan, Karmazin fondly remembers working part-time after high school at an advertising agency who’s only appeal, at first, was the promise of air-conditioning. With encouragement from the agency’s owners, Karmazin went to college and began working his way to the top.

Tom Lowry, a senior writer for BusinessWeek who covers media and entertainment conducted the evening’s interview. Karmazin addressed the rapid growth seen in SIRIUS’ subscriber base to nearly three million people since its launch in 2002, and the company’s new line up of leading talent including Howard Stern and Martha Stewart, each of whom will host shows exclusively on the network. Karmazin is confident that the addition of Howard Stern, the controversial radio personality, to SIRIUS’ roster will only add value to the company. In fact, since the announcement about Stern, the top-of-mind awareness of SIRIUS has never been higher and the company’s market share has outgrown that of rival start-up company XM.

Karmazin outlined the fundamental differences between satellite and terrestrial radio. One of the most significant differences is in cost structure. Karmazin noted that SIRIUS has two important streams of revenue (subscriptions and advertising sales), unlike its terrestrial competitors that rely solely on ad sales. This is an important factor when trying to benchmark the success of the company. To measure success in the fast growing new technology product, satellite radio, Karmazin looks predominantly at two factors: subscriber growth and the “churn” factor (cancellations and customer satisfaction). SIRIUS’ strategy for success is to provide a dramatically better listening experience with fewer, or no, ads. Karmazin believes that the market will support both XM and SIRIUS, but recognizes the competition is not exclusively restricted to XM. SIRIUS is also competing for consumer attention with Ipods, terrestrial radio, Internet radio, cell phones and more. Above all, Karmazin’s main concern is ensuring the quality and production of their programming. “The integrity and content are there; We just need to deliver on our promises.”

Watch Mr. Karmazin's interview in its entirety.