Mel Karmazin is on a mission.
Now that the creation of Sirius XM is official, terrestrial radio’s formerly brightest star is after nothing short of total domination of his old medium.
“We’re going to be the most successful company in radio,” Karmazin said in an interview with The Post. “We’re going to be bigger than Clear Channel because we’re growing and they’re going the other way.”
That’s a bold statement considering that Sirius XM’s stock has lost 20 percent of its value since the merger’s closing, the company has yet to turn a profit and is laden with debt.
And that doesn’t begin to describe the David vs. Goliath-like challenge. While terrestrial radio boasts $20 billion a year in ad sales and 235 million listeners, Sirius XM counts just $2.5 billion in revenue and 18.5 million listeners.
But Karmazin isn’t one to settle for second place.
“Mel is a voracious competitor,” said Joel Hollander, the former head of CBS Radio, who worked under Karmazin for 22 years. “When he has a prize in his sights he goes all out for it. He either wants to be the king of the hill or he wants to take his chips and go home.”
To be sure, some of Karmazin’s terrestrial radio counterparts wish that he would leave the sandbox.
“Mel is singularly the smartest media operator out there, regardless of what kind of media we are talking about,” said Citadel Broadcasting CEO Farid Suleman, a Karmazin protégé who must now face off against his mentor. “I wish he would go run a big media company instead of Sirius.”
According to the Carmel Group’s Jimmy Schaeffler, “An awful lot of radio stations are going to have to change considerably in order to compete and grow market share [against Karmazin].”
In short, it seems Karmazin is liking the feel of his slingshot.
While some catalysts for growth – $400 million in cost savings and a quickened pace for generating free cash flow – are well known, the Sirius XM chief finds promise for profit in a new subscriber promotion and increasing retail sales.
“We think that as we roll out more subscribers in the [automotive channel], they are going to want to have a second radio and they are going to want to have it in other places like their home, on their boat, perhaps a wearable product,” said Karmazin. To date, just 20 percent of US households have the service.
Internal data suggest Sirius XM could generate another $50 million for every 1 million subscribers that upgrade to its “Best of Both Worlds” package, which costs $4 extra a month and enables users to package their own set of channels from XM and Sirius.
And only a salesman like Karmazin could see the debilitated auto industry as having the potential to generate at least $350 million in revenue.
By contrast, Karmazin thinks terrestrial radio has no catalysts to speak of, saying, “There’s nothing out there that’s good news for them.”
Not everyone is buying what Karmazin is selling, however.
Last week, Goldman Sachs analyst Mark Wienkes, who has long had a “sell” rating on Sirius, lowered his six-month price target for the merged company to a measly $1. And the National Association of Broadcasters, after vehemently opposing the merger, is now almost dismissive of it.
“We are completely confident that free local radio will continue to thrive,” said NAB spokesman Dennis Wharton. “Given the stock-market crash of Sirius XM, the real question now is whether satellite radio can sustain a viable business.”