One-on-One: Mel Karmazin, Sirius Satellite Radio
Sirius Satellite Radio CEO Mel Karmazin spoke of the dual-revenue business model as a key advantage that satellite radio has over terrestrial radio in a one-on-one interview that kicked off the Octagon/Street & Smith’s World Congress of Sports on Tuesday.
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"Every single deal that I’ve ever done, I’ve felt that
I was — excuse the expression — the schmuck that
paid too much money.”Mel Karmazin
Sirius Satellite Radio |
Karmazin, talking to Jack Myers of Jack Myers Media Business Report, noted that advertising will become a larger share of Sirius’ revenue as its subscription base increases.
Karmazin said the “guidance we’ve given to investors is that, short term, we’ll have about 10 percent of our revenues coming from advertising, and that will ramp up dramatically as the audience gets bigger. We ended the year with about 3 million subscribers; the amount of advertising revenue that we’ll have this year will be dwarfed in 2010 when we’ll probably have 18 [million] to 25 million subscribers.” This dual revenue stream, Karmazin said, makes it “hard for terrestrial radio to compete” for expensive content such as sports rights.
Myers noted that many of Sirius’ sports deals were signed before Karmazin came aboard and asked, “Are you concerned you paid too much for some of these?” Karmazin responded, “You always are concerned that you paid too much. Every single deal that I’ve ever done, I’ve felt that I was — excuse the expression — the schmuck that paid too much money.”
Karmazin sees the possibility for broader rights deals in the future. He said media companies may “negotiate more of the rights even if they have to lay it off. As an example, there are people who are talking to us today and saying, ‘We would like you to take our radio rights — not just satellite radio, but terrestrial radio as well — and you can do what you want to with those terrestrial radio rights. You’re in control. As long as you pay me, you can have all of my rights if you figure out a way to monetize it.’ I think there are going to be more of those deals happening in the future.”
Karmazin said Sirius has no plans to launch a baseball channel. “We’ve taken a different approach than our competitor. … Probably 100 major league baseball players have approached our company [about doing a show]. And we basically said [to potential customers], ‘If you want major league baseball and terrestrial radio isn’t giving you enough games, subscribe to XM. We’re not going to try to ambush market them.”
Myers said that Sirius is projected to reach revenue of $1 billion next year, up from about $242 million in 2005 and $600 million this year, which will mean profitability for the company.
