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Karmazin: XM-Sirius Merger 'Good For The Country'
 LOS ANGELES -- September 18, 2007: Sirius Satellite Radio CEO Mel Karmazin accentuated the positive in an early-morning presentation at the Merrill Lynch Media & Entertainment Conference at the Ritz Carlton in Marina del Rey Monday, pointing to Sirius' revenue growth, its consumer-satisfaction rates, and its free-cash-flow prospects -- and, of course, its proposed merger with XM Satellite Radio, which he hopes will be completed by the end of this year.
Karmazin began by pointing out, "We compete with terrestrial radio, Apple iPods -- we know we're part of a robust audio entertainment market."
After running through a brief company timeline, beginning with its 1990 launch as CD Radio, Karmazin said,"For those of you who have not yet decided that it's worth paying for radio, our customer-satisfaction level is over 92 percent."
Karmazin went on to describe Sirius' OEM automaker partners -- including DaimlerChrysler and Mercedes Benz -- as "very committed and very enthusiastic about being involved with our company." He said, "They think we help them sell cars." He noted that, in 2005, the company's OEM partners were installing Sirius in 10 percent of their new vehicles and that, this year, the figure has risen to 40 percent.
Moving on to revenue growth, Karmazin emphasized Sirius' place in the competitive arena, saying, "We compete with the Clear Channels and CBS's of the world, and ... we are the fifth-largest radio-revenue company today." He went on, "There is a radio=revenue company out there that has humongous growth rates, and it's us."
Karmazin did admit, "One of the issues for us is that we don't have any cash flow" but said subscriber-acquisition costs are "dropping significantly," down from about $177 per acquisition to about $100. He noted that Sirius said after adding Howard Stern two years ago that its "content was complete," and added, "There is no more expensive content out there that our company needs ... Now what we're focused on is generating all of that revenue so that we get over the hurdle of those high, fast costs."
Moving on to address the merger directly, Karmazin briefly described the DOJ criteria for merger approval and said, "We don't feel that the government should feel the merger is anticompetitive." The efficiencies to be gained by a merged Sirius and XM, he said, would lead to lower costs to consumers, and that's "good for the country."
Karmazin said, "Over the next few months, we expect to get, and we are optimistic that we will get, FCC approval, we will get DOJ approval, we will have a shareholder meeting and get our shareholder vote, and we hope that the merger will close by year's end."
Describing the merger's expected benefits, Karmazin noted the a la carte packages, starting at $6.99 a month, the combined satcasters plan to offer, saying the added subscribers the lower prices will draw will represent a new revenue opportunity.
Additionally, he said, the merger will accelerate technological innovation to let XM-Sirius better compete in a "very robust entertainment market, especially against terrestrial radio," and will provide "extraordinary" cost synergies -- of between $3 billion and $7 billion -- that will both benefit shareholders and be passed along to consumers in the form of lower prices.
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