Karmazin, XM chief predict sat radio growth
WASHINGTON — Noting radio personality Howard Stern “has always made a fortune for every company he’s worked for,” Sirius satellite radio topper Mel Karmazin told a group of potential investors that he’s looking forward to that trend continuing when the shock jock joins Sirius next year.
Karmazin painted a picture of a future in which the satellite radio market expands significantly every year — a picture similarly drawn by rival XM Radio chairman Gary Parsons, who spoke later to the same group.
In back-to-back presentations at Deutsche Bank’s Media & Telecom Conference on Tuesday, Karmazin and Parsons extolled the growth potential of satellite radio in general while respectively touting their individual companies’ product.
Karmazin cited increasing public awareness of satellite radio, saying 35% of people surveyed could name at least one of the two players in the business. Sirius and XM predict that by year’s end, satellite radio subscribers will total more than 8 million. Sirius has about 1.4 million subs, a company spokesman said. It expects to pass 2.7 million by the end of 2005.
Karmazin said Sirius took in $67 million in revenue last year.
“Admittedly, that’s a small number, but we’re still just starting out,” he said, predicting revenues of $200 million in 2005.
Asked if Sirius was prepared for Stern’s arrival, which probably will require additional marketing and support staff based on an anticipated rise in sales potential, Karmazin replied, “We’re geared up for his arrival in January 2006, but we could be ready if he became available sooner.” Though the fight for market share between Sirius and XM has been heated, XM’s Parsons spoke respectfully of the competition, saying, “We’re saying many of the same things” mainly because “we share a vision of the industry.”
XM recently announced a subscriber count of more than 4 million, and Parsons said he expects that to jump to 5.5 million by the end of the year. In just the past two quarters, XM has added 1.25 million subs, Parsons said, and he expects 2005 revenue to top $480 million. Sirius expects to hit cash-flow break-even by 2007; XM predicts it will reach that point in late 2006.
Asked how the federal government might respond to any antitrust implications should Sirius ever acquire XM, Karmazin drew laughs when replying, “I don’t know. We’d be very happy to consider acquiring (XM), but the body language I’m seeing is they’re not interested.”