NEW YORK — Reinventing himself as the hip-and-cool poster exec for satellite radio, Mel Karmazin wooed Wall Street Wednesday with assurances that Sirius has the goods on larger rival XM.
Delivering the breakfast keynoter at the Bear Stearns media confab in Palm Beach, Fla., the newly installed Sirius CEO also raised the possibility the radio satcaster could up its prices now that the larger XM has increased its monthly rate to match his company’s. He said no such decision has been made, however.
Later, XM exec veep and chief financial officer Joseph Euteneuer insisted XM is the HBO of satellite radio.
But touting his lineup, Karmazin insisted Sirius is the true king. “We are the content leader in all of radio. Shakespeare said it: ‘The play is the thing,’ ” Karmazin said.
Karmazin predicted his outfit will own the morning drive-time once Howard Stern bolts Infinity Radio and takes his show to Sirius in January. He also said Sirius eventually would offer three video channels as a premium service.
The competition between the two companies grew more fierce earlier this week when XM decided to scrap its tiered-rate system and raise its basic package price from $9.99 to $12.99, the same as Sirius.
In return, XM will no longer charge extra for an Internet online service or a premium talk channel that features shockjocks Opie & Anthony.
XM’s rate increase sent shares of both companies up in trading this week. Analysts said the move would prompt greater competition and creates a more sound business model for XM.
Wall Street is entranced by the sat radio biz but questions how it will be able to pay for the costly programming deals struck by both XM and Sirius of late, including the $500 million Sirius paid to get Stern.
Analysts also think both XM and Sirius will have to generate some sort of ad revenue base, which Karmazin said Sirius will do when Stern arrives. He said there could be regional advertising or even city by city.
Among other things, Karmazin said he decided to take the job at Sirius after the Stern deal was cut because it showed that satellite radio was serious about being a player. Karmazin, who started in radio, also was Stern’s staunchest ally at Viacom, which owns Infinity.
Euteneuer said XM, with its 3.2 million customers, will remain the market leader over Sirius, which has just over 1 million subs. XM predicts it will grow its customer base by 2.3 million this year.
XM shares were up 62¢ to close at $33.89 in trading Wednesday. Sirius shares were up 3¢ in trading to close at $5.92.