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Mel swells Sirius content

CEO touts big-spend plan

NEW YORK — Sirius Satellite Radio’s new CEO, Mel Karmazin, said Wednesday the company will aggressively court new content in the vein of high-profile pacts with Howard Stern and the NFL.

And he said Sirius has approached Apple Computer chief Steve Jobs about adding the service to the wildly popular iPod. Jobs said no.

In one of his first major appearances since taking Sirius’ helm, Viacom’s former No. 2 defended the company’s big-spending business model and lauded the satellite radio sector as a beacon of growth in a sluggish media landscape.

He called his four years at Viacom a fruitful learning experience.

“What I learned from Sumner (Redstone, Viacom CEO) is that I’m a bad No. 2, and I’ll never be a No. 2. I need to be No. 1,” he told the 2005 Media Summit, a two-day industry confab in Gotham sponsored by the McGraw-Hill Cos.

Sirius’ offices are on the 36th floor of the McGraw-Hill building, where Karmazin said the company will create a sort of consumer corner in a shuttered Hallmark store off the lobby — quashing speculation the space would be a street-front studio for Stern.

Karmazin ankled Viacom last summer. After a two-week vacation — his first in 44 years — he said, “I resolved that I wanted to work. I wanted to be CEO of a publicly traded company that wouldn’t have a controlling shareholder, that was headquartered in Manhattan.”

Sirius wooing

He said Sirius’ Howard Stern and football deals were key in wooing him. Karmazin had a close relationship with the shock jock at CBS but described the relationship as more professional than personal.

“He made our company a lot of money (but) I don’t hang with him. Our lifestyles tend to be a little different. Even I stay up later at night than he does.”

Last fall, Stern shook the media world with a five-year, $500 million deal with Sirius to start in January of 2006, after his current contract with CBS expires.

“I had no idea it was happening. I found out the same way everyone else did … It was a very expensive deal, a very rich deal. I wasn’t there when it was done. But I would have done it,” Karmazin said. He said a million new subs from Stern will more than cover the costs.

In Q&A, he didn’t deny coveting daytime queen Oprah or former President Bill Clinton.

Karmazin said he’d love to put Stern on the air today if he could, but is “happy to wait” until next January and has no plans to “incentivize” Viacom – by handing the conglom a stake in Sirius or otherwise — to let Stern out of his contract early.

‘Call a broker’

“If Viacom or any other company wants to own shares in Sirius, then call a broker,” he said.

“Whether or not we need to be part of any other company in our future — time will tell,” but it’s not in the current game plan, he said, adding, “I can tell you there are a lot of companies who would love to have satellite radio. Why wouldn’t they?”

Shares of Sirius and its larger competitor XM Satellite Radio soared late last year, then got slammed by downgrades from a handful of Wall Street analysts. Karmazin said the analysts were fretting about the stock price, not the company.

Sales are surging and “we have a defined business plan towards profitability … No one is less tolerant of not making money than me,” he insisted.

“It’s a growth company, and the media business is finding it very difficult to find areas of growth,” he said. “Terrestrial radio’s not growing. Newspapers are not growing. And TV stations have become an ‘even-year’ business” — strong during election time, otherwise not.

He noted that Sirius also has a dual revenue stream of subscription and advertising that lets it pursue costly talent and content. The service has 65 commercial-free music channels and at least 55 other channels that can and will air ads – although carefully, and fewer than its commercial counterparts.

Key cars

Content has enabled both Sirius and XM to strike key install deals with carmakers. Sirius has Ford, Chrysler and BMW. XM has GM and Honda. Others, like Nissan and Toyota, want to offer both and let customers decide.

Sirius subsidizes installation, and the automakers take a portion of the $12.95 monthly subscription fee.

Karmazin sees the service expanding to other devices. “I would assume that some generation of MP3 players would have satellite radio,” he said — despite an initial rebuff from Jobs.

“I spoke with Steve Jobs. (The iPod) can have 5,000 songs and they don’t need satellite radio. That’s their current thinking. I think if we do what we want to do with content, it will be an enhancement.”

“We make our money from selling subscriptions, not radios. The more devices that offer our product, the more we make,” he said.

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