Struggle pits John Malone against Mel Karmazin

Could Sirius XM CEO Mel Karmazin, who’s been pretty much his own boss since ankling Viacom in 2004, become No. 2 to John Malone?

The two strong-willed execs are butting heads as Malone’s Liberty Media, Sirius’ biggest single shareholder, filed with the Federal Communications Commission to assume “de facto” control of the Gotham-based satellite radio group.

Sirius wants the FCC to dismiss the request. According to Liberty, Sirius has refused to turn over “passwords, signatures and other information” to facilitate a handover and it wants the commission to weigh in.

A Sirius spokesman declined to comment over the weekend beyond the filings. A Liberty rep wasn’t immediately available.

Liberty Media “respectfully submits this application for consent to the transfer of de facto control of Sirius XM Radio and the various space stations, satellite earth stations, wireless, experimental and other Federal Communications licenses and authorizations held by Sirius and its subsidiaries,” the company said in its filing. It said that restrictions set out in its investor agreement with Sirius, which had prevented Liberty from taking de facto control with a nearly 40% stake, expired earlier this month.

The investor agreement had prevented Liberty from boosting its stake above 49.9% for three years or trying to “influence or control” the Sirius management or board, to which it appoints three directors. Liberty has agreed to stay hands off Sirius and abide by the so-called “standstill” agreement until it hears from the FCC.

Liberty, based in Englewood, Colo., holds a portfolio of media assets, some of which it owns, like Starz and Live Nation, and others where it holds positions, like shares of Time Warner, Viacom — and Sirius. The company is constantly re-jiggering its business by spinning off or combining pieces in part to help investors unlock value in its various pieces.

Liberty lent Sirius over half a billion dollars in 2009, taking a chunk of preferred stock in exchange. Malone is a former telecom and cable mogul and highly regarded, eclectic investor, who also happens to be the single biggest land owner in the U.S.

Karmazin, a longtime radio exec who was running CBS Corp. when it was acquired by Viacom in 2000, is admired for fishing Sirius out of perilous levels of debt and growing the business. Sirius merged with its only rival XM in 2008 and now has a loyal following on Wall Street. It’s not clear if Liberty wants to pursue a particular agenda with Sirius or is mainly looking to keep its options open.

Karmazin famously clashed with Redstone as second-in-command at Viacom and openly admits he doesn’t like to play second fiddle.

Sirius argues that Liberty is still a minority shareholder, although a significant one. Liberty notes that it is the biggest shareholder by far with no other entity owning 5% — the level at which a holding must be reported with the Securities and Exchange Commission.

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