Liberty Media CEO says Sirius XM boss Karmazin can be replaced

Thu Sep 20, 2012 12:18pm EDT

* Liberty's Maffei says other executives could run Sirius

* Karmazin's CEO contract ends this year

* Liberty owns 49.6 pct of satellite radio provider

By Liana B. Baker

Sept 20 (Reuters) - Liberty Media Corp Chief Executive Greg Maffei escalated a war of words with Sirius XM Radio Inc boss Mel Karmazin on Thursday, saying Karmazin could be replaced when his contract expires at the end of the year.

Liberty Media is close to taking control of the satellite radio provider, pending approval by the U.S. Federal Communications Commission.

Speaking at a Goldman Sachs investor conference in New York, Maffei said that Karmazin, who has led Sirius XM since 2004, was "valuable" but not "irreplaceable."

"I think there are plenty of people who could do a great job running the business," said Maffei, whose Liberty Media holds a 49.6 percent stake in Sirius XM and has said it plans to raise its stake above 50 percent.

Karmazin's contract expires at the end of the year. He told investors last week that he is open to contract negotiations but that "my instincts today are that Liberty does not need me at the company."

For his part, Maffei conceded that Karmazin deserves "a lot of credit for what he's done" at Sirius and said the board will still pursue discussions with him over a new employment contract.

But "without Mel (Karmazin), the business will not fail," Maffei added.

Karmazin has resisted the idea of working for a controlling shareholder ever since he left Viacom Inc amid friction with that company's billionaire chairman, Sumner Redstone.

Under his watch, Sirius XM has grown to dominate the market for satellite radio in automotive vehicles, with an estimated 70 percent market share of new cars sold in the United States. Karmazin also helped negotiate new contracts to keep Sirius XM's signature talent on the air, such as "shock jock" Howard Stern. The company ended last quarter with nearly 23 million subscribers.

In August, Liberty Media filed an application with the FCC to take control of Sirius XM. The FCC so far has not responded to Liberty's application.

The media holding company reported it owned 49.6 percent of the company on Sept. 13. It acquired more shares in the open market in recent months and has said it plans to boost its stake above 50 percent.

Liberty, controlled by billionaire chairman John Malone, acquired an initial stake of about 40 percent in Sirius in 2009 as part of a deal in which it loaned the satellite radio provider $530 million to help stave off bankruptcy.

Sirius XM shares were up 3.4 percent at $2.58 at midday on Thursday, while Liberty Media shares were down 0.7 percent at $103.12.

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