Sirius XM CEO Mel Karmazin to step down

Tue Oct 23, 2012 6:37pm EDT

Mel Karmazin, CEO of Sirius XM Radio Inc., takes part in a panel discussion titled ''The Entertainment Industry: A Billion Ideas in Search of an Audience'' at the Milken Institute Global Conference in Beverly Hills, California May 2, 2012. REUTERS/Danny Moloshok

Mel Karmazin, CEO of Sirius XM Radio Inc., takes part in a panel discussion titled ''The Entertainment Industry: A Billion Ideas in Search of an Audience'' at the Milken Institute Global Conference in Beverly Hills, California May 2, 2012.

Credit: Reuters/Danny Moloshok

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(Reuters) - Sirius XM Radio Inc Chief Executive Mel Karmazin will step down in February, a move that comes at a time when media mogul John Malone's Liberty Media Corp is trying to wrest full control of the satellite radio broadcaster.

Shares of the company were down 2 percent at $2.81 in trading after the bell on Tuesday.

Liberty, Sirius's largest shareholder with a stake of just under 50 percent, has been trying for months to wrest control of Sirius and has filed a petition with U.S. regulators to replace the company's board. Liberty has argued that Sirius should be more aggressive about pursuing better technology and expanding internationally.

Karmazin, who famously clashed with Sumner Redstone while at Viacom Inc, is known for his disdain of working for a controlling shareholder, and has indicated that Liberty likely wouldn't need him to stick around if it took control.

Karmazin, who has been at the helm of Sirius for eight years, will step down on February 1, 2013, after the expiry of his employment agreement.

"This is not overly surprising as Karmazin's public musings about the possibility of leaving as Liberty takes over have left most institutional investors we speak to expecting a departure," Lazard Capital Markets analyst Barton Crockett wrote in a note.

Under Karmazin, Sirius has grown its subscriber count to 23.4 million, and maintains an estimated 70 percent market share of pre-installed satellite radio in new cars sold in the United States.

"We will keep our foot on the gas and continue driving ahead to finish 2012 and lay the groundwork for 2013 and beyond," Karmazin wrote in an email to employees.

"I'm looking forward to seeing - and listening to - all that is ahead for SiriusXM in the years to come."

Sirius said its board formed a search committee to consider both internal and external candidates for its next CEO.

"While we understand, we regret Mel's decision to pursue other interests and are grateful for his willingness to oversee a smooth and orderly transition," Liberty CEO John Malone said in a statement.

Liberty 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.

In August, Liberty said it plans to spin off its premium pay-TV network Starz LLC into a separate public company in a deal seen as taking a step closer to taking control of Sirius XM.

Liberty Media said it was considering a tax-free spinoff of its 46 percent stake in the satellite radio provider.

The discussion around an imminent Liberty-Sirius deal boosted Sirius shares as they touched a year-high of $2.97 in mid-October.

Liberty shares were down 58 cents at $109.81 in extended trading on Tuesday.

(Reporting by Supantha Mukherjee in Bangalore and Liana B. Baker in New York; Editing by Saumyadeb Chakrabarty and Akshay Lodaya)

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