Candidates emerge to succeed Karmazin at Sirius XM

Tue Dec 11, 2012 7:00am EST

* Meyer among names being looked at in CEO search

* Meyer oversees auto relationships at Sirius XM

* CEO could come from media industry, subscriber-based business

* Karmazin steps down in February

By Liana B. Baker

Dec 11 (Reuters) - Jim Meyer, Sirius XM's president of operations and sales, has emerged as a leading internal contender to replace Mel Karmazin as chief executive of the satellite radio broadcaster, according to sources with knowledge of the situation.

Meyer, who arrived at Sirius XM the same year as Karmazin, in 2004, oversees the company's auto industry relationships, which account for the bulk of its revenue.

"At a company as complex as Sirius, with the satellites, media and automotive parts, gluing it all together is Jim," said a source who used to work at the company. "He is the No. 2 and worked with him closely."

A committee led by Greg Maffei, CEO of Sirius XM's majority shareholder, Liberty Media, is conducting a search to find Karmazin's successor and is examining both external and internal candidates. Maffei said on Liberty's Nov. 6 earnings call that the CEO search could take up to six months.

Karmazin, who was hired as CEO of Sirius Satellite Radio in 2004 and orchestrated its merger with XM Satellite Radio in 2008, will step down from his role in February. His decision dovetailed with Liberty's gaining a controlling interest in Sirius XM through a gradual increase in its ownership stake over the past year.

Meyer has a strong relationship with Eddy Hartenstein--Sirius XM's non-executive chairman, who is on the search committee with Maffei, along with board member James Mooney. That may lead to Hartenstein's support, the former company employee said. Meyer worked at Thomson Consumer Electronics, which counted DirecTV as a client when Hartenstein was the satellite TV company's president.

Sources said Meyer is just one of a number of candidates Liberty is considering for the position, and that it is not immediately clear who is the current favorite.

Sources said that Sirius XM's chief financial officer, David Frear, could also be looked at for the top job. Frear has been with the company since 2003 and currently reports directly to Karmazin.

But Liberty -- or more precisely its mercurial billionaire founder, John Malone -- has a penchant for tapping big names from outside of its house to run its companies. The firm, which is known for engineering complicated transactions aimed at avoiding taxes, historically has held stakes in companies rather than operating them outright.

For instance, Malone named former NBC Universal executive David Zaslav as CEO of Discovery Communications Inc, and appointed Irving Azoff as chairman of Live Nation Entertainment, two other companies in which Liberty owns sizable stakes. Malone brought in Maffei as Liberty's CEO after a career in Silicon Valley that included stints at Microsoft Corp and Oracle Corp.

Sources said Liberty could go a similar route and name an outsider to succeed Karmazin.

Macquarie Bank analyst Amy Yong said Liberty wants someone with experience in a subscription-based business who understands companies like Netflix and Hulu and can push Sirius XM to launch more Internet-based initiatives.

One media executive said Liberty wants to land a "forward- thinking radio or television executive" and pointed to the coup scored by terrestrial radio broadcaster Clear Channel Communications in landing former MTV and AOL executive Bob Pittman as CEO as a hire Liberty might want to emulate.

One name that has been mentioned is Hugh Panero, the former CEO of XM Radio who left after the merger with Sirius was announced. Panero, who once worked for a pay TV network that was partly controlled by Liberty Media in the 1990s, has been out of the satellite business since leaving XM Radio. He is currently the CEO of PopDust, a music content website.

Liberty did not return calls for comment. A representative for Sirius XM declined to comment or make Meyer or Frear available for an interview. Panero did not return a request for comment.

Liberty acquired a roughly 40 percent stake in Sirius XM in 2009 as part of a deal in which it loaned the company $530 million to help it avoid bankruptcy. Liberty had to wait until March 2012 before it could increase its stake, which it started doing almost immediately once the lockup was lifted last spring, by acquiring shares on the open market. It now controls nearly 50 percent of the company and is awaiting FCC approval to take full control and replace the board.

Even without the FCC's approval, Liberty already appears to be making the decisions at Sirius XM. For example, Liberty for months talked openly about Sirius XM executing a large share repurchase, which the company did last week, instituting a $2 billion share buyback program and a special dividend that returns about $160 million to Liberty.

TECHNOLOGY VS PROGRAMMING EXPERTISE

Meyer -- as well as Frear -- not only lack the big name recognition of some of the other potential CEOs in Liberty's stable, but also strong programming chops. Meyer is described by sources as a technology guy; Frear's focus is finance.

Sirius XM's programming is currently overseen by Scott Greenstein, who serves as the company's president and chief content officer.

"When it comes to the programming side of the business, I don't think Jim knows too much about that and, quite frankly, he's not that interested," said a second former Sirius XM employee who knows Meyer. "Greenstein is up on that stuff. Jim is not that guy at all."

Lacking programming expertise may not matter. Sources said Liberty is more interested in finding someone with good relationships in the auto industry who can take Sirius XM to a higher level digitally. Indeed, in July, Malone publicly criticized Karmazin for lacking vision and has said that Sirius XM could have done more with evolving technologies.

"It depends on how high profile Malone wants satellite to be," said a third former Sirius XM employee. "I could see rebranding, new forays but those things will take time. If Malone feels like it's going to take a long time, then a technology person could run and convert it. Jim's a technology guy."

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