Mel Karmazin pushed Sirius shares to $6 when the company announced his hiring in November 2004. Now his combined Sirius XM Radio Inc. faces bankruptcy and the stock is trading at about 10 cents, Bloomberg reported.
Over a career of more than 40 years, Karmazin, 65, drove radio-advertising sales teams to produce double-digit gains, regardless of economic conditions. He orchestrated mergers that reshaped the radio industry and befriended talk-show host Howard Stern. As president of Viacom Inc., under Chairman Sumner Redstone, he oversaw the Paramount film studio and CBS network.
"In the past, it has never paid to ultimately short Mel, but this is a tough one," Bishop Cheen, a bond analyst at Wachovia Securities in Charlotte, North Carolina, said in a Feb. 10 interview. "This is absolutely his biggest challenge."
Karmazin took over at New York-based Sirius after clashing with Redstone because he couldn't get the top job at Viacom, one of the world's largest media companies. Sirius, a pay-radio business, had started airing about two years earlier. The company said yesterday it may file for protection from creditors as early as Feb. 17 if it can't reach an agreement to refinance debt.
On that day, Sirius XM must repay $175 million in bonds held by EchoStar Corp., the satellite group run by Charles Ergen. EchoStar bought some of Sirius XM's debt after the company turned down an unsolicited takeover bid, according to a person familiar with the plan. Karmazin is also in talks with John Malone's Liberty Media Corp., which controls DirecTV Group Inc., about a possible transaction, people with knowledge of that matter said.
The New York Post reported last night that Malone has offered Sirius a bridge loan of several hundred million dollars to pay the debt maturing next week, citing a person close to the situation.
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