Karmazin Shines Up Sirius

A big CEO stock-buy reverses Wednesday's slide.
Author:
Publish date:

Broadcasting his support for Sirius (SIRI) - Get Report, CEO Mel Karmazin bought 1 million shares of the New York satellite radio shop.

The move comes after investors grumbled over the whopping $225 million stock gift Howard Stern and his agent received this week for helping the satellite radio player hit subscriber targets. Sirius fell 6% Wednesday on concerns that Stern might sell the stock.

Karmazin paid $6.21 a share, or $6.2 million, for the shares Thursday, setting off a small rally in the stock. Karmazin now owns 5.5 million Sirius shares. Sirius shares jumped 26 cents, or 4%, to $6.38 in midday trading.

Stern signed on with Sirius in October 2004 for a five-year contract then valued at $500 million. But revenue and subscriber growth targets written into his contract already have helped boost his paper pay by an additional $125 million.

Stern was issued 31.2 million shares this week, coinciding with the debut of his program. The shares were sent to One Twelve, a private holding company set up by Stern.

Sirius registered the shares for resale Wednesday, leading to the rumors of a big Stern sale and the selloff in Sirius stock. But analysts say Stern is unlikely to dump all the shares, given his long-term stake in the company. Some surmise he may instead sell a small chunk to cover some $90 million in taxes related to the stock gift.

Sirius declined to comment on the Karmazin stock buy, saying the purchase speaks for itself.