The Good News for SIRI? Karmazin Likely Out

NEW YORK ( TheStreet) -- We're watching a dog and pony show play out between Sirius XM ( SIRI) and Liberty Media ( LMCA).

The media relations slugs probably have the press releases ready to go:
We would like to thank Mel Karmazin for eight years of service at Sirius XM. Mel oversaw Sirius' merger with XM and took the company from the brink of bankruptcy to one with increasing free cash flow, strong revenue growth and the best premium content available anywhere.

Mel Karmazin, CEO of Sirius XM.

Of course, that's satire. Pure speculation. But, once you step back and take a clear-headed survey of the situation, it's obvious what's happening here. Liberty's recent moves to buy more shares and take what will likely end up a majority stake in Sirius XM should not confuse investors.

Before long, one way or the other, Liberty will run the company. And this is good news for fanboys and girls of satellite radio, as long as they can handle wholesale change.

All year there has been a well-publicized fire sale by insiders and institutions on shares of Sirius XM. Karmazin entered in the middle of it as he decided, coincidentally, it was time to get his charitable endeavors in order. Whether Karmazin decided to up his contributions to Unicef, the National Association of Radio Broadcasters or whomever, this is probably not mere happenstance. Well, maybe it is -- I cannot say for sure -- but a sane and logical person could "sanely" and logically believe a backstory exists.

Karmazin said it himself: I'm not really good at working for somebody, I just could not be a No. 2. Knowing Karmazin's history, I can get with that, but it's also a nice way set up his ouster so it does not look so much like an ouster.

Karmazin did do a remarkable job getting Sirius XM to where it is today. That much is not spoof or satire. But at this point Sirius XM needs a leader (or leaders, but preferably one leader) with vision. It needs a person who sees the future of media, particularly audio entertainment, as a multiplatform, largely social and mobile, endeavor. Stubborn in his terrestrial radio roots, Mel is clearly not the guy. Like Sheryl Sandberg, Karmazin would make a good, though not as good, COO to somebody such as Mark Zuckerberg.

Sirius XM loyalist longs should cease chants of long live SIRI. I will let the Sirius XM peanut gallery argue over the ins and outs of how Liberty will move forward, but I know the best possible outcome:
  • Karmazin exits stage left.
  • The SIRI ticker dies.
  • Sirius XM becomes part of Liberty Media's solid stable, which includes Starz, the Atlanta Braves and interests of various sizes in companies ranging from Barnes & Noble (BKS) to Viacom (VIA)
  • Liberty hires a tech/Internet/new media guy to lead Sirius XM or the cross-platform integration of the company's various interests.

In an age partnership among major and minor players in the media is becoming increasingly commonplace, the possibilities are endless. John Malone is likely not done building out Liberty. And he certainly has the ears of key people at companies such as Viacom to collaborate.

Now he needs to hire a visionary to put it all together and unleash the power of what he has in front of him. I think Malone gets this, but, for whatever reason, Liberty has not completely leveraged the synergistic possibilities.

As far as Sirius XM is concerned, move No. 1 of a new regime should be to take away the moniker "satellite radio" and, not so slowly, transition from satellite to IP delivery of content. Karmazin does not see the future and has no intention of working with those who do. He put in his time. He served his company well. Now, it's time for him to move on, for satellite radio to become nostalgic to some (just like AM radio) and for Liberty to make moves that really matter in the grand scheme of the future.

If this or a similar series of events plays out, I would seriously consider getting long LMCA.

At the time of publication, the author was VIAB in a custodial account for his minor child.

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