Sirius XM CEO Mel Karmazin is bullish on 2012
Sirius XM Radio Inc. Chief Executive Mel Karmazin expects significant revenue growth in 2012 after the satellite radio broadcaster raises its subscription fees for the first time in about a decade.
As part of the Federal Communications Commission's conditions in approving the merger between Sirius and XM Radio in 2008, the company was prohibited from raising its subscription fees for a minimum period of three years.
Starting in January of next year, the price tag for Sirius Select, the most popular package the company offers to its more than 20 million subscribers, will go from $12.95 a month to $14.49, an increase of almost 12%.
Stressing that Sirius XM has not had a price increase since it launched in 2002, Karmazin said at the Bank of America Merrill Lynch Media conference in Beverly Hills that on a daily basis the higher fees come down to about five cents a day.
Karmazin said the company expects to hit $3 billion in revenue in 2011 and $3.3 billion in 2012. He expects the company's free cash flow should jump from $400 million to $700 million and its earnings before interest, taxes, depreciation and amortization to go from $715 million to $860 million.
Deals may also be part of Sirius XM's future. Noting that the company anticipates having $1 billion in cash by next year, Karmazin said, "I'd love to do an acquisition." He did not elaborate on what sort of company would hold appeal for the satellite radio broadcaster and he warned that the money "isn't burning a hole in our pocket."
-- Joe Flint