Change of Control Heats Up, Mel Karmazin Exits SIRIUS XM

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Mel Karmazin had already telegraphed that his days were likely numbered at SIRIUS XM Radio Inc. (NASDAQ: SIRI). That fight for control from Liberty Media Corporation (NASDAQ: LMCA) is likely coming to a head. The company confirmed today that Mel Karmazin informed the Board of Directors that he will be leaving the company. This is not an instant resignation as the date set to depart is February 1, 2013 after his current employment agreement ends and after a transition period. SIRIUS XM also said that he will be leaving the Board of Directors at that time.

Mel Karmazin said in his quotation that he is confident that SiriusXM’s best years are ahead and the company itself said, “Thanks to Mel, we are well-positioned for long-term growth and value creation.”

Here is where this gets interesting due to that fight for control which we think is effectively all but done. John Malone, Chairman of Liberty Media Corporation (NASDAQ: LMCA) said in the release, “We appreciate the tremendous job Mel has done for the Company in overseeing the merger and delivering outstanding operating performance.  While we understand, we regret Mel’s decision to pursue other interests and are grateful for his willingness to oversee a smooth and orderly transition.”

The SiriusXM Board of Directors has formed a search committee, chaired by Greg Maffei and including James Mooney and Eddy Hartenstein, to consider both internal and external candidates for the Company’s next Chief Executive Officer.

What is obvious here is that this change of control is taking place. We have warned that the change in control may in fact not feel like a normal acquisition. It may not even reward new investors who are having to buy SIRIUS XM at or near multi-year highs. SIRIUS XM shares are down about 2% at $2.81 in the after-hours session.

JON C. OGG

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