CHARLIE ROSE:  Mel Karmazin is here.  He is the CEO of Sirius XM 
Radio.  Nearly 20 million listeners across the country subscribe to this 
service.  Previously he was CEO of CBS and COO of Viacom.  

	The last few years have been challenging for him and his company after 
Sirius XM announced their merger in February, 2007, the government took 17 
months to approve the deal.  Last February in the midst of the financial 
crises, the company was forced to seek out emergency funding and loans.  
Karmazin has called these efforts to save Sirius XM the biggest success of 
his career.  
	
	I am pleased to have Mel Karmazin at this table.  Welcome back.  

	MEL KARMAZIN:  Good to be here, Charlie.  

	CHARLIE ROSE:  So how close did it come that you were not going to 
make it?  

	MEL KARMAZIN:  Very close.  And the reason it was very close was that 
Lehman Brothers failed September 15th.  We needed to refinance $1 billion 
of debt.  We were unable to move in a timely manner.  Everybody was 
interested, they loved the story, but they weren’t prepared to do it.  

	Our lawyers advised us that since you can’t be sure that you’re going 
to get the financing, you have to have a plan b, and you should be 
preparing for a plan b.  

	And they then said to me that if in fact you’re not going to make it, 
it’s real important to know that early on so that you can preserve whatever 
cash you have, because if you’re going to continue to pay your debt, pay 
your interest and stuff, you’re going to tap into this cash that if in fact 
you don’t make it, you’re going to need while you’re not making it.  

	So we’ve gone down two paths, and we met it.  So some people compared 
it to -- not me, and this is radio, not life and death -- but there was an 
airplane that landed in the Hudson, you know, and everybody made it.  And 
you want to believe that every plane could do that and every pilot can do 
that.  

	And it was sort of characterized that we did it.  Our baggage got a 
little wet, but we managed to navigate through it and the rest is history.  

	CHARLIE ROSE:  What did you give up for that?  

	MEL KARMAZIN:  We gave up something that we were prepared to give up 
to a lot of companies, but only one company came to the finish line fast 
enough, and that was Liberty Media led by John Malone and Greg Mafay.  And 
we agreed to board $530 million at 15 percent interest, which was just a 
little bit less than Tony Soprano would lend me.  

	(LAUGHTER)

	CHARLIE ROSE:  At the time the market was such that if anybody was 
lending...  

	MEL KARMAZIN:  The argument was, I thought 15 percent, oh my god.  But 
GE and the Goldman Sachs were borrowing money from Warren Buffett at 10 
percent and equity.  

	CHARLIE ROSE:  And some were saying what a great deal for Warren 
Buffett.  

	MEL KARMAZIN:  And by the way, it must have been a big deal for FE or 
for Goldman because they wouldn’t have taken it.  

	CHARLIE ROSE:  Except the fact that he’s willing to invest in your 
company gives you a certain added value in public perception.  

	MEL KARMAZIN:  Which makes it a good dale for you as well, because if 
Goldman Sachs can say, Warren Buffet is an investor... 

	CHARLIE ROSE:  And you could say in media that’s true about John 
Malone.  

	MEL KARMAZIN:  And John Malone is very smart.  

	And so what we’ve done is, in addition to borrowing the money at 15 
percent, we also gave him equity for 40 percent of the company, which meant 
that we preserve 60 percent for our existing shareholders.  

	Six months later, we paid back John Malone the $530 million that he 
lent us because we were able to refinance at lower debt.  He made a profit 
on that refinancing, and his equity today is worth over $1.5 billion.  

       So he’s gotten the money back.  This equity is worth $1.5 billion.  
The equity that we preserve for our shareholders is now worth $2.5 billion.  
So the company has about $4 billion worth of equity.  And you think about 
had things not gone right, that we might have had to refinance all of that 
debt.  

	CHARLIE ROSE:  But the question that comes out of that too is if not 
John Malone there was other people prepared to come to the rescue of Sirius 
XM.  

	MEL KARMAZIN:  Interestingly, I had spoken to 22 different companies 
about it.  And you know, lots of people weren’t interested in it.

	But shortly after one company, Dish Network announced their 
interest...

	CHARLIE ROSE:  Charlie Ergen.

	MEL KARMAZIN:  Charlie Ergen’s company.  And when they announced their 
interest, the floodgates opened up.  And suddenly, not just Liberty, but we 
were in negotiation pretty far down the road for two other household name 
companies in addition to Liberty that were interested in the deal in 
addition to Dish Network.  

	CHARLIE ROSE:  But the fact that Charlie Ergen of Dish Network was on 
the trail was a huge impetus for you to go make a deal.  

	MEL KARMAZIN:  I think the fact is that once he was interested, 
suddenly the others said, gee, why is he -- why is he interested?  So 
suddenly we went from not wanting to have anybody dance with us to where we 
were becoming one of the prettiest people at the dance.  

	So other companies said if he’s interested, let us look at it.  A 
bunch of people did due diligence on it and saw that there was really 
value.  This was a classic example of a company that has a good business 
model, company’s a great product, but really has a very, very ugly, ugly 
balance sheet and an awful lot of debt.  So if we could clean up that debt 
for him, we could help make this company very valuable.  

	CHARLIE ROSE:  That’s what he was doing buying the debt, wasn’t he?  

	MEL KARMAZIN:  Charlie bought some of the debt as did Liberty Media 
bought some of the debt.  

	So EchoStar, I know, Charlie, the company was doing it, and the 
company didn’t make our shareholders as good an offer as we got from 
others, OK.  They were trying to drive a harder bargain because they 
believed they were the only ones to do the deal.  

	CHARLIE ROSE:  Did anything about that surprise you?  

	MEL KARMAZIN:  No.  I’ve known Charlie for a long time, and he’s a 
very astute businessman.  He has built up a company up from zero to 
billions of dollars.  He’s a billionaire, a very smart guy.  And I think in 
how he handled our situation, he just was pushing too far.  

	CHARLIE ROSE:  Let’s talk about business landscape that Sirius 
operates in now.  The merger was getting the government approval, took a 
long time.  

	MEL KARMAZIN:  Well worth it, well worth it, because there was no way 
that we could have captured the extraordinary synergies of the two 
companies.  

	The year before the merger, the two companies combined lost about $566 
million EBITA.  It’s complicated, but it lost about $566 million.  The 
first year after the merger there was a swing of $1 billion.  

	And the swing isn’t because of the great management of the CEO, the 
swing is because of the synergies of having the two companies come together 
and eliminating the duplication and rationalizing the cost.  

	So the 17 months were gruesome.  I mean, if it took us 17 months, I’m 
sure the government’s going to spend five years with Comcast and NBC.  If 
radio is worth 17 months, what about all these other companies?  

	CHARLIE ROSE:  So what percentage of the market for satellite radio 
does Sirius XM now own.  

	MEL KARMAZIN:  One-hundred percent.  

	(LAUGHTER)

	CHARLIE ROSE:  That’s what I thought.  

	MEL KARMAZIN:  Of the satellite radio market, but that’s not the 
market, because the market has am/fm radio and all this other stuff.  

	CHARLIE ROSE:  So what’s happening to terrestrial radio, as they say, 
regular radio all of us know and grew up with?  

	MEL KARMAZIN:  I think it just proves the same thing that’s evolving 
with all media.  AM radio started in 1920.  It’s still here today.  So it’s 
not growing and there’s less people listening to it than there used to be 
and there’s less people advertising than they used to, but it’s still 
around.  

	And AM yielded to FM radio, and in the mid 60’s FM came along and more 
listening went on FM and more advertising went on FM.  And now we’re here 
today, more advertising more subscribers, more listeners are going to come 
to satellite radio, but AM will still be around, there’s FM.  You’ll get in 
your car, there’s an AM button, an FM button, and there’s a satellite 
button.  

	CHARLIE ROSE:  But what’s the profit future?  

	MEL KARMAZIN:  I think the profit future is less than it has been, 
very fair.  

	And I’m not one of the people who say I’ll be in any business at a 
certain price.  John Malone will say I could buy a newspaper, I can buy an 
AM radio station.  As long as I buy it at the right price it’s worthwhile 
doing.  

	For me I have no interest in doing that.  For me I have only 
interested in being part of growth companies, and that was sort of what 
made me come here to begin with.  So I think there will always be an AM 
radio station, an FM radio station.  They’ll just be making a lot less 
money than they’re making today.  

	CHARLIE ROSE:  We’ll sit here five years from now.  What businesses 
will you be in that you’re not in now?  

	MEL KARMAZIN:  I had a meeting on that subject today.  Now that we 
have the debt issues fundamentally behind us, things are going well today.  
What is the next step?  What is it that we would fantasize over having part 
of our portfolio?  

	And I know what we don’t need and don’t want, but I don’t really have 
anything.  I really can’t tell you boy if in fact we can get the financing 
and if in fact everything was right, I would love to own a television 
station.  I don’t want to do that.  I don’t want to own newspapers.  I 
don’t want to own radio stations.  

	CHARLIE ROSE:  So what do you want to own?  

	MEL KARMAZIN:  I think what we have right now is a good business and 
we’ll continue to grow it, and as opportunities come up in the future I 
will certainly look at it, and I will have the financial capacity to do it.  

	But I don’t think you have to think that way.  In other words, I don’t 
think that in you are a cable company, you need to say you have to own 
content, because it’s interesting that one cable company very recently said 
we want to own contest.  

	CHARLIE ROSE:  Comcast.  

	MEL KARMAZIN:  Comcast with NBC.  Then there’s this other company 
called Time Warner that said we have this cable.  

	CHARLIE ROSE:  Oh well.  

	MEL KARMAZIN:  Not oh well, but we have these cable systems.  So we 
have the cable systems on one cable, and we have this content.  But we want 
to split it up.  Within months of each other, Comcast says I want to own 
content, Time Warner says I want to put them separate. 

	CHARLIE ROSE:  This is the old debate do you want to be in 
distribution or content.  Did you have a favorite between those two?  

	MEL KARMAZIN:  My favorite was always content.  The one day I paid 
attention in school, and Shakespeare said The play of the thing."  So I 
still remembered, you know, the play is the thing.  

	(LAUGHTER)

	So I was always a believer of wanting to have content, whether it be 
Howard Stern or the NCAA for the NFL, I wanted to have great content.  And 
I thought no matter what distribution was out there, if I had the content, 
the distribution would want to carry my content.  

	CHARLIE ROSE:  That’s one thing you and some of the rest don’t agree 
on.  

	MEL KARMAZIN:  I think that’s true.  

	CHARLIE ROSE:  What else do you share?  

	MEL KARMAZIN:  Very little else that I can think of.  

	CHARLIE ROSE:  Are people worried about what’s happening to Viacom and 
CBS?  

	MEL KARMAZIN:  I don’t know who is worried about it.  I’m not.  I mean 
-- 

	(LAUGHTER)

	CHARLIE ROSE:  Come on, great companies.  Anybody who is involved in 
reading the business press knows that Red Stone has some issues about 
having finance debt.  Am I right or wrong?  

	MEL KARMAZIN:  Well, I think every company that has debt has now 
learned they should worry about it, because it’s no longer a matter of fact 
you are going to be able to refinance it.  So you have to be very prudent, 
and hence what we’re doing.

	I think what you have are two of the greatest companies in the world.  

	CHARLIE ROSE:  Radio and Viacom -- CBS and Viacom. 

	MEL KARMAZIN:  Yes.  I think CBS is, you know, great television 
network.  You sit there and you put great content on.  CBS will have the 
Super bowl this year and it will be the most watched show on television.  
Viacom has some great cable networks that are doing phenomenally.  There’s 
great talent in that company.  They’re great.

	Will they ever have the cash flow or will the stock price have to be 
where it was when I was there?  It’s just a different time.  

	CHARLIE ROSE:  What do you think?  

	MEL KARMAZIN:  It’s just not going to be.  

	CHARLIE ROSE:  Right.  Does that mean it should never go apart?  

	MEL KARMAZIN:  No.  I’m saying even if it were together today, because 
you can take a look at companies like News Corp and Disney and other media 
companies that didn’t split things apart, they didn’t fare that much 
better.  

	CHARLIE ROSE:  OK, but I repeat my question.  Should it have been 
split apart?  

	MEL KARMAZIN:  No, of course not.  If you ask me a direct question 
I’ll give you a direct answer.  

	(LAUGHTER)

	No, it never should have been.  You want to have all of these assets.  
You want be able to take the slow growing assets and have the cash flow 
there to help the fast growing assets.  No, you want to be stronger and 
bigger, and I would never have done it.  

	CHARLIE ROSE:  OK, Howard Stern.  

	MEL KARMAZIN:  Great partner.  An absolutely incredible moneymaker for 
us as well as for himself, and a unique tenant.  I think probably the 
single most influential, most successful radio personality in the history 
of radio.  

	CHARLIE ROSE:  More than Arthur Godfrey?  

	MEL KARMAZIN:  More than Arthur Godfrey, that’s what I was about to 
say.  All I know is what I read about what Howard is making.  Arthur 
Godfrey He never made $500 million dollars.  

	CHARLIE ROSE:  Put the $500 million in context for me.  You came to 
him.  He was then working for CBS Radio I guess at the time.  

	MEL KARMAZIN:  I was gone.  

	CHARLIE ROSE:  You were gone.  

	MEL KARMAZIN:  I was at CBS and I hadn’t yet come to satellite radio.  

	CHARLIE ROSE:  And they made a deal.  

	MEL KARMAZIN:  They made a deal for Howard.  You had the two satellite 
radio companies, both interested in Howard, both Sirius and XM were 
interested in it.  You had terrestrial radio that was interesting.  Howard 
was in the driver’s seat in selling his services.  

	Everybody knew the audience that he generated.  Everybody knew the 
kind of advertising revenue he’d generate.  And there was an old-fashioned, 
you know, auction.  

	At one point, Howard came to the conclusion then that he wanted to go 
to satellite radio.  He didn’t want to have to deal with the FCC, he didn’t 
like censorship.  

	CHARLIE ROSE:  He wanted to say what he wanted to say.  

	MEL KARMAZIN:  He wanted to say what he wanted to.  And he negotiated 
a -- what turned out to be a great deal for Sirius because of the awareness 
that it created, the fact that we got a tremendous number of subscribers 
because of it.  And also got paid fairly -- in his opinion, not enough, but 
got paid fairly for what he brought to the table.  

	CHARLIE ROSE:  Honestly, does he have the impact on Sirius that he had 
went he was with terrestrial radio?  

	MEL KARMAZIN:  I think it’s sort of like saying HBO versus the 
broadcast networks.  So if by influence you mean is it available, free, 
ubiquitous.  Well, is it free and ubiquitous?  Do more people watch the 
broadcast network than watch HBO?  Yes, a lot more.  

	Can you be influential with a program or a performer on HBO?  And I 
think the answer is he has less audience than he had before.  So if that is 
influential, then so be it.  But I think his credibility in his brand is so 
much better by not having to be censored and him to be free, to do the kind 
of program he creatively wanted to do.  

	CHARLIE ROSE:  You are now in contract negotiations with him.  

	MEL KARMAZIN:  No.  

	CHARLIE ROSE:  Will you be at some point?  

	MEL KARMAZIN:  Yes.  

	CHARLIE ROSE:  His contract will be up when?  

	MEL KARMAZIN:  His contract is up in December of 2010, and we have not 
begun.  But, as I said, he’s a great partner and my hope is I be able to 
figure out a way to keep him.  I like him.  

	CHARLIE ROSE:  You have also said in your inimitable manner, probably 
he thinks we’ll not offer him enough and we think we’re offering him too 
much.  

	MEL KARMAZIN:  I know where that came from.  In other words, it was 
somebody asking me a question about when will the contract?  Well I don’t 
know when the contract.  Well what’s the process?  How does it usually 
start?  And I said it usually starts with Howard’s agent saying I want this 
and I’m sitting there saying I want that.  

	But I had a long history with Howard.  Every single deal whether or 
not it was Simon & Schuster doing his book or Paramount doing his movie, 
whether it was the radio stations carrying his show, we all made a lot of 
money with Howard.  And my experience is I would like to continue to do 
business with him.  

	CHARLIE ROSE:  What’s the genius he has?  

	MEL KARMAZIN:  I think Howard has a way of relating to the audience 
that is so unique.  He is honest.  He bears everything that’s going on in 
his life.  He says something that people are afraid to say.  

	He will have guests on and he will ask the question that nobody else 
will ask, and therefore they may not get that guest on again.  People will 
shy away from him.  So there are many people who won’t want to be a guest 
on because -- won’t want to be a guest on Howard’s show because his candor 
and how direct he is.  

	He’s funny.  He’s entertaining.  But he’s not a standup comedian.  
Howard does four to five hours of live radio every day.  Most comedians 
have an act, and that act is like an hour, and they do that same act over 
and over again.  So it takes a unique person, and Howard is so unique and 
that’s why we’re talking about him, there’s not 20 of them, you know.  

	CHARLIE ROSE:  That’s right.  Well Don Imus, too.  When Don had lost 
the two relationships he had, one with CBS Radio, were you right there come 
in a second.  

	MEL KARMAZIN:  No.  I was sitting there saying shame on them, OK.  
Shame on... 

	CHARLIE ROSE:  You had a place.  You could have said come be with me.  

	MEL KARMAZIN:  And if I believed that I could generate enough 
subscribers, OK, to pay the money that Imus would want, OK, I would 
absolutely have no reservations about doing it.  

	CHARLIE ROSE:  What about Martha Stewart and Oprah Winfrey and all of 
that comes under your umbrella, because Oprah was with XM and Martha was 
with you.  

	MEL KARMAZIN:  And we just extended our contract with Oprah for a 
number of years.  We’ve expended our agreement with Martha Stewart for a 
bunch more years.  

	So yes, I mean, we think it’s all about content, and I think that at 
the end of the day when traditional terrestrial radio is cutting back on 
their cost because their revenue’s not growing, so the way that they need 
to react is to spend less money.  

	They’re spending less money on talent and we’re spend is more money on 
talent because we think the play is the thing, and we think at the end of 
the day people are going to listen to what’s compelling.  

	And whether or not if "The Charlie Rose Show" that we offer that’s 
compelling or whether or not it’s FOX News that’s compelling or CNBC that’s 
compelling or Martha Stewart or Howard Stern, all of those things are part 
of our service.  

	CHARLIE ROSE:  Tell me about the advertising world and where it’s 
going.  

	MEL KARMAZIN:  I think that there is too much inventory.  I think that 
the Internet has changed obviously -- I don’t know how many people have 
been on this show and said that -- but has changed the world.  And what’s 
happened is that there is far more supply than there is demand.  

	So a business that needs to support itself by advertising only is 
challenged, you know.  And that’s why people have said I want to own cable 
networks, because I get a dual revenue stream, because I’m worried about 
that revenue.  

	And in the world where the Internet, people are reluctant to pay for 
content on the Internet.  The way that’s going to be supported is by 
advertising, and there’s just not enough advertising to go around to 
support all of this content that people want to offer.  So I think it’s a 
buyer’s dream to where they can negotiate.  

	CHARLIE ROSE:  In other words, if you want to put an ad on some method 
of distribution, you’re on the driver’s seat.  

	MEL KARMAZIN:  Yes.  If you got the money and you’re sitting there and 
saying I could buy terrestrial radio, I can buy Internet radio, I can buy 
satellite radio if I wanted to buy radio.  Make me an offer, and then the 
buyer decides.  

	And the same thing is true of video.  I can run that advertising on 
Hulu.  If CBS is going to charge me too much money, I’m going to put my 
money in some other places.  And you can see what’s happening to the 
advertising revenue in traditional media.  It’s just gone the wrong way.  

	CHARLIE ROSE:  And so therefore they’re in trouble.  They’ve got a 
crutch that nobody seemed to have a way out of it.  

	MEL KARMAZIN:  And that’s really the challenge.  So all these 
companies have a digital strategy, but the digital strategy is less than 10 
percent of their revenue.  So that less than 10 percent of their revenues 
growing, but the 90 percent is falling faster than that 10 percent.  

	CHARLIE ROSE:  The revenue they can get from transferring to digital 
is 10 percent from what they got from analogue.  

	MEL KARMAZIN:  Yes.

	I think people are still watching television.  We just did a 
television campaign.  We were media buyer.  Where do we want to advertise 
to get people to say Sirius Satellite Radio is no longer this company in 
government limbo waiting for merger?  We no longer have this refinancing 
risk.  We’re back in business, so where do we spend our advertising money?  

	Where did we put the vast majority of our advertising money?  In 
television because the most number of eye balls are still there.  Where do 
we put it?  We put it into live television, we put it into NFL games, we 
put it into events where people weren’t recording it on their DVR because 
we wanted people to watch it live.  

	So I still think forget the business model they have.  The largest 
audience is still going to be available on free, what was called free over-
the-air television, the broadcast network.  

	The problem is the costs are going up so great and the fragmentation 
of the audience is going.  So even though the networks still have this 
lion’s share of the audience, it’s just not as big as it used to be, just 
like the AM audience is not as big as it used to be, the FM audience.  

	CHARLIE ROSE:  They’re big for things like the Oscars and the NFL, big 
events.  So what does that mean for network television?  

	MEL KARMAZIN:  I think that one of the things that it means for 
network television, I don’t know who has the guts to do it but there’s an 
argument that says -- I remember meeting with Paul Allen.  He bought this 
cable business Charter and he came and invited me to his apartment for 
lunch in New York.  

	So he said, Mel, you don’t have a affiliate, one of your own TV 
station.  I’m sure the market was Cleveland, but it’s been a while in 
Cleveland.  What I would like you to do instead of having an affiliate that 
carries your CBS program, take the content off that affiliate, take it off 
the affiliate and make it available on my cable system.  

	So the only way anybody in Cleveland can get the CBS content, so you 
couldn’t get the Super Bowl, you couldn’t get "Survivor," you couldn’t get 
that, was to have cable, OK.  And I will pay you for your content, OK.  So 
I will pay you per subscriber just like we pay ESPN.

	And that business model today is one that would work if you only owned 
the network and you didn’t own the stations, because today the people who 
own the network also own TV stations.  

	But I don’t know why a network, you know, NBC, that may not have an 
affiliate in a given market or may not an own or operate a station in the 
market -- what’s the affiliate willing to give me, what’s the cable station 
willing to give me?  

	CHARLIE ROSE:  So you’re basically saying it used to be that everybody 
who looked at CBS said the crown jewel of those CBS owned the and operated 
stations, they were the revenue producers.  

	MEL KARMAZIN:  We don’t make the money on those networks, but you when 
you add in those high margin, profitable TV stations in the market.  And 
now what’s happening is the TV stations are challenged the network is 
challenged.  You’re stuck with these TV stations and you’re not going to 
damage them.  So you’re not going to take away your network content.  

	And the networks are trying to get the cable systems to pay them for 
their content.  

	CHARLIE ROSE:  So network television would be a great business if you 
could just go out into every market and sell that content to the highest 
bidder?  

	MEL KARMAZIN:  The television business would be a great business if 
you only looked at the audience and you didn’t look at the business model.  
The business model for network television is a difficult business model.  
	
	You don’t own the content.  I mean everyone who talks about content is 
king -- the NFL owns the content.  The NCAA owns the content.  The Olympics 
own the content.  It’s not like NBC owns the Olympics.  So they lease the 
content from the Olympics.

	(LAUGHTER) 

	So what do you own if you’re NBC?  You don’t own the Olympics.  

	CHARLIE ROSE:  When you look at Rupert Murdoch and the problem he has 
now in trying to go -- "The Wall Street Journal," not wanting it C-3, and 
believe that when Google puts "The Wall Street Journal" content on they’re 
doing something that’s not in his interest to say it kindly.  Can he find a 
model once the genie’s out?  

	MEL KARMAZIN:  Yes, I think the -- I’ve never been a fan of owning 
newspapers.  I had the opportunity and have chosen not to.  Rupert loves 
the newspaper business.  

	So starting out with the fact that he’s bought and paid a fair amount 
of money for newspapers, I think he’s in the wrong asset class for growth 
in the future.  

	Dealing with trying to monetize your content on the Internet, very few 
media companies have been able to do that, you know.  Google has done a 
phenomenal job.  Amazon has done a great job.  EBay has done a good job.  
But it’s very hard to find a site that has done a great job of monetizing 
its content on the Internet, all right.  

	And if in fact your site is going to be "The Wall Street Journal," the 
question is whether or not somebody is going to pay you for the content 
that’s in "The Wall Street Journal," or is there so much of the similar 
information out there, financial information -- if you go to Google and you 
put in "Boeing," you know, you’ll get an awful lot of information about 
Boeing.  

	You won’t get "The Wall Street Journal" if it precludes the use of it, 
but you may get enough information to satisfy you.  So it’s a challenge to 
say whether or not there’s something in the wall street journal that must 
have, must have, that someone is going to pay for when all of the other 
choices on the Internet are free.  

	CHARLIE ROSE:  How serious do you take the idea that most of us are 
going to get most of our media over computer or small smart phone devices?  

	MEL KARMAZIN:  I tell you, I still don’t enjoy the experience.  I 
carry two of them in my pocket as we speak.  

	CHARLIE ROSE:  I carry a cell phone.  

	MEL KARMAZIN:  Exactly.  I don’t like getting my content that way.  I 
do it as a, you know, because I need the information.  But I don’t enjoy 
watching video on it.  

	When I enjoy watching television or I want to watch video, I want to 
see it on a high definition, big screen set.  I understand there’s some 
subset, younger people particularly, who, or people who travel, that may -- 
if you can figure out a way to monetize it, because it’s not so much they 
want to have the content where they want it, they don’t want to see the 
advertising, because they’ve been brought up you can skip the advertising.  

	So I don’t know how you monetize that content on that device.  And 
that’s where all of the challenges come up.  

	I do think that there was a time when I was -- if you were to ask me, 
who do I worry about competing with the most...  

	CHARLIE ROSE:  Good question.  

	MEL KARMAZIN:  I would have said Rupert and News Corp.  I would have 
said they have a global platform.  I thought Rupert was willing to invest.  
He had a longer time horizon, he was willing to spend a lot of money on 
content.  

	CHARLIE ROSE:  And he was global.  

	MEL KARMAZIN:  He was global in a big way.  

	I would say today in my opinion, it’s Google.  I think that Google is 
the company that I’d watch the most.  

	CHARLIE ROSE:  This sort of reminds me, Ken Auletta, who you know, has 
a new book called "Googled."  Do you know where I’m going?  

	MEL KARMAZIN:  I do because he called me -- maybe you should say where 
you’re going.  

	CHARLIE ROSE:  Here’s where I’m going.  There’s a meeting between you 
and Sergey Brin and Larry Page and Eric Schmidt, three of them, right.  And 
you said that their advertising model was, and you didn’t really use this 
word, was "f-ing with the magic."  

	MEL KARMAZIN:  I used the full word.  I don’t remember saying it, but 
I know Ken had verified two other people in the meeting that I did say it.  
It’s absolutely sounds like something I would have said.  

	(LAUGHTER)

	And what I was saying is I love the model that I had then.  At that 
point I had -- I was the CEO of CBS, and I had a model where you buy a 
commercial, here in advertising you buy a commercial in the Super Bowl.  
And at the time you paid $2.5 million for a spot.  

	And you had no idea if it worked.  You had no idea if you sold 
product, if it did any good.  I loved that model.  

	CHARLIE ROSE:  That was the magic.  

	MEL KARMAZIN:  That was the great model.  

	CHARLIE ROSE:  And you didn’t know.  

	MEL KARMAZIN:  And you didn’t know.  And why, if I can get away with 
that model, if I’m in the business where I can sell advertising that way, 
why do I...  

	CHARLIE ROSE:  People are willing to give you x number of millions of 
dollars for 30 seconds, or whatever it is, not knowing exactly how many 
people are going to buy.  

	MEL KARMAZIN:  No return on investment.  You know how everybody looks 
for return on investment?  We had a business model that didn’t worry about 
return on investment.  And then here comes Google.  They screwed it up.  

	CHARLIE ROSE:  "F-ing with the magic."

	MEL KARMAZIN:  They went to all these advertisers and say we’ll let 
you know exactly what it is.  Everything follows after that.  

	CHARLIE ROSE:  But you should worry about this, shouldn’t you?  That 
really is inevitable as technology and science movers forward, the ability 
to measure the audience.  

	MEL KARMAZIN:  And that’s why subscription, subscription, 
subscription.  And the reason I love -- 

	(LAUGHTER)

	-- I used to love the advertising business un Google ruined my day.  
Google comes along and this is the new way of doing it, and I’m now in the 
subscription business.  

	CHARLIE ROSE:  So in other words the idea of media model to be in 
today is that you can somehow create content, go buy it or create it 
yourself, and put it on a distribution system where people will subscribe 
to the distribution system and you can wrap it with some advertising and 
you get a bonanza.  

	MEL KARMAZIN:  The NFL is a great example.  So if you were to take 
whose future, I mean who owns content that the future is very bright for, 
my sense is the NFL will sell its content to, you know, the broadcast 
networks, it will sell it to DirecTV, Sirius satellite radio, it will sell 
it to everybody.

	And everybody wants their content and they’ll have people who are 
watching it live so that the advertising model will work there and they’re 
going to get a lot of license fees and a lot of content.  

	CHARLIE ROSE:  Take a look at this commercial.  Roll tape and we’ll 
look at it.  Here it is.  

	(BEGIN VIDEO CLIP)

	(MUSIC)

	(END VIDEO CLIP)

	CHARLIE ROSE:  So there you go.  That’s your message right there.  

	MEL KARMAZIN:  I think that that basically is talking about content, 
it’s talking about how we’re different, you know, that it’s not just that 
we have an Elvis Presley Channel, we have Howard Stern, great comedy.  I 
thought it got the message out and cut through the clutter.  And our people 
developed it internally.  I had nothing to do with it.  All I said is it 
was great and don’t touch it and we’ll go with it.  

	CHARLIE ROSE:  All right, have you changed because of what you went 
through in terms of the way you look at business, management style, any of 
that?  

	MEL KARMAZIN:  You mean the liquidity issue?  

	CHARLIE ROSE:  Yes, that.  

	MEL KARMAZIN:  One of the things... 

	CHARLIE ROSE:  It scared the hell out of you, so therefore what?  

	MEL KARMAZIN:  I never ever -- in any position I ever had before, it 
was whether or not how much profit we were going to make, whether we were 
going to make more or less profit.  It wasn’t about whether or not you 
could buy your debt, because I was fortunate to be at CBS and Viacom, deep 
pocket companies, very mature companies.  

	And I didn’t realize early on that it wasn’t about whether or not 
content was king or it wasn’t about whether or not distribution was king, 
it was about cash is king.  And certainly I don’t think anybody will make 
that mistake again.  

	I certainly will sit there and not ever find ourselves in a position 
where we didn’t have plenty of cash in early enough years to be able to 
deal with maturity.  I don’t know when I will put it in practical use.  

	CHARLIE ROSE:  Five years from now, not what business will you be in, 
but will you be at Sirius XM.  

	MEL KARMAZIN:  I don’t know.  I just agreed to extend my contract by 
three years.  We had a negotiation with the board and the board wanted five 
years, and they acquiesced to agree to me doing three years. 

	CHARLIE ROSE:  What do you want to do?  

	MEL KARMAZIN:  I just don’t know what I want to do after those three 
years.  I want Sirius to be an amazingly successful company.  I know for 
sure, what I do know for sure is I’m not going to retire.  I don’t play 
golf.  Things that people do, I don’t understand how people play golf.  

	(LAUGHTER)

	CHARLIE ROSE:  You do nothing.  

	MEL KARMAZIN:  I do nothing.  I do nothing and I love doing nothing.  

	CHARLIE ROSE:  Do you read.  

	MEL KARMAZIN:  I read novels.  

	CHARLIE ROSE:  Do you fish?

	MEL KARMAZIN:  Are you crazy?  

	(LAUGHTER)

	Here’s what I do.  I legitimately -- here’s what I do.  I work.  I go 
home to my wife and my dog and we hang, and I love that life.  And I need 
to have that work peace as well.  So three years from now, god willing, you 
know, I don’t know what I’ll do, but I’m loving what I’m doing now.  

	CHARLIE ROSE:  Great to have you here.  Thank you very much for 
coming.  

	MEL KARMAZIN:  Thanks.