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Nearly a year and a half after it was announced, the merger deal between Sirius Satellite Radio and XM Satellite Radio is an accomplished fact, and the chief executive of the combined company sees strong signals for the future.
"I think the prospects for the combined company are extraordinary," Mel Karmazin told CNBC.(For the full interview, watch the accompanying video.)
"(The delay) certainly put the company in limbo for far too long," Karmazin said. "It certainly had confusion in the marketplace, in retail, particularly, and it also put us on radio silence as far as talking to investors."
Karmazin, formerly chief executive of Sirius [SIRI
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], says the combined company is fully financed, and expectes to achieve positive cash flow by 2009.
"Any liquidity question that had existed on individual companies obviously are now put to rest, and on the combined company, we have a fully-funded plan," he said. "We have some converts that come due in 2009, and we're optimistic that on the Sirius side, investors will see the value of this combination and will price through it."
Karmazin expects cost savings from the deal to reach $400 million.
Thos cost savings may help the combined company move toward leadership in the entire radio business, he said.
"If you just take a look at the trailing 12 months revenue of the combined company, we have $2.2 billion," he said. "That's probably a number greater than most people think about when they think about satellite radio. That makes us the second largest radio company in the United States. Only Clear Channel [CCU
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] will have higher revenue, and their growth -- there is no growth -- we're growing dramatically."
Karmazin added, the company may also consider a reverse stock split.
One challenge the new company will face is slumping auto sales, which hurts sales of pre-installed satellite-radio units in cars. Karmazin said he is disappointed by trend.
"We wish that that's not the case, but the penetration rate that we're experiencing is offsetting it," he said. "We've added more gross ads from (original equipment manufacturers) so far this year than in any period of time in our history."
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