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CNBC Transcript: CNBC's Jim Cramer Interviews Mel Karmazin, Sirius XM Radio Inc. CEO on "Mad Money with Jim Cramer" (Transcript Included)

Mel Karmazin, CEO, Sirius
Mel Karmazin, CEO, Sirius

When: Monday, August 11th at 1:30PM ET
Where: CNBC's "Mad Money w/Jim Cramer"

Following is the unofficial transcript of a CNBC interview with Mel Karmazin, Sirius XM Radio Inc. CEO, on "Mad Money w/Jim Cramer."

All references must be sourced to CNBC's "Mad Money w/Jim Cramer."

CRAMER: ANYWAY, I HAVE TO STICK TO FORM, AND PEOPLE ARE TELLING ME I HAVE 30 SECONDS TO USE THESE THINGS. BUT I ALSO WANT TO BE SUBSTANTIVE. IT'S A STOCK THAT APPEARS TO HAVE BEEN -- WELL, IT HAS HURT PEOPLE, AND YET THE PRODUCT IS A LOVED PRODUCT, SO WE HAVE TO DEAL WITH THE NOTION YOU CAN HAVE A LOVED PRODUCT AND A BAD STOCK AND WHETHER THEY EVER MEET. SIRIUS/XM RADIO, THAT'S IT. YOU PROBABLY KNEW IT WAS COMING.MEL KARMAZIN IS THE CEO, AND COME ON BACK. MEL. ALL RIGHT. LISTEN TO ME. FIRST OF ALL, GOOD TO SEE YOU.

KARMAZIN: I'M NOT SO SURE IT'S GOOD TO SEE YOU, BUT, YOU KNOW.

CRAMER: IT TOOK ONE YEAR AND 158 DAYS AND IT WAS OVERDUE. WHEN I LOOK AT THE FINANCIALS, MEL, I THINK THE FCC COST YOU A BILLION.

KARMAZIN: THAT'S NOT THE WAY I LOOK AT IT. I GUARANTEE YOU THAT DISH AND DIRECTV WOULD HAVE LIKED TO HAVE HAD THE MERGER DONE. THE FACT IS IT TOOK A LONG TIME AND IT SHOULDN'T TAKEN THIS LONG BUT IT WAS WORTH WAITING FOR, BECAUSE I THINK THAT THESE COMPANIES TODAY ARE GOING TO CAPTURE THE VALUES AND YOU'RE GOING TO SEE THE STOCK IMPROVE. I CAN'T CONTROL THE STOCK, I CAN ONLY CONTROL THE COMPANY, AND WEARE DOING EVERYTHING RIGHT.

CRAMER: HOW IS IT THAT A BIG EVENT OCCURS, AND THAT NIGHT THE STOCK GOES FROM $2 TO $1.50.

KARMAZIN: IN ORDER FOR US TO CLOSE THE MERGER, WE NEEDED TO FINANCE A BILLION 250. A WEEK BEFORE WE WENT INTO THE DEBT MARKET, WANTED TO RAISE $400 MILLION ACTION AND WE RAISED $700 MILLION. THE LAST $500 MILLION NEEDED TO COME IN THE FORM OF A CONVERT. AND IT NEEDED TO COME THE DAY WE CLOSED BECAUSE WE COULDN'T CLOSE IT INTO ESCRO

CRAMER: MEAN YOU DIDN'T WANT ANYONE HOLDING THE DEAL UP.

KARMAZIN: WE KNEW THAT THE N.A.B. WAS GOING TO TRY TO GET A STAY.

CRAMER: THE NATIONAL ASSOCIATION OF BROADCASTERS, THEY HATE YOU PERSONALLY, TOO. I'VE BEEN HATED, SO I RECOGNIZE IT.

KARMAZIN: THEY HATE US BECAUSE OF THE DAMAGE WE'RE DOING TO TERRESTRIALL RADIO, I DON'T TAKE IT PERSONAL, BUT I DON'T CARE.

CRAMER: ACTUALLY, YOU DO TAKE IT PERSONALLY.

KARMAZIN: WE CAN TALK ABOUT THIS SOME OTHER TIME. AT THIS POINT WE NEEDED TO CLOSETHE MERGER, WE NEEDED TO CLOSE IT THAT NIGHT. I COULD HAVE TAKEN A RISK AND SAY LET'S WAIT TILL WE GET THE FINANCING. WE GOT THE DEAL DONE. WE RAISED VERY UGLY, WE RAISED A BILLION 250 OF NEW MONEY. NOW THE DEAL IS WE ARE FOCUSED ON RUNNING THE COMPANY NOW THAT WE CLOSED IT. DO I WISH THE MARKET WASN'T THAT WAY? YEAH, BUT WHAT CAN I DO? I COULD HAVE CLOSED OR NOT CLOSED. I TOOK THE HAND I WAS DEALT.

CRAMER: YOU HAVE ANOTHER FINANCING NEXT WINTER.

KARMAZIN: NEXT YEAR IN 2009, WE HAVE THREE PIECES AN XM CONVERT, A SIRIUS CONVERT AND SOME BANK DEBT. WE'VE ALREADY HAD DISCUSSIONS. WE THINK THE SOONER WE CAN PUT THAT BEHIND US, THEN PEOPLE CAN FOCUS ON THE FUNDAMENTALS.

CRAMER: BUT MEL I HAVE TRADED CONVERTABLE BONDS IN MY LIFE AND I WOULD ON A RATIO SHORT AS MUCH COMMON STOCK AS I CAN IN ORDER TO TAKE OUT THE RISK OF ANY SORT OF DEFAULT, AND OWN THECONVERT. YOU HAVE TO GET THE STOCK TO $4 AND CHANGE TO BE ABLE TO BLOCK ME FROM DOING THAT.

KARMAZIN: THE THOUGHT OF A DEFAULT IS RIDICULOUS. YOU CAN PREDICT ANYTHING YOU WANT TO.

CRAMER: YOU DON'T REALLY HAVE THAT CHOICE, YOU LOCK IN THE YIELD AND MAKE SURE YOU DON'T HAVE ANYPRINCIPALS.

KARMAZIN: I NEED TO DEAL WITH WHAT'S OUT THERE. ALL WE WITH DO IS GROW OUR FREE CASH FLOW, GET THE STOCK TO REFLECT OUR VALUE, AND IF WE SCREW PEOPLE ALONG THE WAY BECAUSE THEY BET AGAINST THAT, THAT'S THEIR PROBLEM.

CRAMER: I LIKE THAT. GOLDMAN SACHS JUST DESPISES YOU.

KARMAZIN: I DON'T MIND YOU DOING THAT, BUT THERE'S 20 ANALYSTS OUT THERE. ONE IS OUT THERE WITH THIS VIEWPOINT, YOU DON'T HAVE THE GUYS OUT THERE WITH THE $6.

CRAMER: IF YOUR STOCK WAS ON 20, I WOULD BE FOCUSING ON THESE GUYS.HERE'S A GUY THAT SAYS YOU SHOULD BE AT ONE, SO HE HAS CREDIBILITY.

KARMAZIN: THEY THINK WE'RE WORTH $4 BILLION. THERE ARE OTHER PEOPLE OUT THERE THAT BELIEVE THAT WE ARE WORTH OVER $12 BILLION SO WE'LL HAVE TO SEE, OKAY?HE HAS BEEN WORKING WITH THE HEDGE FUNDS FOR AN AWFUL LONG TIME.

CRAMER: MEANING THAT YOU THINK HE IS IN LEAGUE WITH PEOPLE WHO LIKE THE STOCK AT LOWER -- WHICH IS A SERIOUS CHARGE.

KARMAZIN: IN MY HUMBLE OPINION.

CRAMER: ITS GOOD YOU SAID THAT YOU WANT TO BE LAWYERED LIKE EVERYTHING ELSE, AND ME TOO.

KARAZIN: IN MY HUMBLE OPINION I KNOW WHAT KIND OF REPORTS HE HAS WRITTEN. HE'S ENTITLED IT'S AMERICA

CRAMER: BUT IT SAYS YOU'LL HAVE A DIFFICULT TIME SELLING RETAIL INTHE NEXT FOUR MONTHS, BECAUSE NOBODY KNOWS WHICH RADIO THEY SHOULD BUY. THAT'S BEEN AN IMPORTANT MARKET FOR YOU

KARMAZIN: AND JIM THAT'S WHAT WE'RE FOCUSED ON NOW THAT THE MERGER TOOK PLACE. I JOINED THE COMPANY WITH $67MILLION OF REVENUE. WE HAVE 2.4 BILLION OF REVENUE. THAT'S OUR RUN RATE. WE HAVE TALKED ABOUT THE EFFICIENCIES OF THE MERGER AND WITH THE EFFICIENCIES OF THE MERGER WE ARE GOING TO HAVE POSITIVE IBIDOD NEXT YEAR

CRAMER: 400 BUT YOU HAVE NOT TALKED ABOUT THIS YEAR. NO NUMBERS FOR 2008.

KARMAZIN: THIS YEAR WE JUST GOT TO XM. WE JUST FOUND OUT WHAT IS AT XM. WE WANT RIGHT AFTER LABOR DAY WE'RE GOING TO HAVE CONFERENCE CALLS FOR INVESTORS SO WE CAN TELL THEM WHAT'S GOING TO HAPPEN IN 2008 GIVE THEM MORE COLOR IN '09.

CRAMER: YOU'VE BEEN FAIR IN ANSWERING THE TOUGH QUESTIONS. I HAVE BOTH SIRIUS AND XM, IN TWO DIFFERENT CARS, BECAUSE I'M A HUGE BELIEVE IN BOTH, AND THEY WOULDN'T LET ME HAVE IT IN ONE CAR. I WANT TO LISTEN TO HOWARD, BUT I WANT TO LISTEN TO BASEBALL. WHAT ARE MY OPTIONS?

KARMAZIN: RIGHT NOW, WE LOVE WHAT YOUR OPTION IS YOU PAY $25.90 ANDYOU GET BOTH, BUT IF YOU DON'T WANT TO BUY BOTH, YOU'LL BE ABLE TO GET HOWARD THIS FALL, AND YOU SHOULD ASSUME ONE OF OUR PROMOTIONS THAT WILL HAVE IT RETAILED THIS FALL IS PROMOTING THE BEST OF SIRIUS ON XM AND VICE VERSA. THAT WOULD BE STIMULATING SALES THIS FALL.

CRAMER: HOW MUCH QUICKLY FAT TAKE OUT -- I'VE BEEN TO THE STUDIOS. YOU GUYS ARE LIVING LARGE.

KARMAZIN: I STARTED TAKING IT OUT ON THE 29th OF JULY, THE DAY I WAS IN THAT BUILDING. SO WE HAVE ALREADY NAMED AN EXECUTIVE COMMITTEE, ALREADY TERMINATED UNFORTUNATELY A NUMBER OF PEOPLE, ALREADY ELIMINATED A LOT OF CONTRACTS. WE'RE ON THE WAY RIGHT NOW TO DELIVERING THAT EBITDA AND FREE CASH FLOW.

CRAMER: CAR BUSINESS IS TERRIBLE, I KNOW YOU'RE ALSO TRYING TO GET THE USED CARS TO ACTIVATE, BUT THEY HAVE NO INTEREST. HOW DO WE -- WHY SHOULD WE NOT WORRY ABOUT A $12 MILLION CAR BUILD.

KARMAZIN: SO THAT -- I WILL TELL YOU, THAT'S NOT ACCURATE, THE PEOPLE DO WANT TO DEAL WITH THE USED CAR MARKET, BUT LAST YEAR WE ADDED 5.7 MILLION GROSS ADDITIONS IN OEM. THIS YEAR, TERRIBLE YEAR, MAYBE 12 MILLION CARS PRODUCED. BECAUSE WE'RE PENETRATING MORE MODELS, WE'LL ADD WELL OVER 6 MILLION. WE WILL ADD MORE OEM SUBSCRIBERS 208 THAN CALENDAR YEAR 2007, EVEN THOUGH DETROIT IS SELLING LESS CAR.

CRAMER: iPOD?

KARMAZIN: COMPETITION, PLENTY OF COMPETITION.

CRAMER: WILL IT DESTROY IT? WILL YOU DESTRY TERRESTRIAL RADIO?

KARMAZIN: NO.

CRAMER: WHY NOT?

KARMAZIN: AM RADIO IT WILL BE AROUND FOR A LONG TIME. WE WILL BECOME THE BIGGEST THING IN RADIO. TELL ME ONE COMPANY IN THE AUDIOENTERTAINMENT BUSINESS THAT YOU LIKE BETTER THAN SIRIUS IN WHO HAS 2.4 BILLION.

CRAMER: I DON'T.

KARMAZIN: SO YOU PICK A COMPANY IN THIS SPACE THAT'S BETTER THAN US?DO WE HAVE COMPETITION?CHALLENGES?YEAH.

CRAMER: I FINALLY HAVE THE PHILLIES AND EAGLES IN MY CAR, AND OF COURSE HOWARD. MEL, YOU'RE FAIR, I HAD TO HIT YOU HARD, BECAUSE PEOPLE THINK I HAVE COST PEOPLE MONEY ON THIS. I KNOW YOU WANTED THIS DEAL DONEEARLIER. HEY, WELL DONE. MORE OUTRAGE OF THE DAY. MEL, THANK YOU VERY MUCH. APPRECIATE IT.




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