This isn’t exactly new, in the strictest definition of the word, but why let that stop us? A group of Sirius XM creditors, creditors whose money makes the company hum on a daily basis, have threatened to seek the ouster of chief executive officer Mel Karmazin if the company files for bankruptcy. (Remember: that could happen as early as tomorrow.) The WSJ notes, however, that the odds of this actually happening—adios, Mel!—are fairly low, since bankruptcy judges tend to give management the benefit of the doubt that it’s doing its best for the corporation. If, for some reason, the judge decides in favor of the creditors, Karmazin and a whole host of Sirius XM brass could be out of a job (which, coincidentally, may not be all that bad).
These creditors are upset with the way Karmazin has run the company, especially relating to his handling of this whole debt situation. I guess they see Karmazin as trying to save the company while simultaneously saving his own backside, rather than solely looking out for the interest of the corporation. Remember: that Dish Network deal, while it may help the company, especially in the short term, could well lead to Karmazin’s sacking, since the Dish Network guy and Karmazin aren’t exactly best friends.
But these creditors would have to prove to the bankruptcy judge that Karmazin was not just a bad CEO—Lord knows there’s bad CEOs all over the place—but that he was engaged in “gross mismanagement” or outright fraud. I don’t think anyone has accused Karmazin of that!
The fact is credit, for all intents and purposes, no longer exists, so it’s extraordinarily difficult for someone in Karmazin’s position to right the ship, as it were.
It’s not that Sirius XM is failing, it’s that it’s failing during the worst recession since the Great Depression. That exacerbates the problem, as you might guess.