The CEO of Sirius XM Radio Inc (NASDAQ:SIRI) Radio, Mel Karmazin, said during a conference in Beverly Hills, California, that Liberty Media may change the board and replace him as CEO, once it gains a controlling stake in the satellite radio broadcaster.

John Malone

“My instincts today are that Liberty does not need me at the company. I have historically been expensive. It’s very clear to me that if I were Liberty, I would sit there and say, ‘I’m not sure we need Mel,’” he said.

In afiling with Federal Communications Commission on August 16, Liberty said that it is planning to increase its stake in XM Radio Inc (NASDAQ:SIRI) to over 50 percent to take over the company. Yesterday, Liberty Media Corp (NASDAQ:LMCA) (NASDAQ:LMCB) purchased 30.9 million shares of Sirius that took its holding from 49.2 percent to 49.7 percent.

Currently, Liberty Media Corp (NASDAQ:LMCA) (NASDAQ:LMCB) has preferred shares that are convertible into 40 percent stake and 558.6 million common stocks of Sirius. Liberty Chairman John Malone had acquired 40 percent stake in Sirius by providing $530 million loan that rescued Sirius from going bankrupt in 2009.

In June, Liberty CEO Greg Maffei praised Karmazin for improving the Sirius’ performance after the 2008 economic crisis, and said that he would like Karmazin to be the CEO. However, later he publicly said that Karmazin is a short-term oriented guy, and his short-term plannings and goals have restricted the satellite radio broadcaster from reaching its full potential.

Karmazin’s contract with Sirius is about to expire on December 31. According to Bloomberg data, he received a compensation of $10.7 million in 2011. Karmazin, 69, said in August that he will “deal with” his contract before announcing the quarterly results in September. Additionally, he said if Liberty spins off XM Radio Inc (NASDAQ:SIRI) as a publicly traded company, he would like to stay on board.

There is a possibility of spin off, because Liberty chairman John Malone said in July, ““There is no question eventually Sirius will be an independent company. The question is, in what time frame and in what circumstances?” Malone is known for his savvy investing and history of creating spin offs to unlock shareholder value.

On a conference call yesterday, Karmazin stated:

They could do it in the next few days. I have no idea what their plans are. They have not shared their plans on buying stock with me. But if Greg Maffei is speaking today, and he wanted to make news that it’s possible that today he could buy the shares that would get him to over 10% of the stock.
When you combine his over 10% of the stock he owns with his preferred stock with Liberty’s preferred stock and the FCC allows them to convert, then they would then have 51%. So they don’t have to wait for the FCC approval to get to the 10% plus. They can do that first and then they could just sit with waiting for the FCC approval.
The way it works is Liberty filed an application with the FCC for changing control of the Company. It is unusual that the FCC has not already put it out for public notice. The process is that it is accepted for filing and then it’s put out on public notice. I believe there’s no reason to think that even if there is some reason that they have been pulling it up that they will ultimately put it out for public notice.
The public will then have 30 days in which to make comments about it. In the case of the SiriusXM merger, that 30 days became 17 months because it was very controversial and there were a lot of people who came out of the woodwork to try to file comments against it.
My sense of this transaction is that I have no reason to believe that it’s going to get anywhere near, if it all reaction so that the 30 days, if in fact nobody files, there’s another 15 days and theoretically the FCC could be in a position to grant them — grant their application, if the FCC sees fit prior to the end of this year. If in fact there is a problem, somebody comes out of the woodwork and tries to make some noise, it could linger but I have no other information on it.

Liberty anticipates to have to pay approximately $1.5 billion by the time it acquires controlling stake in coming days. Sirius shares plunged 3 percent to $2.43 in New York trading.