Mel Karmazin: ‘Zen Master’ And M&A Master

Best described as a habitual CEO and dealmaker, Mel Karmazin insists that at a young age he had no idea his life would take him down the path of corporate leadership and high-level mergers and acquisitions.

In a career that has included more than $100 billion in M&A activity, Karmazin has been involved with virtually every aspect of the interconnected media universe. He’s led small start-up companies, has run major corporations generating as much as $22 billion in annual revenue, and has testified before Congress more times than he cares to remember.

He has fought for free speech, stared down the FCC over indecency allegations, and supported the First Amendment rights of a host of entertainers ranging from Howard Stern to Janet Jackson. And none of it would have happened without an offer from a high school typing teacher.

“I went to high school in Hell’s Kitchen in Manhattan, and when I was a senior the typing teacher asked me if I wanted a job after school,” he recalls. “I told her I had a job — I was working in a factory at the time — but she said this job was in an air-conditioned office. It was an advertising agency and the job paid minimum wage — $1.25 — so I applied for the job and got it.”

The son of a taxi driver and factory worker, Karmazin had no distinct plans to even go to college. The folks at the agency, however, saw something in the 17-year-old Karmazin and convinced him to remain at the company while pursuing college credits. “After I finished high school, I was working fulltime at the agency while attending early bird sessions, night school and summer school,” he continues. “I graduated from Pace university in four years without ever being a fulltime student. Graduating from college was never something I intended to do.”

With a degree in business administration and a focus on advertising and communications, Karmazin continued to work at the agency after he graduated in 1965. Over the next five years he worked his way up through the ranks, eventually becoming a vice president and co-owner of the company. Then in 1970 CBS came calling and asked Karmazin if we wanted to be a part of the company’s radio group. “Tobacco advertising had just been eliminated and they didn’t have any experience in retail selling, so I agreed to join them.”

Karmazin started in the radio station business and quickly was elevated to retail sales manager. “I was doing well by CBS standards,” he recalls. “So well, in fact, that they had cut my commission three times. I told them if they did it one more time I was going to quit, and they explained I was making more than my manager’s manager — and that wasn’t the CBS way.” When they cut his commission once again he made good on his promise and went to work for Metromedia, where he says founder John Kluge quickly became his mentor. In his new role Karmazin oversaw the operations of New York’s WNEW-AM (now WBBR) and WNEW-FM (now WWFS).

In 1981 he moved to Infinity Broadcasting, which had stations in Jacksonville, Fla.; San Jose, Calif.; Boston; and was in the process of buying stations in New York and Philadelphia. Karmazin was instrumental in taking the company public in 1986, when he was named CEO —and dubbed “the Zen Master” by radio host Don Imus. He ran the company until 1997 when it merged with Westinghouse-owned CBS Corp. in a $4 billion deal.

“When we sold Infinity I joined CBS and was running the TV and radio stations,” Karmazin says. “I worked for [CEO] Michael Jordan, and shortly afterward the board asked me if I would become CEO of the corporation. I said ‘yes’ and in 1998 I was named CEO of the company.”

This was at a time when CBS was beginning to sputter in the network television business. The network had lost NFL football to upstart Fox a few years earlier, and the company was struggling in both ratings and revenue. “We were mired in last place back then,” Karmazin observes. “Les Moonves was running the TV operation for me, and I gave him more responsibility, including putting him on the board based on the extraordinary job he was doing. We got the NFL back, we developed Survivor and CSI — all the things that would take us back into first place.”

This also was the time when media consolidation was occurring at a frenetic pace, and the CBS board decided it needed to have a position both in cable distribution and program production. “We agreed that I should talk to [Chairman] Sumner Redstone to try to buy Viacom, but he had no interest in selling,” Karmazin  says. “Instead, he suggested that Viacom acquire us, so we sold him the Westinghouse CBS entities, including Infinity. Part of the deal was for me to stay on for three years, but since it was widely known I wasn’t good at working for someone else, we agreed that I would report not to Sumner but to the independent directors of the board. If he and I didn’t get along the only thing he could do was to call a board meeting and have them fire me.”

That never happened, and after three years the board asked Karmazin to stay another three years. “Not only would I get paid a lot of money but I had no non-compete clause,” he says. “I could leave any time I wanted and go to work somewhere else.” He remained at Viacom one more year, then left for what he says was “good reason” and retired. He and his new bride went on a honeymoon in Europe, and when they returned he says he was ready to burn his passport and return to work.

“Around that time I got a call from the board at Sirius saying they had hired Howard Stern and didn’t know what to do,” Karmazin says. “They had $67 million in revenue and the Howard deal was $500 million, so it was a very challenging time for them. They made it interesting for me not to say ‘no,’ so in 2004 I joined Sirius.” At that point the satellite company had fewer than one million subscribers, negligible revenue and debt that many analysts believed was insurmountable. These factors led him to engineer the controversial and contentious merger with XM Satellite Radio, a process that took 17 months, numerous hearings and millions of dollars in legal fees to pull off.

By the time the merger finally was approved the U.S. economy had gone from humming to sputtering, and car sales — the primary source of new satellite radio subscribers — had taken a beating. Global markets seized up, and the combined companies’ share price began to shrivel. Karmazin managed to stave off bankruptcy proceedings with the assistance of Liberty Media Chairman John Malone, who provided a $530 million loan in exchange for a 40% stake in the company. After one contract extension Karmazin left SiriusXM to retire in late 2012, and is adamant that he has no intention of rejoining the corporate world.

All his deal making aside, Karmazin’s career also has been characterized by his support of free speech and First Amendment rights. As Howard Stern’s boss at Infinity and CBS, he regularly battled the FCC on what the commission —a nd some vocal members of the public — considered “indecent” broadcasting. “Dr. Ruth was saying things that were a whole lot worse, but the FCC would tell me that humor was different,” he observes. “It was OK for Ruth to say certain words but not OK for Howard to say them. They played hardball by threatening not to approve future acquisitions, so we got aggressive and told them we would take them to court. Finally Chairman Reed Hundt convinced me it was in both of our best interests to put this behind us. So we made a deal to make a voluntary contribution to the FCC and never admitted any guilt. In my opinion Howard never did anything wrong and we put it all behind us.”

Then along came Super Bowl XXXVIII, and all bets suddenly were off. Some folks saw Janet Jackson’s wardrobe malfunction as a sign of decreasing American morality, while others considered the incident harmless and felt it received an undue amount of attention. “I was at that game and during halftime I was talking to the NFL commissioner,” Karmazin says. “I got a call from the broadcast truck and they told me about the Janet thing. I ended up having to testify in front of Congress because of that.”

Karmazin is involved in numerous philanthropic ventures and has served on a number of boards throughout his career. He is the founder of the Mel Karmazin Foundation, and has served as a trustee at NYU Langone Medical Center, a board member and executive committee member of Autism Speaks, and vice chairman of the board of trustees of The Paley Center for Media. He was inducted into the Broadcasting Hall of Fame, and has received the National Association of Broadcasters National Radio Award and the IRTS Gold Medal Award.

The Library of American Broadcasting will honor this year’s Giants of Broadcasting & Electronic Arts at a luncheon at New York’s Gotham Hall on Oct. 15. For tickets, congratulatory ads and other information, please contact Joyce Tudyrn at [email protected]. The luncheon is presented by the International Radio and Television Society Foundation. TVNewsCheck is publishing these profiles as an in-kind contribution to the library. You may read other profiles in the series by clicking here.