I don't often leave my office for lunch, and I am told that neither does Sirius XM CEO Mel Karmazin. So you can imagine my surprise when we encountered each other on Madison Avenue a few days ago.  Karmazin was looking trim and fit, and there was no visible sign of a bulletproof vest under his well tailored suit. I first met him more than 30 years ago when he was Mr. Infinity Broadcasting, and I was a media and entertainment analyst at the Dreyfus Corp.  A private chat with Karmazin is hard to come by, so I didn't want to waste the opportunity, no matter how brief. I asked him exactly what he was thinking when he did the self-described "ugly" financing last month to complete the XM merger. He told me it was the single toughest decision he has ever had to make in his long business career.  Once the FCC finally approved the merger after almost a year and a half of consideration, he had two choices: to close that night or to wait for better financing alternatives than those he was offered at that moment.  There were risks to each choice. If he didn't proceed to close as fast as possible, there was the immediate risk that the National Association of Broadcasters would get a court injunction the following morning and throw the deal into the courts for an even more prolonged battle. Some are of the opinion that there was a real risk that XM might go bankrupt under the weight of the debt which the combined companies are now laboring to lighten.  If it did file for bankruptcy protection, other possible bidders like Direct TV (nyse: DTV - news - people ) or Comcast (nasdaq: CMCSA - news - people ) who like and understand the subscription media model were likely to surface with the ability to outbid Sirius (nasdaq: SIRI - news - people ). That also would have precluded a combination in the future.  In order to close the transaction, Sirius needed to raise enough money to take out the XM debt that was triggered by immediate "change of control" clauses in its indentures. The credit markets are pretty rapacious these days. It doesn't matter if you are trying to refinance your home or an office building or if you are trying to raise capital to complete a merger, as in this case. It really complicates matters in this environment if you don't yet have earnings or positive annualized cash flow.  Faced with this set of choices, Karmazin swallowed hard and decided to forge forward. He viewed the "ugly" offering as the better alternative, and he took it.  Special Offer: Give more money to yourself, not to fund managers. Click here for ETF model portfolios with recommended allocations in Jim Lowell's Forbes ETF Advisor.  CNBC's Jim Cramer didn't help the process at all. He was on TV yelling (can you imagine) that you didn't want to own the stock and you should only own the bonds being sold. Of course, the bonds were not available to small investors so that advice was totally useless for most folks. It definitely affected the price of the offering though, and it really jacked up the cost of the money.  One estimate is that the financing cost $70 million in additional interest charges that weren't included in the estimated savings figures of $400 million that the company had circulated in anticipation of the merger.  I also asked Karmazin why he went onto Cramer's show after he had cost both the company and in turn SIRI shareholders so much money. The answer to that query was that they had several meetings with large institutional investors and regarded CNBC as a way to communicate with retail investors. While Karmazin might have had an agenda of bullet points he wished to pursue on air, I am not sure he got to make many, or any, of them. The stock did rise briefly, but it wasn't worth cavorting with Cramer, in my view.  The good news, if there is any, is that both XM and Sirius executed quite well in the second quarter, even as car sales faltered in the U.S. This has been a poor year for auto sales, which are expected to fall to 12 million units.  Even so, half the new 2008 vehicles will be coming down the assembly line with satellite radio players installed at the factory. That reflects the conviction of the car manufacturers that satellite radio is an important feature in a new car. About half of car buyers with a unit installed become subscribers who mail in about $110 per year. That's 3 million new subscribers and $330 million additional revenue to the combined company.  Last but not least, I asked Karmazin about his recent purchase of two million additional shares and why he didn't buy more. His employment agreement gives him about a 1.5% interest in the merged company if the options he has been granted become worth something. At present prices, he isn't faring much better than the rest of the shareholders. He had previously put $24 million into open market share purchases at much higher prices and felt that a $30 million exposure on his own money was sufficient incentive for him to make this merger a success.  His focus is on executing on the business plan as it has been since he arrived in 2004 just after Howard Stern signed his agreement with the company. The subscriber tally was 700,000 then, and the stock was selling in August 2004 for $2. It zoomed to $4 and then briefly to $9 after Stern and then Karmazin agreed to join.  Karmazin's belief in satellite radio has been validated by the subscriber growth, if not by his stock purchases. Sirius ended the June 2008 quarter with 8,924,139 subscribers, 12 times the subscriber count then, just four years later. The stock, however, has sunk to a buck.  Sirius has said for years that having 20 million subscribers was the critical mass number needed for effective marketing to national advertisers (for inclusion only in talk shows). With the merger, they will exceed that number by year end.  Controlling costs, imposing discipline throughout the merged companies and eliminating duplicative programming efforts will contribute a lot to the improved results. Renegotiating sports contracts with the National Football League and Major League Baseball is likely, too. Unifying the business models for the various car companies will also result in some savings and better subscriber acquisition costs. Net of the $70 million lost to higher interest charges, management thinks all these savings will approximate $330 million in the first year of the merger.
Here are a few questions you might want to ask Mel Karmazin about Sirius if you meet him on the street.