Sirius Satellite Radio and Howard Stern Go Ear to Ear with XM: I’ve often wondered about the $500 million gambit to get Howard Stern on Sirius. I’m a Howard Stern listener that didn’t make the jump over to Sirius with him.
I’d feel differently if I could get his broadcasts on my Media Center PC and even more significantly downloaded to my phone, but you do have to wonder about the wisdom of paying him all that money. And total price tag for the Stern show now would appear to be closer to $670 million.
“While it’s still early to determine how the Stern story will ultimately play out — the radio personality began his first Sirius broadcast on January 9, 2006 — a few key issues will tell the tale. Can the Stern effect last beyond his first few months of airtime? Will Sirius be able to close the gap with XM Satellite Radio, which ended the year with more than six million subscribers? And will the buzz generated by Sirius’s grab for shows like Stern’s and the broadcasting rights to the National Football League games help the company to eventually surpass XM’s subscriber base?
No matter how this saga unfolds, Stern won’t come cheap. Jonathan Jacoby, an analyst at Banc of America Securities, estimates that the true cost of Stern’s contract will be about $670 million, including non-cash compensation. Stern and his agent, Don Buchwald, were awarded 34 million shares valued at about $200 million last month for bringing in more subscribers than expected. Fader finds it hard to defend Stern’s compensation. While it’s possible to cook up metrics to justify the deal, what remains to be seen is whether Stern’s fans stick with Sirius. “A lot of them bought Sirius just for Stern, but there could be lower retention rates. It’s very hard to imagine that the acquisition of one person, even if it is someone as popular as Howard Stern, will be enough to keep Sirius afloat for long,” he says. “