On October 6, 2004, Stern announced on his show that he had signed a five-year deal with the satellite radio service Sirius. Sirius provided a budget of $500 million to pay Howard, his staff and general production costs.[8] His salary has not been revealed. Other media sources have claimed that Stern netted a $225 million one-time stock bonus for meeting subscriber quotas, which he did meet in January 2006.[9]
The deal, which took effect on January 1, 2006, enabled Stern to broadcast his show without the content restrictions imposed by the FCC. Moreover, the deal also enabled Stern to program an additional Sirius channel.
On February 28, 2006, CBS Radio announced it had filed a lawsuit against Stern, Stern's agent Don Buchwald, and Sirius Satellite Radio, saying Stern used CBS's airwaves to unfairly promote the satellite service and enrich himself. The lawsuit also claims that Stern "repeatedly and willfully" breached his contract with CBS, "misappropriated millions of dollars worth of … airtime" for his own benefit, and "fraudulently concealed" his performance-related interests in Sirius stock. The suit, filed in New York state court, sought compensatory and punitive damages. Not to be outdone, Stern earlier in the day (prior to CBS's announcement) held a press conference at which he mentioned that CBS added to the media attention, booking him for appearances on Late Show with David Letterman and its news magazine show 60 Minutes. "I made them millions of dollars. If I was hurting them, why did they keep me on the air for 14 months?" Stern said. "How can you have it both ways?"[10]
Leslie Moonves appeared on one of Stern's final shows to compliment him on his move to Sirius and thank him for the record advertising revenue the network sold. Moonves told Stern that he bought Sirius stock. Stern said the network had the option to "push the button" on his program, taking him off the air, if they did not agree with what he was presenting to the public.
On May 11, 2006, CBS said it was near settling the lawsuit with Stern. "We have an agreement, but there are details that have to be worked out," said CBS lawyer Irvin Nathan [11]. Some details of the agreement were officially announced May 26.[3]
As a result of the CBS lawsuit settlement, Stern announced on June 7, 2006 that Sirius gained exclusive rights to his entire back catalog of radio shows from his days at CBS (about 23,000 hours). The shows cost Stern approximately $2 million, which equates to approximately $87 per hour of tape. Sirius has the rights to the tapes until the end of Stern's current contract with Sirius, and then all ownership rights will return to Stern
Howard Allen Stern (born January 12, 1954) is an American radio and TV personality, media mogul, humorist, actor and author.
Howard Stern currently hosts The Howard Stern Show varying between four days a week (Monday-Thursday) and five days a week (Monday-Friday) on Howard 100, a Sirius Satellite Radio station. On Fridays, Mastertape Theatre airs, playing replays of old Howard Stern shows from years past. Replays of the show can be heard throughout the day on Howard 100 and various times on Howard 101.
The self-proclaimed "King of All Media" (a humorous reference to Michael Jackson's appellation "The King of Pop") has been dubbed a shock jock for his highly controversial use of scatological, sexual and racial humor. Stern has said that the show was never about shocking people, but primarily intended to offer his honest opinions on a gamut of issues (ranging from world affairs to problems among his own staff). Though controversial, he is one of the highest-paid radio personalities in the United States and the most fined personality in radio broadcast history.
He is best known for his national radio show, which for many years was syndicated on FM radio stations (and a few AM stations) throughout the United States until his last terrestrial radio broadcast on December 16, 2005. He began broadcasting on the subscription-based Sirius satellite radio service on January 9, 2006.
In addition to radio, Stern has ventured into publishing, television, feature films, and music. He has written two books, Private Parts, which he adapted into a film, and Miss America. Stern's television endeavors include a variety show on New York City's WWOR-TV, a nightly E! show documenting his radio broadcasts, a similar CBS program that competed with Saturday Night Live for a time, "Howard On-Demand" for digital cable subscribers in various markets, and Son of the Beach, a parody of Baywatch for FX which Stern executive produced.
In 2006, Howard was elected into Time Magazine's "Time 100: The People who shape our world" [2] and was ranked #7 in Forbes Magazine's 2006 annual Celebrity 100[3].
SATELLITE RADIO GROUNDED? (see video)
Yes, we know. Terrestrial radio sucks. Mel Karmazin moved from Viacom (VIA) to Sirius (SIRI). And yes, Howard Stern followed. But, who cares. Who do you know that actually owns a satellite radio? I don’t. Not when you have Web radio anyway. Web radio is this year’s satellite radio. Last year satellite radio was on such lists. But something went wrong, very wrong.
First off, as bad as plain old radio might be, it didn’t go out of business altogether. In fact, radio giant Clear Channel Communications Inc. (CCU) has a market cap of over $17 billion. That’s approximately double the market cap of Sirius and XM (XMSR) combined. Clear Channel’s stock has outperformed the shares of both satellite radio companies over the last two years by a wide margin.
And the nature of competition changed. Enter Apple (AAPL), podcasts and even, Nokia (NOK). In fact, we think that companies with outdoor assets (Clear Channel for example) can Wifi-enable billboards and beam their signals to listeners and totally redefine the radio market.
The iPod was launched in 2001 and sold 70 million units in five years. Nokia Corporation thinks it will sell 80 million music phones this year. These devices are obviously delivery mechanisms and platforms for whatever radio is, becomes and competes with.
It’s not like people are not excited about radio, it’s just that the excitement has shifted: over the past five years, Apple Computer Inc.’s stock has risen from about $11 to $91.
One thing that keeps their stocks, well, on the ground is the heavy debt burden: XM and Sirius have balance sheets with over $1 billion in debt and they’re losing money to this day in 2006 off quarterly revenues of some $200 million.
Oh, I know what you are thinking, they are building market share, right. Well, let’s examine the tale of the tape: XM finished the third quarter with more than 7.2 million subscribers. Sirius has more than 5 million subscribers.
More importantly, both companies are reducing targets. That’s weak. Sirius cut its subscriber goal for the year and now say it expects to end 2006 with 5.9 million to 6.1 million subscribers, down from its previous estimate of 6.3 million. XM has cut its subscriber goal at least twice this year. It expects to end the year with 7.7 million to 7.9 million subscribers.
Come on? It’s so weak that some are calling for a merger. Problem. Who buys who?
XM’s enterprise value smaller than Sirius’ even though XM has a larger subscriber base. What does that say? One word: hype. Another word: flash.
Two wrongs don’t make a right. Besides, the FCC will probably not allow it, it sold two licenses to XM and Sirius to ensure competition. If it views satellite radio as one entity taking on terrestrial radio and Web radio, then it says a lot about the future of satellite radio, which held so much promise recently.
And… with Democrats in office, we don’t think that a one company market is realistic.
Lastly, the fact is that the companies’ technologies are somewhat different: they use different codecs.
So where does this lead Mel Karmazin? Who knows, Yahoo! (YHOO) maybe? I hear they need a good salesman.
Photo:
Soft-copy of Sirius Satellite Radio publicity photograph of radio personality Howard Stern, copyright 2005.
Fair-Use Rationale: Publicity photograph of Howard Stern, employee of Sirius Satellite Radio for use on the Howard Stern page.
Source: Sirius.com (Original Version as a thumbnail still active on this page. Accessed on 14-SEP-2006. Modified version still active. Accessed on 14-SEP-2006.)
