Can Sirius XM Survive Without Howard Stern


The satellite radio service wants to keep Stern, but faces a possible future without its top talent behind the mic

by F,           

One day last summer, Howard Stern ripped into his bosses at SiriusXM on his morning radio show. He accused them of gamesmanship, of treating him like a common employee, of disrespecting his talent. “Whenever you f— with me, I will f— with you worse,” he said. “I always win.”Explaining why he was so livid, Stern told his listeners that his bosses had recently asked him if he’d like to move the start of his show an hour later, to 7 a.m. That way everybody would get an extra hour of sleep. It seemed like a generous offer; Stern thought it over and accepted. It was then, he said, that management balked, insisting he’d misunderstood. He could start his show at 7 a.m., they informed him, if and when he renewed his contract with Sirius XM Holdings, which is set to expire in December 2015. Stern said he was enraged by what he felt was a strategic bait-and-switch. (A spokesperson for SiriusXM declined to comment.) For the next several minutes, he vented. “It’s not even clear to me who works for who,” Stern said. “I’m pretty sure if I left, it would be very bad for the company.”Stern is 61 years old. For 40 years he’s been rising before dawn to entertain and titillate drive-time commuters with a kaleidoscopic, screwball performance that’s teeming with anxiety, misfits, satire, celebrities, profanity, pranks, and porn stars. He’s the top rainmaker in American radio, capable of generating hundreds of millions of dollars a year in revenue for whomever employs him and his entourage of baroque sideshow performers known as the Wack Pack. Since 2005, Stern’s show has appeared on SiriusXM, the nation’s sole satellite radio service, which charges subscribers for access to some 175 channels of curated music, live sports, and talk shows. (The price typically ranges from $9.99 to $18.99 a month.) He anchors four hours of morning radio three days a week. Repeats of his shows and highlights from his extensive archives air constantly on two dedicated Howard Stern channels.

Source: Platon/Trunk Archive

Over the past decade, Stern and SiriusXM have thrived together. In 2004, when Stern announced he was moving his hit show from broadcast radio, where it was syndicated on 46 major markets around the country and attracted an estimated 20 million listeners, to satellite radio, where the majority of Americans wouldn’t hear it, lots of people thought he was crazy. It was unclear whether significant numbers of people would pay for satellite radio when they could listen to AM/FM for free.

But with Stern on board, Sirius’s fortunes took off, its subscriber base swelling with acolytes incanting “Baba-Booey!” and “Hey now!” Sirius quickly caught up with, passed, then acquired its rival, XM Satellite Radio. After surviving a rocky patch during the recession, SiriusXM has emerged in recent years as a growing, profitable business. It has 27.3 million paying subscribers. Last year the company had earnings of $1.4 billion before interest, taxes, depreciation, and amortization on $4.2 billion of revenue. On paper, the marriage between Stern and SiriusXM has never been better. Yet its future remains in limbo. Stern, who declined to be interviewed for this article, hasn’t said if he intends to extend his contract.

The Howard Stern Show is still the single most important piece of content that SiriusXM has—and the most expensive,” says Barton Crockett, an analyst with FBR Capital Markets. He estimates that Stern’s contract costs his employer about $80 million a year. “I think he’s worth every penny. It would be great for them if they can keep Howard Stern.”

In the past, Stern has always let his contract decisions go down to the wire. He has nine months to entertain offers and let the drama play out on his show. “Never think of me as a disc jockey,” he said on-air last July. “Because the one thing that matters to me more than anything after all these years in radio is that you treat me with respect. I’m sick and tired of how management speaks to talent. Talent is what drives this world. There is no Sirius without talent. Doesn’t matter how many satellites you f—ing stick in the air.”



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