Howard Stern Who Can Afford Him?
I was a huge Howard Stern fan ever since I could get his channel 9 show in high school, and while he was on the radio, but once he moved over to satellite then that is where it all ended for me. I wasn't going to pay for radio, no way in hell. And I was broke at the time too.
I have caught a few of his shows on XM and they just aren't the same. When he was on the radio the entire Stern team had to work hard and creatively to get there bits on air. But being on satellite they can say what they want, which has caused the show to lose it magic.
Perhaps not technically, but Stern's on-air mentions of his exclusive Sirius XM Radio deal winding down at year's end, and his hedged proclamations of competing offers, are what one insider called his "method of operation."
Not only is it his way of rallying his fan base so they'll agitate on his behalf, but he also is making sure that celestial and terrestrial radio know they'll need to bid against each other if they intend on retaining -- or attaining -- his services.
As effective as Stern's M.O. might have been in the past, though, it could fall flat this time because Sirius XM Radio has descended into penny-stock status during his satellite tenure, and traditional radio isn't faring much better. This begs the questions: Who's left that can afford to pony up anything near the $100 million a year that Sirius XM has been shelling out to Stern and his crew? And what form could a new deal take?
Sirius XM chief Mel Karmazin on Wednesday made it clear he wants the shock jock to stay put.
"In this world of fragmentation, content prevails," he said during a presentation at the Paley Center for Media in New York. "Howard Stern is great content. Howard would be sought-after by anyone. He's a great talent. Having said that, we would like him to stay with us, and we are optimistic he will continue to do so."
CBS might not compete for Stern's attentions, given that he insulted CEO Leslie Moonves after the company sued him five years ago. CBS would not comment.
Clear Channel Radio CEO John Hogan, on the other hand, already has said his is "the most logical company for (Stern) to optimize his exposure and financial return."
Hogan seemed to be saying that Stern would make more money at Clear Channel than elsewhere.
Clear Channel presumably would syndicate Stern through its Premiere Radio Networks. But that entity has struck new deals recently with some of the industry's top personalities, including Rush Limbaugh, Ryan Seacrest, Sean Hannity, Glenn Beck, Elvis Duran and Delilah -- none of whom came cheap. Limbaugh's contract inked in 2008, for example, calls for $400 million over eight years.
Besides its $500 million commitment to Stern, Sirius XM is paying $600 million to Major League Baseball, $200 million to the NFL, $108 million to NASCAR, $100 million to the NHL, $55 million to Oprah Winfrey and $30 million to Martha Stewart.
Stern's hefty pay package came before the Sirius-XM merger, when the two were competing and bidding against each other. So if Stern sticks with satellite after his contract expires at year's end, it is expected he'll work fewer hours for less pay.
"We are assuming that Sirius renews with Howard Stern in 2011 at $80 million a year in cash," Lazard Capital Markets analyst Barton Crockett told clients recently. "That represents a fair compromise between the view that Stern is worth less now than he was in 2004 and the fact that he still has a loyal subscriber base that could walk if he doesn't renew."
Crockett guesses that 1 million of Sirius XM's 18.5 million subscribers would leave. If he's right, it would cost Sirius XM $74 million per year in lost free-cash flow.
Others note Stern's flagging cultural influence, evidenced by a sharp decrease in the number of Google searches for his name during the past five years. TheStreet.com also weighed in on Stern's worth by polling its readers: 55% said Sirius XM should not re-sign him.
Many have opined that Stern's options are limited, given that his show has become so raunchy that the FCC wouldn't even allow it on traditional radio, at least not in its present form. Crockett argues, though, that tension caused by an FCC at war with Stern actually would improve the show.
Such a scenario already has detractors lining up. The Parents Television Council, for example, calls it "a very troubling sign" that Clear Channel even expressed an interest in Stern.
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Source-THR
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