Howard Stern Frigid On Pay Cut Comments – Dont Look For Deal Before Christmas
Big stars always have tough negotiations when it comes to signing a new deal. Howard Stern finds himself in that position now. He has been a staple in radio for decades and is at the end of his five year deal with satellite radio. Whether or not you like Stern is not material. The fact is that he is a radio star that generates revenue for whomever he is working for. Talent like this can not be dismissed lightly.
This week in an interview Sirius XM’s David Frear stated that Stern may need to take a pay cut in order to stay on board with Sirius XM. This opened a floodgate of Internet comments and Stern even addressed the issue on his show. His first deal with Sirius is likely the most oft confused deal in the short history of satellite radio with many thinking that Stern pockets $100 million per year. The reality is that the $500 million deal encompassed construction of the studio, the entire staff, and every stitch of programming on the Howard 100 and Howard 101 channels. Howard did not take kindly to Frears comments. He feels that he is an integral part of the company and deserves fair compensation.
Time is now getting short. The last live show is scheduled for December 16th. The reality of what a new Stern deal may shape up to look like is that there will be less guaranteed money and more incentives. One key shortcomings of the current deal is that Stern’s show is not available on the mobile phone apps. This is a point that gives Stern negotiating power. More and more people are shifting to apps on smart phones for audio entertainment. Stern is a shrewd negotiator, but then again Karmazin is as well. It creates an interesting dynamic.
The reality of the situation is that Stern and his show staff are all on vacation from December 16th until after the New Year. It is during this period that details of a new deal may be worked out between Sirius XM and Stern. Yes, Stern can leave, but realistically speaking he has a good thing on satellite radio. Why leave? That news does not make satellite radio retailers happy, but what choice is there. Stern has power in holding out. He knows this, and will use it to his advantage.
For Sirius XM the trick is keeping Stern on board while at the same time proving to the investment community that they are being cost conscious. It is often said that the best and most reasonable deals are those which neither party feels like they won and neither feels like they lost. This is the dynamic that needs to be sought out. It is important that both Stern and Sirius XM are able to save face in this deal.
The way I see it the company will need to be creative. They need to lower the guaranteed money while at the same time allowing Stern to earn the type of money he wants. One method is giving him a revenue share of some nature. His channels command the highest ad rates, and perhaps that is a way to get the deal done. Another incentive could be a cut of the streaming side of the business on apps and the Internet. Sirius XM got creative on the latest Martha Stewart deal, it should not be a surprise that they will need to get creative on this one.
Personally I feel the real negotiations will not start until after Christmas with an announcement as late as the first week in 2011. I know this is not what people want to hear, but realistically speaking it is where the Stern situation is. While Stern has had some moments of “negotiating on the air”, he has for the most part handled this whole situation in a stand up manner. The same can not be said for Bubba The Love Sponge who is on Sterns channels in the afternoon. Bubba seems to slam satellite radio far too much. It is like he takes it all too personally, and is burning bridges he shouldn’t be burning. If he is not careful he could wind up being a casualty of these negotiations.
As for Sirius XM. They need to stop fueling the fire and simply work on a fair deal. When the time comes a press release letting everyone save face will be issued. Then we wont have to worry about this for five more years.
Position – Long Sirius XM Radio
If he is only going to work 3 days a week than yes he would take a pay cut. He gets so defensive and it seems he always looks at something 1 way. Like Gary’s interviews. Of course he didn’t call Howard a mental patient nor did anyone think that he did. Whether is leaves or stays I am staying because frankly there is nothing like SiriusXM.
Well I guess no matter how big a person, if they don’t work for themselves you can bet there is an asshole that has power over them. In this case Howard was transported back to the pig vomit days! Anybody that works for someone knows there’s always some buthead trying to make themselves look good by sticking it to someone lower on the ladder than they are.
What was “creative” aabout the new Martha Stewart deal? I don’t believe I read anything on that. Can you point me to something if you covered it?
I’m thinking that maybe there’s a way for Howard to have re-newed his contract and still not know. He tells his agent to get it done but don’t tell me it’s offically done until Dec.13th. This way he can be truthful to his audience by saying he doesn’t have a deal and then miraculous be able to announce to the world at the Paul McCartney concert that he’s re-newed his contract with sirius/xm. I will be really surprised if he does not announce at that concert.
It’s just a perfect set up!
wow wouldnt that be great or what, stern has been known to jump on concert stages to represent his company..back in the day 92.3 krock.
Wonder if Howard could ” lease ” a channel from Sirius ( for free ) and charge a fee over and above the Sirius fee for his show only. He gets all the revenue and it does not cost Sirius anything. Stern fans pay for Stern.
Howard and Mel are playing a game of high-finance chicken. That’s why it’s taking so long. And I’m sure this will go down to the wire with a settlement in the wee hours the morning before the first 2011 show. But a deal will be worked out because it has to. Howard Stern is the face of satellite radio, so Sirius must sign him. And as for Howard, he’s got no other place to go. That internet gig is a loser all day long and everybody knows it.
Don Buchwald is finding out that Malone is a lot tougher negotiator than Joe Clayton who he walked over. It will be interesting to see what transpires but it ain’t going down for $100M/year – Liberty won’t let this happen.
I believe that there was some sort of study done that indicated that is Stern left Sirius-XM that about one million subscribers would leave. That is worth about $120 million. On the other hand, if Stern stays that would cost Sirius-XM $100 million plus his bonuses. That’s a wash on the financial page. The big looser would be Stern as he’s not going to find anybody else to give him anywhere that kind of money. Forget about Steve Jobs, he doesn’t need Stern in order to make money.
The article is correct in saying that in the end Stern stays and some sort of face saving contract will be hammered out. Sirius-XM will continue to grow with or without him. There was a time when Sirius-XM needed him, but that time of absolute necessity has passed. From what I hear Stern netted $350 million during the past five years so what is he crying about.
1 million won’t leave…I like Howard but I like Sirius more. In the end Howard is a funny circus act. He is not the original he tries to convince everyone. Does he really deserve that much money? When someone would pay him that …yes. Now not so much. If he was smart he would ask for the same deal 60% stock 40% cash. He is not and my guess is he won’t be back for 6 months and which time he caves….
True, 1 million will not leave, more like 3-5 million. I, for one, would be gone, since Howard is all I listen to all day. He has more leverage here than you give him hertx, a lot more, and Sirius knows it.
Hey Stern has value but so do the other 120+ channels and their hosts/jockeys. They deserve some credit. What are we talking about here? 20M subscribers won’t just drop service for one radio jockey that decides to leave or gets released. We have Sirius XM in all our vehicles, home (DISH network of course) and Sirius XM users for life regardless of a jockey. Sorry Howard, nothing personal.
Listen, I love Dangerous Darren and Rockin Keith Roth on Hair Nation but if they decide to leave I know we would still keep our service. It would suck because those guys are they face of Hair Nation and keep us Rockin’!! High five to them.
We should say thank you to Stern for everything and helping do his part to help grow the Sirius brand but understand new jockeys and hosts will come and go. It’s just the biz and the cycle of life in radio. Economy plays a role in this today as well so while the economy was moving 5 years ago, it’s not today.
loyal fan and shareholder~
The deal is as far as I’m concerned Howie can pound sand. Mel tell him to take a hike because he is uncensored on siri/xm and the fcc will come down hard on him anywhere else. That is a Fact Jack. Mel you the man tell Stern to take a hike if he doesn’t like what he is offered.
Stern can go, I used to listen quite a bit, but now im getting tired of him. lets take the initial hit and move on.
I got Sirius just for Stern when he first signed on but grew tired of his show and many vacations. That, along with the sound quality & repetitive radio station playlists, I just couldn’t justify keeping and paying for the service any longer. I cancelled 2 years ago and, you know what, I haven’t really missed it. I have my iPod and Pandora on my phone to get me by.
First: I don’t believe David Frear specifically stated Stern would have to take a pay cut….folks need to get their facts straight.
Second: To suggest that Howard has the option of streaming over the Internet as his core operations, thats ludicrous. Howard is not going to limit his options to an uncertain data-regulated future of mobile Internet Streaming. Besides, Sirius-XM already offers premium Internet streaming, which in the future may include more Howard.
Third: Howard and Mel have a very special relationship. Mel is not going to make Howard feel inferior. Mel and Howard are professionals; they will work out a fair deal for both parties. IMO, I believe the deal has already been ironed out. Taking the announcement down to the last minute causes some parties to jump ship and provides confident investors the opportunity to consolidate at a lower price. If a deal with Stern includes a fair amount of Sirius stock, as some people have speculated, then this would be a perfect time for Howard to snatch up a considerable amount of shares just before his announcement to stay is made public.
As a customer, I pay for six sat radio subscriptions and one Internet streaming sub through Sirius-XM. Sirius-XM equipment and connection is far superior to any so-called competitors service. I don’t listen to Howard – Never have, but I believe anyone who brings a considerable amount substance to the value of a company, is well worth retaining at a cost that still earns revenue. I’m betting one day, when this infant sat radio company matures, it will have a channel for every person on this planet and beyond – even extraterrestrials like music lol.
-Timeless
Howard just announced that he is staying…..
ouch… bad timing on this article Headline !
“The reality is that the $500 million deal encompassed construction of the studio, the entire staff…”
Hmmm, I’ve always heard Howard say that he has no control over the staff hiring and contracts. Yet, I’ve heard many times before that his $500 million deal included the staff.