The Howard Stern Influence
When people talk about satellite radio, the name Howard Stern almost always arises. Whether you like him or not, Stern is a radio and media icon who’s influence on entertainment can not be doubted. Some look at Howard with a jaundiced eye because of his edgy style, but he is much more than that. His boisterous fans who clamor to every bit or sketch are joined by many “closet” fans who enjoy his show on their commute, but never admit to listening to him.
How does Howard Stern command such a vast audience from such a wide spectrum of people? The answer is that he posses an ingrained talent to balance edgy content with informative discussion. He looks at life through a humorous prism, and for a few hours a day, allows some to laugh out loud while others curiously listen from the sidelines. Howard has an uncanny ability to bring out the most from his interviews, and shed a little light on aspects of his guests that no other interview brings out. The great thing about him is that you are compelled to tune in because you don’t want to miss radio gold like his interview with Paul McCartney.
When Howard Stern signed with Sirius Satellite Radio there was huge discussion about whether the cost was worth it. Stern fans loved the move while detractors labeled him as washed up, and over the hill. In the end, it was Howard Stern, and not the NFL, NASCAR, Eminem, or Martha Stewart that delivered subscribers in huge numbers to Sirius. Even in the face of a huge boost in subscriptions, some claimed that he was not the major factor in Sirius’ sudden growth.
Fast forward a few years, and Sirius would merge with XM. As part of the merger, an upgrade in packages would be offered. Sirius subscribers could buy the Best of XM, and XM subscribers the Best of Sirius. As of June 2009, the merged company had roughly 19 million subscribers. Of those subscribers, roughly 15 million are self paying. Roughly 5% (748,000) of the self paying subscriber base has elected to pay a premium to get the ” Best Of” the other package. The interesting statistic is that 544,000 XM subs have opted for the “Best Of Sirius”, while only 204,000 Sirius subscribers have opted for the “Best Of XM”. This translates to the “Best Of Sirius” package getting 73% of the “Best Of” market!
Is the gap between the two “Best Of” packages attributable to football? Not likely. These numbers are growing outside football season. Is NASCAR the answer. Again, not likely. Nor is Martha. The major draw for the “Best Of” package is Howard Stern. Perhaps if Major League baseball were to become a part of the “Best Of XM” package there would be some boost to the XM side of the house, but given that the NFL has yet to carry a big impact in the other direction is telling, and would point to modest gains in the “Best Of XM” package if it were offered. I am sure that die-hard Opie & Anthony fans will want to cry foul and label Stern as a “has-been”, but the numbers speak quite clearly. Stern is far from a has been, and will continue to be a major draw, even with a four day work week.
Howard Stern’s current deal expires about eighteen months from now. Before the end of 2009, the grumbling about whether or not he will return will become more and more newsworthy, even in the mainstream media. Stern will attract coverage that other name talent on SDARS has not. When Ellen left XM, there was no story about it on Entertainment tonight, or Fox News. Howard garners that kind of coverage, and he will forever be linked closely with satellite radio.
The fact of the matter is that Howard Stern carries a lot of cache. While Sirius XM could survive without him, having him on board makes things much easier. When he left terrestrial, a vacuum was created. terrestrial radio has survived, but they indeed missed him. For the entertainment world, the most serious question is not where Howard goes, but whether or not he retires. If Howard stays in radio, Sirius XM will have to put a competitive number on the table. If he retires, satellite radio will have already had the chance to expose subscribers to all of the incredible content Sirius XM has to offer.
Stern is a compelling differentiator in media. The numbers bear it out. His career bears it out. Whether someone wants to admit it or not, an edgy Howard Stern in hand is better than an edgy Howard Stern elsewhere. Howard still has influence, and has a great deal more influence than people really comprehend.
Position – Long Sirius XM
Ok I agree Howard is a big pull. Before he went to Sirius they were way behind XM with subs. There is a few other things at play with the “Best Of” packages. Technology is not the least of them. XM radios can pick up terrestrial repeater stations so they have less dropped signals in tows with large buildings and other things that may interfere with receiving the satellite signals. Many of the customers who used to have both services dropped their Sirius radios to go exclusively with their more reliable XM receivers. The new radios will change this. Howard has a huge fan base is he worth his contract. I hope so, as a stock holder, but as a subscriber I care less. I find him dull, and uninspiring, but that is my opinion. Everyone is entitled to one. I will say from an analyst point of view Howard is the only relevant part of the Best of Sirius package, but you wonder why they dropped the price from 4$ to $2.
O&A fan (above) – your numbers are wrong. Just before the companies merged the 2 sat companies had relatively the same numbers. I would look it up for you, but im lazy. I am a listener to both Stern and O&A and anyone who denies the impact of Stern has their head in some other Vortex.
I have to agree I bought Sirius BECAUSE of Howard, I love the other channels but I am a big talk radio guy seems to get me through the day better than music.
However I am still waiting for this mystical Iphone streamer that has been on the cusp of release for over 6 months now.. (I’m referring to all the apps and the official one)
Someone just get it online NOW!!
Where is the I-Phone App? Will Stern announce the release on Letterman? Even better, will Stern announce that he does not plan to retire at the end of his current contract?
The issue has never been if there is a draw to Howard Stern, but at what price ? As a listener and a stockholder, I just can’t justify the price. If the company was making money then the extravagant spending could be tolerated as just cutting into profits. As it is, Howard and sports costs have placed the company on the verge of bankruptcy and has already cost us 40% dilution of the company just this year !! Sad to say, but someone should be working on a business plan to make this company work with no big names and only low cost sports and about 10 to 11 million subscribers. If it can be profitable at that level, then the high priced programming can be added back in if it can bring in more subscribers at a profit. Howard, NASCAR, NFL and MLB need to be told that the patient investors deserve some return on their money for a change. If they can’t live with lower fees, then the company will figure out how to move on without them.
Just one person’s opinion, but what do you think ?
Without Stern, there is no Sirius-XM.
If he left tomorrow, you might as well close the doors.
The instantaneous drop in subscribers would be fatal to the company.
BahBah Booey, perhaps that is true, but it’s not the point at hand. Howard isn’t leaving tomorrow, he has a contract. I don’t think you would close the doors, but you would have to get by on maybe 15 million subscribers instead of 18 million. Not fatal, but tough even with the expense cuts that have happened.
The real question is the future. Howard Stern, the NFL and NASCAR are all up for renewal soon. MLB has a long time left, and I don’t know about the college conferences.
Do we shove another Billion or two of the shareholder’s equity at these things or decide to tough it out with fewer subscribers? Howard Stern, the NFL owners and NASCAR are all very wealthy. The people suffering are the SIRI stockholders who have had 90 of their investment wiped out. I submit that a profitable company with 10 to 12 million subscribers is better than a company with losses as far as the eye can see with 20 million.
Just a thought
Looks like Fathers’s Day is going to pass before the I-phone appl.promotion or the I-Phone appl. at all.
They said the I-Phone app would be out before the end of the 2nd qtr. They meant 2009 right?
Yesterday was a complete failure for SiriusXM. Apple has no intentions of promoting SiriusXM, and I believe the iphone application will be rejected.
Sure feels that way around here, with the stale 4-day old nature of this ‘blog’………. just when everyone is expecting something……….I’d say business as usual !!
And as always…………..fear, doom and gloom, and someone is selling their stocks out on-the-cheap…………………
>>> The fact of the matter is that Howard Stern carries a lot of cache.
I assume you meant he carries a lot of “cash”.
He carried cash out of Sirius, and by extension, out of XM by the trailer-load. In fact, he’s about the only one who carried any cash out.
As some smart people predicted early on, after his five years are up, he’s history — and the $720 Million Sirius “invested” in him is history, the “brand” they built actually works AGAINST them, and Howard is laughing all the way to the bank.
Joe Clayton destroyed Sirius and the idiots running XM allowed Stern to take them down along with Karmazin.
Who couldn’t have foreseen the so-called “Stern Effect” was a temporary spike in subscribers? How could they have missed it?
I have both Sirius, in my car, and XM, in my truck. I will not get best of Sirius on my XM but did try to get best of XM on my Sirius. I do say try because the peice of garbage radio cannot be programmed for it. I will be letting my Sirius sub expire.
When the merge happened both company’s had approx 9.5 million subscribers, correct? If you attribute the entire 500k best of subscribers to Howard then only approx 5% of xm subscribers wanted him. More realistically, lets say half paid for him. This means that 95% to 97% of the people already paying for xm didn’t want him. This doesn’t exactly prove that he is worth 100 million annually.
The most likely final solution for the Howie dilemma is that he keeps the channels with Artie, robin, Gary and maybe Bubba. Howard stays on as the godfather of h101-h102 with a once weekly show. This way he gets to keep his pride and Sirius gets to keep 90 plus million a year. The koolaid drinking die hard fans will all scream, but most will stay put. After all, they are presently putting up with a guy who only does 160 live shows a year.
As for Howie jumping ship for terrestrial radio, listen to his show closely and you will hear how desperate he is to be done with the whole business.