http://www.huffingtonpost.com/mario-almonte/a-taste-of-honey-with-alt_b_736345.html
A Taste of Honey - With Howard Stern Enticed by Alternative Media, Can Sirius XM Survive Without Him?
In recent weeks, radio DJ Howard Stern seems like a man holding back a smoldering fire. With his five-year contract with Sirius XM expiring at the end of the year, he finds it inconceivable that the company he almost single-handedly rescued from near extinction should now consider him expendable.
But when once his options seemed limited to accepting a more modest contract with Sirius XM or retiring, he now sounds ready to move on. His eyes have been opened to the almost limitless potential of alternative online media. Some of the biggest industry players are convinced that he is capable of accomplishing a feat that so far has eluded many of the most brilliant minds of the new digital landscape - getting people to pay for content - and they're flashing a substantial amount of cash before his eyes to lure him in. Stern is thus mulling over the challenges of blazing a new media frontier - and once again making a former, unappreciative employer eat his dust.
What, Me Worry?
One of the biggest mysteries in Howard Stern's long and remarkably successful career in radio is how astoundingly clueless his past employers have been with regards to his value to their company. Often, at the height of his popularity and when they needed him the most, they have basically allowed him to walk out the door - to watch him achieve even bigger success with his next employer.
In 1985, at the top of his game, New York City's WNBC radio fired him for "conceptual differences," even though he was generating some of the station's highest ratings. He was soon picked up by a competing radio station, WXRK, where he not only went on to bury WNBC in the ratings, he held the number one spot in New York for seven consecutive years.
During his 20-year reign at WXRK, Stern became the biggest radio personality in the country, with an estimated audience of more than 20 million and syndication in 60 markets in North America. Yet, he was constantly at odds with Infinity, the station owner, which placed increasing pressure on him to tone down the controversial elements of his show. As a result, in 2004, Infinity watched Sirius Satellite radio - now Sirius XM (SIRI) - steal him away with a breathtaking $500 million, five year deal.
Infinity seemed cavalier - even disdainful - of Stern's value to them, possibly because the cold, hard numbers showed that Stern's $100 million in ad revenues accounted for less than half a percent of parent company Viacom's $23.9 billion in sales. But they made the fatal mistake of dismissing the near-fanatical devotion of his fans, which transformed his show into a powerful lead-in that anchored listeners to the rest of the station programming in all of his 60 markets. When Stern left, people stopped listening to many of these stations entirely.
The company also overlooked his exceptional influence on the radio industry as a whole. He made it cool - almost glamorous - to be a DJ, attracting new talent to the business and launching an industry renaissance that significantly increased the value of radio stocks. When he left terrestrial radio for satellite, he took that coolness factor with him, sending terrestrial radio into a tailspin. Arguably, the Internet was already changing music listening habits, and audiences were abandoning traditional radio in record numbers, but the impact of his departure in accelerating the process cannot be discounted.
Stern's arrival at satellite radio not only sparked a massive surge in membership that quickly helped Sirius catch up to its then-rival XM, it also helped the technology achieve its most elusive prize - legitimacy. As a result, high-caliber talent no longer considered it a step down in their careers to be on satellite radio and readily signed on (of course, the generous payday didn't hurt). Sirius' momentum also propelled it to a position of dominance over XM, eventually forcing XM to merge with Sirius to survive.
You Again?
But history now seems on the verge of repeating itself, with the love affair between Sirius XM and its poster child Howard Stern apparently coming to an end in typical fashion - bitterly. The company appears to have placed its final offer on the table, convinced it cannot afford to pay him any more, and feeling confident it can survive without him.
"They may have come for Howard," Sirius XM Chief Executive Mel Karmazin said recently, "but they listen to other channels."
Very likely, Karmazin is looking at the cold, hard numbers, which indicate that Stern is no longer the subscriber magnet he once was. Today, the majority of new subscribers come from automobile sales, where a free year of satellite service is included with most new car purchases; about 50% of these customers convert to paid subscriptions. Meanwhile, Sirius XM surveys also appear to indicate that most of its subscribers do not listen to Stern (though people have not always been honest about admitting this), so it is unlikely they would care if Stern left the service.
Therefore, with automobile sales recovering and its subscriber base growing again, Sirius XM feels it can take the potential hit in lost Stern fans, should their most visible talent leave them.
