Stern Has Serious Hurdles If He Leaves Sirius XM
The subject of Howard Stern is getting a lot of attention lately. His contract is set to expire at the end of the year, and already we are beginning to see the Howard Stern version of on-air negotiations. This week Stern stated that retirement was not an option, but that he would wind up somewhere. He also stated that there were other options he was considering and dropped a hint that he felt the Internet would be available in cars within 5 years.
As I pen this I can not help but think of the same hurdles that are being faced by Internet radio services such as Pandora and Slacker. If Stern goes the Internet route, there are hurdles similar to that which all Internet radio services have:
1. Most radio listening happens in the car. Internet is not available in all cars.
2. Internet Radio may seem like an inexpensive alternative, but equipment is needed to make it work. In this case it is smart phones that include data plans. For fans that already have smart phones a switch to Internet radio is simple. For those that don’t, it means dropping down hard earned dollars on a new phone, and locking into a more expensive monthly contract.
3. When Stern migrated to Sirius XM there were fans that refused to come with him because of hardware costs. That same thing could happen again to those that do’t want cell bills that go over $120 per month.
4. Stern would likely lose the “live factor” meaning it would be that much more difficult for listeners to feel connected to the show. How on earth can we expect whack packers that call in and are integral to the show to grasp the concept of calling in when the show is being recorded instead of when it is being heard?
5. Satellite Radio has good coverage across the entire continent. Cell coverage can be much more spotty.
6. No matter what Stern does, he will not put up his own money to do it. This means that someone is going to have to pay handsomely. I do not see Stern doing another deal that involves stock, and that is likely the way another competitor would need to compensate him.
7. Stern’s success on the Internet radio via smart phones is not defined. Because he is not available on any of the apps, there is no measure of his success.
Howard Stern has an ego. He has a certain way he wants to proceed, but perhaps his ego is in the way as he is negotiating with Sirius XM. Stern likes to credit himself with almost every subscriber Sirius has obtained since his arrival. Yes, he did bring subs, and yes, he does have cache, but XM still had more subs than Sirius at last count, and they did it without Stern. Stern is a draw, but not as big as he likes to think. When Stern came to satellite he lost listeners. It was a subject the competition brought up time and time again. If he tries to be a pioneer again, the same thing will happen. Not everyone will follow. As the King of All Media, does he really want to go out on a decline? If he stays with Sirius XM, he can participate in the growth Sirius XM will have in the years to come. Sirius XM already has a proven and stable platform that Stern can claim as his own. Even if he leaves, Sirius XM will grow. The subscriber numbers of XM prove growth is happening without Stern. How would it look if the King of All Media left and the company was still adding subscribers at a healthy clip? Is that a risk stern is willing to take?
I do believe that smart phones will evolve further, and become more integrated with the dashboard of cars. However, there are costs associated with that. The newest wave is making your smart phone a wireless hot spot. Such technology would make it much easier to bring the Internet into cars. Verizon charges an extra $20 per month for that feature, but as you can see, the $20 fee is stiffer than the current rates for Sirius XM which provides a more consistent signal and is already built into cars.
Will Stern leave? Only time will tell, but it is a subject that I will cover in a follow-up article.
Position – Long Sirius XM Radio
Im tired of Stern, as far as I’m concerned he can go. The subscriber base will take a hit, but I don’t think it will be as bad as everybody seems to think.
SIRI can use the 500 million they paid him to gain more subs. I am not worried if he leaves.
Right now at this particular moment with consistent siri share onslaught and manipulation and the general market hysteria Stern may be somewhat important for siri’s momentum. However, in a bigger picture projecting two or three years from now Stern is irrelevant. Satellite radio will become a standard feature in a car similar to an air conditioner, as one large car dealer said in an interview with the satelliteradio playground. I would be shocked if Karmazin agrees to pay him anything close to what sirius agreed to pay him more than five years ago in order to lure him away from xm. Someone, hopefully Howard’s agent, should remind him that there is only ONE satellite company nowadays. These are different times and a different company with no true competition like it used to be before when sirius and xm were cutting each other’s throat for each and every new talent or deal, in particular like HS. Incidentally, this relates to any other contract that siri will be renewing. This is why I keep saying that this is still a huge area for savings that will contribute to siri’s EBIDTA growth. We should be looking at least at a 40% reduction in Howard’s pay. I completely agree that Howard’s big ego is definitely getting in the way of negotiations and may screw up not only the deal by also end his career as we know it now. You made a bunch of absolutely sensible points that I hope Howard’s agent should be pointing to him. With or without HS siri will still prosper.
Howard is not going anywhere…Write it down…3 year deal with 2 additional years at Howard’s option. Pay is more per day but less total dollars than last contract. Show runs from 7am to 11am. Howard programs a third channel that is music oriented where his “cronies” pick the music and produce the shows. Sirius agrees to pay the talent Howard chooses to complete the programming on Howard 101. It will be announced in 3 weeks.
Left out that Howard will split the revenue with Sirius on the ” Howard only” app.
Thank you Spence . . right on point as usual!
I hope Stern’s recent, off-handed, comments about the future of the technology, which to me is a direct slap in the face to the shareholders who employ him, did not escape the notice of the carpeted offices at “1221”
Howard is in new territory here. Fans who listened on terrestrial (myself included), were not also shareholders . . . fans who listen on satrad have substantial vested interest in the success of the Company.
People will put up with a lot of BS . . . but be careful when you start messing with their money; I wouldn’t be so sure that his fans will flock to follow him this time around.
And lets be honest, for someone who is the face of the franchise . . you barely ever see his face promoting the service or making appearances the way he did while on terrestrial . . . not hard to figure out why . . . satrad gave him his “F-U” money
Bingo!!!
Many of his fans are indeed stockholders — like me. Now he’s f’ing around with my money.
Quoting a website called marksfr*gg*n, here is what Howard said on his show recently:
“Howard said that the future of media is going to change over the next 5 years. He said whoever has the best content is going to win. He said he could have an app where he’s available wherever you are.”
As a long-time shareholder, even before Howard Stern came on board, I don’t like the implication in his statement.
It is implicitly dismissive of the subscription business model, it is implicitly dismissive of the satrad technology, it is explicitly dismissive of existing Siri content and it serves to devalue the significance and importance of the longstanding relationships with “OUR” OEM partners.
I am a Howard Stern fan. I am a Sirius XM shareholder.
If it’s “all about business” for Howard then it’s “all about business” for me too. If he is so concerned about having an “App” so that he’s “available wherever you are,” he could have already had one . . right here with the people who currently employ him and for the benefit of the Company’s existing shareholders.
We thought that was why he was appearing on David Letterman, to announce the “App” . . . instead he talked about “Jessica Hahn,” and “Richard Simmons” as if his radio show was stuck in some kind of “1980’s” time warp with no new material on satrad.
There is an age-old proclamation Howard that dates to 1422:
Le Roi est mort, vive le Roi!
Translation: The King is Dead, Long Live the King!
Interpretation: No one is irreplacable.
Good riddance if Stern goes. The presence of Stern on Sirius was one of the reasons I originally chose XM back before the merger. I also much preferred XM’s XCOUNTRY over Sirius’ miserable Outlaw Country. Hopefully Mojo Nixon, Fred Imus, Hillbilly Jim, Roger Alan Wade, Johnny Knoxville, Don Was, Cowboy Jack Clement and Shooter Jennings will depart with Stern.
The way I hear Howard is that he really wants to stay. He also said he understands that sirius wants a 5 yr.contract. The points I’m hearing from Stern, are a 3 day work week and some assurance that sat. radio is going to evolve with new tecnology. Let’s face it if you’ve worked your whole life to create this amazing radio show and have this huge fan base you want to feel like you’re on the right tec. not just out in the middle of no where. It’s human nature, as an investor, as a sub. I want to know that sirius/xm is going to stay relevant. I happen to agree with Howard on what he puts in for sirius/xm compared to other celebrity channels. I don’t know if sirius/xm knows how many people listen to which channels but I got a feeling they could cut some other channels to keep Howard and be better for it. Bottom line Howard is a marqee name that helps separate sirius/xm from other services. Mel knows, with in reason, you’ve got to keep Howard.
I don’t want stern to leave at all I have many subs on both sides.it was a smart move by Mel cause I wanted baseball and the sky dock was so cool a device he sold me.in many articles people mention that 20 bucks for internet is steep but aren’t you gonna pay that anyway cause a smartphone without it isn’t smart at all so I feel that argument is a mute point! During sterns vacations I start turning the dial and I find myself overwhelmed with shows I’ve never herd. Ron and fez was huge find and Ellis is good too.
Anywho,stern: 3 stations 1:live show teus,wed,Thursday
2: 101 same as now
3:102 stern live music shows of past pre recorded material
Would pandora pay for stern? I think they would it will be called pandoraH 2.0
This reply is the only intelligent piece I have read on here so far, including this article! While you make great points about Siri and the long term, you also state it will take a short term hit. Unfortunately I think you r underestimating how big that will be. The author states that at last count XM still has more subs??? Hello??? First off SIRI surpassed XM in every way, and it was DIRECTLY BECAUSE OF HOWARD STERN!!! XM laughed when Stern told them he would help put them out of business in 5 years, but it happened! Siri had around 700k subs at the time he signed, and XM I believe was close to 4 or 5 Million when they both courted Howard Stern. BOTTOM LINE IS THIS, Sat radio is still not that “for sure” thing/winner when it comes to the cars of tomorrow. There is still a subs fee, and whether the hardware is already there or not, many people do not choose to pay that fee even today. In the next 3 to 5 years we already know that the devices in this car niche will be many and different. Siri does not yet have a strangle hold on the future. Siri has been a big part of my portfolio for the better part of a year now, and it is what it is BECAUSE OF HOWARD STERN! Data shows something like 70%+ subs listen to Howard at least once a day when in cars with Sat radios!! If just 30-40% of his fans drop and follow him, that’s HUGE #s folks. Yes I think Sirius MIGHT weather the storm over the long run because of it’s head start, but it very well could go the way of Beta Max, Macintosh (back in the day), Atari, Zenith… So many examples of company’s that had a huge lead, great product, etc and wound up dying because of a few blunders at CRITICAL GROWTH POINTS! SIRI better realize that at least for the next 3 to 5 years, they need Howard Stern. He does NOT need them. He will make money, be relevant, and create success wherever he goes because of his loyal fan base! SIRI needs to keep him to ENSURE their lead will be insurmountable by other technologies vying for that precious spot on the car audio. And once and for all, both SIRI and XM were dead without Howard. XM was dying when SIRI bought it up, and the only reason SIRI got to that strength of a position was because of the MILLIONS of subscribers Stern brought over. Yes, MILLIONS, which is multiple times what SIRI started with. Give the guy the credit he deserves once and for all! He did it! Neither Oprah, MLB, Opie and Arnold (whatever that show is), not Sinatra, not Elvis, NO ONE WAS GOING TO BRING IN THE MONEY THAT STERN DID! Not to mention Mel Karmazon (SIRI CEO) admitted that Howard Stern’s deal far and away paid for itself and was critical to the success of the Satellite radio industry that was dying! I hope SIRI does make it, but without Howard, and with my iPod and a car audio connection, the SIRI subs is not worth it to me! One last thing. Don’t forget that in a year or so, all the old Sat radios will most likely need to be replaced with Sat Radio II. THERE IS ANOTHER MAJOR REASON FOR SIRI AND SAT RADIO’S SUCCESS THE LAST FIVE YEARS, HE SOLD MILLIONS OF RADIOS!!! Who will do that now to people who already have the old hardware?? They need him for a good 5 more years, so pay the man!!!
Sirius hardware is pure junk and NOTHING has changed in that regard.
After a total of 8 different units that all broke, I have given up on Sirius.
Without Howard Stern Sirius has NOTHING of value.
Wherever Howard goes, I’ll go.
since the whole world know what is going to happen, it is likely built into the stock price. 90 cents if he doesn’t sign and 1.10 if he does. and if it goes to 1.10 it will be shorted as people buy on the news, just like the RR.
Correct me if I’m wrong, but at the last SIRI quarterly meeting, nobody asked about Howard’s contract negotiations. Mel had to bring the issue up himself and then answer his own question. Nobody else seemed to care. The investors are obviously not concerned at all with the fate of Howard Stern.
I can’t imagine that Howard would leave Sirius, though. This internet thing is a bad idea and he knows it.
My sentiments exactly!! If he goes, I’ll be one of those not to follow. Howard’s core base is not full of young smart phone carrying types. He’s a relic to them. I got my first smartphone last month, and personally, it’s not all that it’s cracked up to be. The battery runs out daily. I couldn’t imagine having to hook that thing up to my car every time. It’s just dumb.
I can’t stand when Howard rants about what he means to SIRI. It is sooo off putting. He is one needy m’fer.