Sirius stock rocky on fears of costly deals
Rebel-rousing Sirius recovered slightly Thursday from a dramatic stock plunge, with topper Joseph Clayton trying to smooth investor concerns by promising that the radio satcaster is on track to hit 1 million subscribers by New Year’s Eve.
Sirius, which had been riding high on the news it signed shock jock Howard Stern and tapped former Viacom prexy Mel Karmazin as CEO, saw its value drop by 23% in trading Wednesday after two Wall Street brokerage firms downgraded the company.
Satcaster’s shares lost $2.11, closing Wednesday at $6.99. Shares were up 3.91% Thursday, closing at $7.17 on the NASDAQ.
Clayton, speaking on the final day of the UBS Annual Media Week Conference in New York, dismissed concerns the Stern hire and recently inked National Football League deal were too costly and risky.
Price hike ahead
But he admitted the monthly price for Sirius — now only $12.95 — would have to increase over time.
Clayton said it goes without saying that he’d like to see Stern come to Sirius before his contract with Viacom’s Infinity radio is up at the end of 2005.
“Would we like to have him earlier? You betcha,” Clayton said.
But speaking at UBS earlier in the week, Infinity prexy Joel Hollander made it clear he was not willing to let Stern go early unless someone was willing to cut him a check for $100 million — roughly the revenue Stern will bring in.
Stern has become a poster boy for Sirius, pumping the satcaster on his Infinity radio show and anywhere else he can. Shock jock said he had no choice but to leave the broadcast airwaves because of Washington’s indecency crackdown.
Clayton said Sirius would give Stern all the freedom he wants, but reminded that even satellite radio must answer to some degree to the Federal Communications Commission.