Infinity chief dismisses sat radio threat
NEW YORK — “If you want to give me a check for $100 million, we’ll take (Howard Stern) off the air tomorrow,” Infinity Broadcasting prexy-chief operating officer Joel Hollander told a packed media conference Tuesday.
He was responding to an investor worried that keeping Stern through the end of his contract — until 2006 — basically meant free daily advertising for Sirius Satellite Radio, Stern’s next employer and Infinity rival.
“We certainly don’t like that he’s on the air every day talking about satellite radio,” Hollander acknowledged. But paying out the shock jock’s contract is a painful proposition, too.
And, he said, concerns are overblown. “I’ve always been an Imus listener. But I listened to Howard Stern this morning. In an hour, he talked about satellite radio for two minutes.” (Not that anyone’s counting.)
“Right now, we are planning on having him fill out his contract. And he’s been a total gentleman,” Hollander said.
Infinity, a unit of Viacom, is prepared to open the coffers wide to attract new talent. “You’d be surprised at the interest we’re getting. We’re going to do something, but at the right time. … We’ll deal with it when we’re ready,” he said — the implication being that Infinity may cut Stern loose when it finds a replacement.
The Viacom-Sirius friction has become one of the media industry’s most diverting dramas.
Former Viacom chief operating officer and close Stern ally Mel Karmazin, who ankled last summer after a rocky tenure, recently took the top job at Sirius. These two hires and a series of content deals and upbeat news have inflated Sirius stock.
Shares jumped another 11.4% Tuesday to pass $9 a share — for a hefty market capitalization of $11.4 billion. Service has about 800,000 subs.
Larger competitor XM Satellite Radio has 2.5 million subs, a stock near $40 and a market cap of $7.9 billion.
Hollander called Wall Street’s love affair with satellite radio “irrational exuberance” — borrowing Federal Reserve chief Alan Greenspan’s description several years ago of the stock market in the thrall of the Internet bubble, which later popped.
“I believe there’s a business. I just think it’s a boutique business, not a mass business — 295 million people listen to radio every day in the United States, and they have 4 million subscribers.”
Radio is struggling, and Infinity has been Viacom’s biggest sore spot over the last year or so. Hollander — in a slap at Karmazin — said the company had been starved for cash and badly run with an eye on short-term profits to boost the stock.
Karmazin “did a wonderful job for many years and made a lot money for investors and for employees. But that was then, this is now,” he said.
“Les (Moonves) has brought his creative background. … They’re totally different people. Different styles.”
Hollander said Moonves and Viacom chief Sumner Redstone urged him to leave no stone unturned in the search for content and talent.
Infinity also plans to cut its spending on sports rights, the cost of which has ballooned. Hollander said 12 deals with various teams will be up in the next 24 months. Company won’t reup unless it’s sure it can make money on a deal.
He reaffirmed Infinity’s focus on the top 20 largest markets — which generate 80% of revenue — and said talks are under way to divest or swap the others.