Satellite broadcaster's shares rise as 'King of All Media' stays on
More than any other talent, Stern has been key in growing satellite radio’s subscriber base. The self-proclaimed “King of All Media” is believed to have been a huge factor in bringing Sirius XM up to its 20 million sub tally.
“Howard is a great talent, and we are thrilled that he will continue to provoke, engage and entertain on Sirius XM,” said CEO Mel Karmazin. “Our agreement is good news on all fronts — it is good for Sirius XM subscribers and good for Sirius XM stockholders. Howard forever changed radio and was instrumental in putting Sirius on the map when he first launched on satellite radio. He is one of the few ‘one-name’ entertainers in the country, and our 20 million subscribers are lucky to have him.”
News came after months of speculation regarding Stern’s fate. Stern — who makes a habit of keeping listeners and his employers guessing — went on a tirade earlier this week after Sirius chief financial officer David Frear told attendees at the UBS investor conference Stern would have to settle for a pay cut.
Of course, it could have all been for show: A new deal was signed, sealed and delivered just two days later.
Terms of the deal weren’t disclosed, and some analysts have suggested to the media that while Stern’s take-home pay probably remained steady, he may have been given fewer, or no, stock options.
New deal, which runs through Dec. 31, 2015, will allow Sirius XM to begin exclusively transmitting Stern’s programming to mobile devices, the company said.
Contract is likely a huge relief for Sirius XM, which could have faced subscriber defection had Stern left for another outlet.
“On my first day in satellite radio, Sirius had approximately 600,000 subscribers. Today, the two companies have 20 million; and, in my view, we have just scratched the surface of how many people will get onboard,” Stern said in a statement.
Stern left terrestrial radio in December 2005, signing a five-year, $500 million deal to head over to Sirius (prior to its merger with rival XM), where he would no longer face content restrictions. The host opted for the change after frequently running afoul of FCC limitations.
With his contract expiration looming, rumors had been swirling that Stern might be looking for a new home. His “King of All Media” status has faded during the past five years as his available audience shrunk because of sat radio’s limited aud base.
News of Stern’s contract gave a lift to Sirius XM’s shares, which have been inching up since falling below $1 late last year. Sirius XM shares were up 8¢, or 5.7%, at the close of trading Thursday to $1.39.