Sirius Satellite recently awarded Howard Stern a stock option worth $85 million. As the operations manager for a radio station, I almost choked on my Cheerios when I first heard about it. Then I read this article and it brought things more into perspective. But “subscriber performance” aside, I still have to ask: Is Howard Stern really worth that kind of money? My only real exposure to him was his television show on E! I never heard his original radio show (although it was carried briefly on a Denver station, I could never pick it up out here in the boonies) and I don’t subscribe to Sirius for reasons that are probably obvious.
Any Dopers listen to this guy? Is he worth the money?
Sirius Satellite Radio paid shock jock Howard Stern a bonus worth nearly $83 million on Tuesday for surpassing subscriber goals set in a 2004 contract that had already turned heads with its $500 million compensation package.
It may be inexplicable to some of us that anyone would voluntarily agree to, let alone pay to, listen to Howard Stern - but it is a undeniable fact that many people do. So on that basis, paying him a large sum of money is a business decision of weighing the cost of employing him vs the revenue he generates.
I think that it has more to do with the fact that Sirius is in a bidding war for on air talent with their only real rival, XM. If they didn’t sign him, XM would, and would get the subscribers that he inevitably brings. Both of these companies want to be THE satelite radio company, and therefore must get as many subscribers as they can even if it means losing money to do so.
If XM and Sirius merge (which is in talks right now, apparently) he is suddenly worth a lot less.
From Sirius’ perspective, that’s pretty much the entire foundation of their business model – kind of tough to set it aside in considering Stern’s worth.
A year ago I was hearing that this was an insurmountable hurdle. For some reason in the last few weeks, there seems to be a different tune. Merger makes sense from a business perspective, so I’ve gotta believe they’re gonna try it.
I never thought the old radio show was anything to write home about, but I listened to it because everything else that was on at the same time was worse. I mean, would you rather listen to Rush Limbaugh? And I have to say, once in awhile Howard would come through with something really funny. When you’re driving to work, your choices are listening to the radio or sitting in silence. (Well, you could listen to recordings but I got tired of all my stuff.)
His style has certainly spawned a lot of imitators, so there must be something to it.
Am I right that the big stumbling block would be whether or not the new entity would be a monopoly? I can see them arguing that with internet, terrestrial, and even cable radio, the merged satellite companies would “compete” with the other distribution models for listeners. Their argument should proceed by analogy to the television programming market: in every market you have one or two satellite providers, one or two cable providers, and free over-the-air providers. Often the local cable provider is a monopoly, but the availability of the dish (theoretically) prevents anti-competitive behaviors.
Note the absence, above, of any terms for the female anatomy[sup]1[/sup] or discussions of tawdry lowest-common-denominator blather, and I think you’ll figure out where I stand on the Howard Stern issue. He’s an asshole, but he’s figured out how to make an honest living from it, which is more than I can say for most of the other assholes I meet.
It’s not Sirius’ money, it’s the stakeholders’ money. Big difference. Stern is bleeding them dry and laughing all the way to the bank. Neither Sirius and XM can sustain their huge annual operating losses indefinitely. Right now, what they’ve got is no more promising than a Ponzi scheme. The annual shortfalls are enormous, and neither marketing plan indicates how they might shrink the gap. If the two don’t merge, neither will exist within 10 years, barring an unlikely “overnight” defection of millions more terrestrial radio listeners. Given that satellite radio must succeed, the feds will allow a merger of two very sick players.
Well, he passed the 6,000,000 subscribers mark awhile back. When he came to Sirius they were idling along at around 600,000.
I pay $12.95 a month to listen to Howard. He’s brought joy and laughter to my life for a decade now and I’d pay twice that if I had to. Multiply that $12.95 by 6,000,000 and you get:
$77,700,000 per month
Multiply that by 12 and you get:
$932,400,000 per year in gross subscription revenue.
So he helped the company gross more than 9 times his 1 year gross salary in his first year just on subscriptions. There is also the profit in selling 6 million radios at $50 up to $450 and more each. Then there is advertising revenue. Howard Stern is the “Super Bowl” of radio and people pay very well to have their commercials on his show.
Even if subscriptions didn’t grow enormously over the next 4 years (trust me, they will), I don’t see how anyone can say he’s “bleeding them dry and laughing all the way to the bank.” Sirius has never been more prosperous and it’s growing by leaps and bounds.
But, to ascribe all of the 5.4 million to Stern is likely way off. Satellite radio in general picked up quite a bit in that time period. XM added a similar number of subscribers as well in the past two years without Howard.
The only way Stern will get me as a listener is to fork over some of that $85 Mil to me. And it will have to be a pretty large fraction, as my ears have better things to do.