THIS IS SIRIUS!
Sirius and Stern announced today that Stern has signed an exclusive five-year deal to bring his show to the Satellite broadcaster beginning in 2006, after his contract with Viacom’s Infinity Broadcasting runs out. According to a Sirius press release, Sirius will spend approximately $100 million per year to produce the show—a figure that includes “compensation of the show cast and staff, overhead, construction costs for a dedicated studio, and a budget for the development of additional programming and marketing concepts.”
Sirius estimates that it will need to sign up around one million new subscribers in order to break even. Sirius currently has around 600,000 subscribers, compared to competitor XM’s 2.1 million. According to a Sirius SEC filing, the deal with Stern includes cash and stock (Sirius' $100 million annual production cost will reportedly be paid with $80 million in cash and $20 million in stock), with additional stock to be issued to Stern if subscriber targets are reached. At that point, Stern will also share in ad revenue.
As of this post, shares in Sirius (SIRI) were up 52 cents to $3.87 on Nasdaq—a 15.52% increase.
"Signing Howard Stern is, without a doubt, the most exciting and transformational event in the history of radio," said Sirius CEO Joseph Clayton in a statement. "He is an entertainment force of unprecedented recognition and popularity in the broadcast world, who is capable of changing the face of satellite radio and generating huge numbers of subscribers for Sirius."
"When you look at his enormous existing fan base, all we need is for Howard to bring in a small fraction of his weekly audience for this agreement to pay for itself," Clayton added. "Anyone who knows Howard, and who understands how loyal his fan base is, will not have a hard time seeing the incredible potential for growth that he will represent for Sirius."
Speaking to analysts on a conference call this morning, Clayton elaborated, saying he expects Sirius to sign up four million additional subscribers based on the Stern deal, even before the company spends any marketing money. "There are 12 million-plus fans who are fanatics ... and his fans are three times more likely to sign up," he said, referring to company research, according to a Dow Jones Newswires report.
In a statement, Sirius President of Entertainment and Sports Scott Greenstein, who negotiated the deal with Stern rep Don Buchwald, said, "Howard is an incredible creative and comedic icon, and we are thrilled that he chose SIRIUS to broadcast what everyone believes will be the most exciting part of his career. There is absolutely no one like Howard Stern, and I'm excited that, for the first time, his show will be heard across the entire country as it was always meant to be heard."
Said Stern himself, “It has been my dream to have the top-rated show in radio since I was five years old. Sirius—the future of radio—will take this dream to a whole new level as I bring my fans my show my way. It will be the best radio they will ever hear."
Added Stern’s long-time rep Buchwald, "An important new industry is being developed and Howard wants to be its leader. He is truly excited to be working with Sirius, which will not only provide a new and innovative platform for his broadcast talents, but will draw on his skills as a businessman. Sirius has offered Howard and his fans a great opportunity to be a part of something truly remarkable, and we look forward to a spectacular future."
