There aren’t many celebrities with the power to move a company’s stock price. But Howard Stern is one of them: He helped to lift Sirius XM Holdings shares 5.3% in pre-market trading this morning after agreeing to stay on the air for five years as part of a 12 year deal with the satellite radio company that includes its first foray into streamed video programming.
He’ll keep The Howard Stern Show going on SiriusXM for five years. He’ll produce his Howard 101 channel, with new and old episodes plus additional programming.
Sirius also picked up 12-year rights to Stern’s audio and video performances from his 30 year career. Video plans “will be announced at a future date,” the company says. They will include video from his show as well as “the Howard Stern archives and special programming.”
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Stern says that SiriusXM’s “best days are ahead. So, if you are not listening to SiriusXM and The Howard Stern Show, then you are really more like a zombie, a rotting corpse monster, living half a life, deadened and blackened inside. It’s as if you were still watching black and white television while shopping in actual stores on your way to the post office to fax a memo.”
He calls company CEO Jim Meyer “my life partner and the baby we are about to have is our new streaming video app. The joy we are going to bring you in the very near future will make you feel like Christmas is every day. Ho, Ho, Howard…out.”
For his part, Meyer calls the deal with Stern “unique and pioneering.”
They crafted it over several months with Stern’s long time agent Don Buchwald. He says the terms “required a lot of give and take, as well as creative thinking on everyone’s part, and I am grateful to them …for the hard work they invested to make this deal a reality.”
The deal comes a day before Stern’s last scheduled show from his previous five-year contract, which Macquarie Securities’ Amy Yong estimates included as much as $500 million in cash and stock. Prior to this morning’s announcement, she predicted that a new deal could raise the total as much as 20%, possibly increasing SiriusXM’s programming outlays about 3%.
Although the company, controlled by John Malone’s Liberty Media, might save money by ending the relationship, “concern would shift to customer attrition and Sirius XM’s advantage in a competitive space,” she says.
But Morgan Stanley’s Benjamin Swinburne concluded early this month that, although the company made a profit from Stern, losing Stern would be “manageable” based on a November online survey of 2,000 audio listeners. About 9% of the satellite radio company’s subscribers in the survey said that they mostly bought it for Stern. Yet 70% primarily listen to music.
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