Sirius XM Explores Alternatives for Life Without Howard Stern

Bloomberg

 

Sirius XM Radio Inc. is exploring programming alternatives in case the satellite broadcaster and talk-show host Howard Stern aren’t able to agree on a new contract, Chief Executive Officer Mel Karmazin said.

Stern, whose five-year, $500 million contract expires in December, is continuing to negotiate with the New York-based company and a resolution will come before the end of the year, Karmazin, 67, said in an interview yesterday. Sirius XM stations, such as Raw Dog Comedy and Playboy Radio, would help retain many of Stern’s listeners if he left, he said.

“There’s no deal,” Karmazin said. “The only announcement will be when there is a deal, or there’s not a deal. And I’m hopeful there will be a deal.”

Stern is responsible for adding about 2 million subscribers to Sirius XM since he moved to satellite radio from terrestrial in January 2006, according to Tuna Amobi, an analyst at Standard & Poor’s in New York. Total subscribers may surpass 20 million before the end of the year, Sirius XM said this month.

Karmazin declined to give an estimate of how many subscribers would cancel the service if Stern leaves. Without Stern, Sirius XM would “save $100 million a year” and use the money to fill the programming gap with various types of shows, he said.

“You don’t try to replace Howard,” Karmazin said. “I don’t think there’s a radio personality that’s out there that we would bring in and say to the Howard Stern fans ‘let us introduce you to this new talent.’”

Budget Savings

Karmazin said he would use the budget savings to “go and try to get different people who might appeal to different audiences.” Sirius XM, the only satellite radio provider in the U.S., might “expand our classical music, or maybe we would do a little more in the opera area, or maybe we would do something that we’re not doing today.”

Don Buchwald, Stern’s agent, didn’t immediately return telephone and e-mail messages seeking comment.

“Howard has a great deal of options, many options available to him,” said Karmazin, referring to reports that Stern may introduce his own online service.

Sirius XM will receive about 2 percent of its $2.8 billion in revenue this year from advertising, Karmazin said. While ads during Stern’s programs are capped to 6 minutes per hour, Sirius XM’s ad sales department insists they could sell more, he said.

“I want that subscriber to be very happy,” Karmazin said.

Karmazin said he doesn’t see any potential acquisitions for Sirius XM, which had $258.9 million in cash at the end of the second quarter.

“There’s nothing out there that fits our core competencies,” he said.

Buybacks, Dividends

The company might return cash to shareholders through buybacks or dividends, Karmazin said. Such a move will become increasingly likely as Sirius XM continues to lower its debt and build cash flow, though there’s no target date for such action, he said.

Sirius XM projects adjusted earnings before interest, taxes, depreciation and amortization to reach $575 million for 2010, compared with $463 million last year, Karmazin said at investor conference this month.

Last week, Sirius XM sold $700 million of eight-year senior notes in a boosted offering, according to data compiled by Bloomberg. The 7.625 percent notes were unsecured, and used to pay off 11.25 notes, Karmazin said.

Sirius XM was unchanged at $1.38 yesterday in Nasdaq Stock Market trading. The shares have more than doubled this year.

Is Simon Dissing Howard?

People Magazine

Simon Cowell may be leaving American Idol after the current season but don’t think he doesn’t care about who his replacement will be. In a conference call Thursday with reporters, Cowell talked about who is right for his job, the rumors that he and Ellen DeGeneres are squabbling and why he thinks Lady Gaga should mentor the latest crop of Idol hopefuls.

There have been rumors that you and Ellen DeGeneres aren’t getting along. Could you address them?
I wouldn’t say that we didn’t get on well. I don’t know Ellen that well. It was a difficult position for her because she started work on the Hollywood week, which is quite a difficult show to do. There was one story I read that [said] I turned up an hour late for something and that she wanted to film. The truth was I think I turned up 15 or 20 minutes late because I did a press conference earlier in the day. And they did start filming, but that wasn’t a particular problem. There was no fall out. I was trying to guide her through the week and that was it really.

What do you miss most about Paula Abdul?
Well Paula is my friend, amazingly, even though we used to argue a lot. She was somebody I got really close to over the years. We’d hang out together after the show. She always made me laugh. I always thought she was funny. It was just like not having your friend on the show anymore, so I do miss her.

What does it feel like to have people say that you’re irreplaceable?
It’s very, very flattering. I really do appreciate it. Like I said before, the show goes on. I’m going to feel sad when it all ends.

What kind of person could replace you?
You have to be good looking. Secondly, you have to know what you’re talking about. I’m starting to realize with these shows that you have to put people on that actually know what they’re talking about. Rather than guessing, they really have to have experience, so that you cannot just criticize — you can offer constructive advice as well.

How much music experience is required for the judging job?
I think it’s really important. When we first started we had a record producer, an artist and an A&R man. So you’ve covered pretty much everything. I would say someone who has had managerial experience is always helpful. But in simplistic terms if you’re going to give a score you generally need to know what you’re talking about. I think over the years judges have been replaced by personalities. That in the long term will create problems because you’ve got to be able to spot a star. So whoever replaces me, my advice has always been find somebody who actually knows what they’re talking about.

How does that apply to Howard Stern?
He doesn’t seem to fit any of the criteria. He’s played records. Maybe that’s a good qualification — that he’s played records and is a DJ. But he obviously wants the job. Good luck to him.

You’ve said people need to be seasoned in the music business to be a judge. Are those comments directed at Ellen?
I was thinking that … people are going to misinterpret what I’m saying. I’ll tell you why I think Ellen is a good choice. She actually is very responsible for the people who perform on her show. I know that for a fact because I’ve dealt with her as a record label. She loves music and she’s been an artist. No it wasn’t meant to dis her credentials. It was specifically talking about my replacement because my role on the show is as someone who has run a successful record label. So that was specifically for my replacement.

Is it important that a woman win this year?
Depends what she’s like. We’ve had a few years now of guys winning the show. I would say that it’s definitely a better chance of a girl winning the show this year.

What would be the right type of woman to win?
You want somebody who represents what’s going on at the moment. I’d love to find a Taylor Swift … somebody who is relevant rather than just a contest winner.

What mentors are you hoping to work with during the season?
We should have Lady Gaga because she is the most relevant pop artist in the world at the moment. She’s very smart. I like her.

Parents Group Petitions Fox to Keep Howard Stern Off 'Idol'

US Magazine

The Parents Television Council is up in arms over rumors that Howard Stern may replace Simon Cowell on American Idol next year.

"Fox's American Idol is one of the few family-friendly programs left on broadcast TV," the group says in a statement, before slamming the network for "considering filling the show with someone who is known primarily for crude profanity and explicit sex talk."

The Parents Television Council -- which has also protested sexy scenes on Gossip Girl -- is urging parents to sign a petition to keep Stern, 56, off the reality hit.

They point out some of Stern's most controversial comments: "[This is] the same Howard Stern who said of the gunmen at the school massacre in Columbine, ‘Did those kids try to have sex with any of the good-looking girls?...If you're going to kill yourself and kill all the kids, why wouldn't you have some sex?'"

They also quote Stern speaking graphically about Fantasia, the Season 3 winner, before asking parents to "protect America's children and grandchildren from being exposed to this kind of language every week on American Idol, it is absolutely vital that you TELL FOX NOT TO HIRE HOWARD STERN!"

In an UsMagazine.com poll, more than 80 percent of readers voted that Stern wouldn't be a good fit. Judge Kara DioGuardi agreed, telling reporters Wednesday, "I don't know that he has a musical background. I think that if you're gonna replace Simon, you have to have that background."

He's Sirius: Stern Says there's 'No Better Job' than being 'Idol' Judge

NY Post

Shock jock Howard Stern is singing a new tune -- admitting today that he's considering leaving radio to become a judge on “American Idol” next season.

Stern confirmed a Page Six report that Fox is interested in hiring him to replace Simon Cowell on the top-rated show.

“There’s not a better job on the planet than judging that f----ing karaoke contest,” Stern told listeners during his Sirius satellite radio show, according to excerpts published on MTV.com.

“It might be possible. We’ll see,” said Stern, adding that the network would "have to pay me a ton of dough because I already make a ton of dough.”

The Post reported Friday that Fox was interested in hiring Stern.

Stern, who lives in the city, is believed to be reluctant to commit to a show that would require him to tour the country as a judge and spend much of the year in Los Angeles.

Stern’s five-year, $500 million contract with Sirius expires at the end of this year.

When it comes to money, Stern said Fox would have to pay him big bucks to join the show.

"A $100 million to judge a karaoke contest? Yeah, I would do that show for $100 million,” he joked.

As for replacing the acid-tongued Cowell, Stern said, "If I do say so myself, I can't imagine anyone else but me replacing him ... How else are they going to make that show work? Who knows how to broadcast and who knows how to be interesting? And who's not afraid to speak their mind?"

A Fox spokesman did not immediately return a call seeking comment.

Fox is owned by News Corp., which also owns The Post.

Stern Threatens To Quit -- Is It Just Idle Chatter?

Mel Karmazin and Howard Stern a match made in Hell. 
USA Today

Howard Stern is threatening to leave Sirius XM Radio now that the shock jock and the satellite radio provider are getting set to enter contract talks in 2010.

That threat probably seems less daunting to Sirius than it once would have. Sirius originally wanted Stern so badly that it gave him the most lucrative radio contract ever, a five-year deal that started in 2006 and paid him $500 million in cash and stock.

Today, he doesn't have many places left to go — at least if he wants another huge payday.

Free radio stations are struggling with steep drops in advertising and high debt loads, and probably can't pay top dollar to get Stern back to the medium where he began. He also likely would chafe at being censored again after enjoying the freedom of satellite radio, where his racy banter hasn't been subject to federal restrictions on language and content.

He can't switch to another satellite radio provider — Sirius swallowed the only other one, XM, last year.

So if Stern, 55, does re-sign with Sirius, it's likely to be for less this time around.

Sirius nearly had to file for bankruptcy protection this year and is still trying to reduce costs. The company is feeling the brunt of weak auto sales, which deliver many of its new customers. And it faces new threats from emerging commercial-free rivals such as Internet radio.

For these reasons — and because Stern has warned other times that he might quit or retire — his latest threat rings hollow to some analysts.

"It's probably positioning for contract negotiations," said Brett Harriss, an analyst at Gabelli & Co., whose parent Gamco Investors owns 1.1 million shares of Sirius. "I don't think he would give up his bullhorn."

Sirius' chief executive, Mel Karmazin, said recently that he will work hard to retain Stern, but the company would not offer more detailed comments. Stern's agent, Don Buchwald, did not respond to requests for comment.

Stern made his name on traditional or "terrestrial" radio. While Sirius mainly makes its money from selling subscriptions, the money that flowed to Stern on traditional radio came from syndication rights. In that setup, radio stations pay companies that distribute programs such as Stern's.

Many of those radio stations have struggled since Stern left the free airwaves, and the recession compounded the problems. In the first nine months of the year, radio advertising revenue fell by 21% to $11.8 billion, according to the Radio Advertising Bureau.

Citadel Broadcasting, the nation's third-largest operator of radio stations, filed for bankruptcy protection Sunday. Other big station owners also are wrestling with debts, and the syndication division of the largest station owner, Clear Channel Communications, already is believed to be paying Rush Limbaugh $400 million over an eight-year contract.

"Who else can afford Howard Stern?" Harriss said.

When Stern signed with Sirius, the company trailed XM Satellite Radio Holdings in the race for customers. It badly needed a marquee name to attract subscribers to its service, which delivers 130 radio channels anywhere in the country for $6.99 a month to $19.99 a month, depending on the package.

Now after buying XM for $3.3 billion, Sirius has 18.5 million subscribers, down slightly from a peak of 19 million at the end of last year. Sirius' radio lineup beyond Stern includes Oprah Winfrey, Martha Stewart, NFL games and Major League Baseball. Half of its channels are music and free of commercials, while the rest air sports, talk shows, news, entertainment, traffic and weather.

The company still has never posted a net profit. Revenue was nearly flat in the last quarter, and Sirius remains pressured to cut costs. Sirius narrowly avoided bankruptcy protection 10 months ago by getting $530 million in financing from Liberty Media. Sirius had to give a 40% ownership stake to Liberty, which is controlled by satellite mogul John Malone.

As Sirius tries to get its finances in order, it must cope with threats from emerging technologies, such as Internet radio services that also deliver radio programming without commercials.

The company has been trying to cut costs. Sirius' programming expenses in the past four quarters fell 18% from the total paid by Sirius and XM in the previous year, when they were still separate companies. Sirius has eliminated duplicative radio programs since it absorbed XM and found ways to reduce "on-air talent costs."

Given the climate, if Stern returns to Sirius, "he's not going to get $500 million again," said Miller Tabak analyst David Joyce. Robert Eatman, the agent for Sirius talents Opie & Anthony and rapper Nick Cannon, agreed that Stern is "probably not worth" $500 million to Sirius now.

But the question will be just how much less Sirius can pay and still keep Stern.

Stern accounts for about $80 million of Sirius' annual programming costs, which have totaled $365 million over the past four quarters. The $80 million covers Stern's salary, wages for his staff and production and operating expenses, according to filings with the Securities and Exchange Commission. The remainder of the contract was paid in stock.

There are no independent ratings available to track the popularity of Stern's show, which airs Mondays through Thursdays from 6 a.m. to 9 a.m. But he has been so important to Sirius that he was the sole radio talent mentioned in SEC filings from 2006 through 2009 as a party whose failure could hurt Sirius' business. (Automakers were also among the listed entities.) In his first year at Sirius, Stern received a stock bonus worth $82.9 million because Sirius' subscriber count exceeded an agreed-upon target by more than 2 million.

Stern could leave to start a new venture, perhaps a subscription service that sends his show to PCs and mobile devices. Sirius already streams Stern's shows online and through the iPhone. Or he could explore more options in cable TV, where his first pay-per-view special, "Howard Stern's Negligee and Underpants Party," was offered in 1988.

Stern also could retire.

"Howard has the creative and business freedom to do what he wants to. He can just about write his own ticket in a number of areas," said Tom Taylor, executive news editor of Radio-Info.com, which tracks the radio industry. "He doesn't need to do anything. He's going to pay the rent fine."