Thursday, November 13, 2008

What Will Howard Stern Do At End Of Sirius Contract

Howard Stern has made an extraordinary amount of money under his current contract with the fading Sirius satellite network . Based on the large equity payment and the subscription model Sirius employed, they were able to pay far more than any traditional media company at the time could have mustered for Howard’s services. Unfortunately for Sirius, the type deal they entered into with Stern is too costly to repeat, particularly with their stock doing so poorly.

My prediction is that when his contract is over, Howard Stern will launch a multi-platform Internet and mobile-based subscription service.

One of the things we learned when stern left CBS is that there is a core audience of several million people that will likely go wherever he is and will pay as much as he asks. If Stern can move a modest 1 million listeners to a new platform, underperforming the several million he moved to Sirius, the profit opportunity would be substantial.

Historically, the infrastructure costs for broadcasting have been high. Whether it was billions of dollars for satellites, or terrestrial broadcast licenses, these kinds of costs require a mega corporation as a partner. But the times and the technologies have changed, and now the most valuable resource is not the ability to pay for infrastructure, but the ability to build an audience. This shifts the balance of power such that someone like Stern doesn’t need a major broadcast partner at all. In fact he can *become* a major broadcast company based on his initial asset: his large and moveable audience.

Presuming a subscription fee of $10, Stern could rake in $10 million per month or $120 million per year. This easily makes such a company worth at least a Billion and probably some multiple of that by the time additional revenue streams are developed. This would allow Stern to get the kind of equity bump he got at Sirius. I can’t see any other strategy making sense for him.

The interesting question is how would the technology work? The easy part is I would expect something that would be broadcast live across the regular Internet.  But the more interesting question is what about mobile. I think Stern could offer his service to all of the mobile phone providers offering currently moribund channelized streaming services such as Verizon. He could also partner with someone like Slacker, who already has a mobile Internet device for downloading content over wifi. Then again he could raise private equity and create some kind of infrastructure platform purpose built for the Stern network, though this type of risk and work doesn’t seem to be Howard’s style.

So from a technical perspective there are many good options, and what he chooses will be a function of where he wants to sit on the risk/reward/effort curve. But what is clear is that whatever choice he makes, it almost assuredly will involve leaving exclusive deals with big media behind.

10 comments:

  1. Wrong. Howard Stern is extremely loyal. Sirius has treated his very well so he'll stay with them. He makes a ton and can do whatever he wants. He is hard working, but he wouldn't want to run this - way too much work for an extra 10-20 mil. He admits all the time he knows his show and that's it. Why would he want to work harder? He'll stick with Sirius and work 3 days instead of his current 4 if anything. My guess is he signs on in the same capacity.

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  2. Plus, if he takes on his own venture he'll lose his chess playing time. No way he does that.

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  3. this:

    I think Stern could offer his service to all of the mobile phone providers offering currently moribund channelized streaming services such as Verizon. He could also partner with someone like Slacker, who already has a mobile Internet device for downloading content over wifi.


    made me think of CelleCast.

    CelleCast is a way to get talk radio like Stern's show into cell phones.

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  4. Howard Stern has sold out his loyal fans in favor of the almighty dollar. His once edgy show has become nothing more than the radio version of The View. What a sad, pathetic way to end an otherwise stellar career.

    He's become what he once made fun of on a daily basis.

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  5. XM and Sirius file for bankruptcy. Howard Stern becomes a thing of the past. His day is over; he is done and will never make a meaningfull comeback.

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  6. Yeah. Howard WAS really funny years ago. But no doubt the show jumped the shark. Howard will simply wait out his contract and be done. I didn't follow him over to XM. It just wasn't worth the money. Instead I listed from time to time by downloading MP3 USENET copies of the show onto my IPOD. It was free and I STILL stopped listening because (as Billy Crystal used to say about Howards nagging) It just wasn't funny anymore. Howard is finished. His creativity disapeared with his youth. He is rich beyond his wildest dreams. No doubt in my mind he will kick back and smell the roses in life and simply retire.

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  7. hes not renewing anything.....his sirius channels will stay with current staffers running the shows,he might make appearences now and then,but for the most part,hes just gonna retire,thats why the show has been slacking so much,he doesnt have to try anymore,anything hes doing isnt for the fans anymore,he only gets into things if it pleases himself,no longer is he intrigued by "radio gold"....it was fun but all good things come to an end.

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  8. Howard is the most entertaining broadcast audio personality...ever. Even if he is not quite as funny as he was he's still by far the best bet for entertainment for people working routine jobs or driving. That's why his core audience is so faithful, he gets them through long dreary routine days at work, no other radio personality is as entertaining. The true faithful will follow him wherever he goes.

    I don't think Howard will retire, he wants to switch to an afternoon shift, the threats of retirement are probably leverage to negotiate the later time slot. I hope Sirius/XM realizes it won't make any difference to his audience, his show will simply be rebroadcast the next morning for the morning drive time. Loyal listeners don't care if they are listening to yesterdays show, it's still just as good regardless. A later shift could reenergize Howard and the crew and help with guests, especially with "A" celebrity guests, they won't have to get up early in the morning and should be more available, awake and animated later in the day.

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  9. Howard is way too scared of not earning money if he can. He talks about it all the time regarding different actors and bands. It is so hard to achieve success in show business, once you have it, just ride it out and collect. Not only that, what would he do with his time. He is workaholic, it is all he knows. He defines himself by his radio persona. That is the true Howard...he has said it many times. The off air Howard is shy, quirky and boring. How long you think Beth would put up with a wining old man. Not long I bet. He will work somewhere....maybe not a Sirius, maybe his own gig through new technology. One thing is for sure, he is no dummy and will milk this for all it is worth. He is tired now and needs a break to renew his ideas and juices. My prediction- He leaves Sirius for a few months, recharges his batteries, and comes back through a cell phone provider via Verizon,Slacker or the like. You'll see. He won't quit. He doesn't know how....

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