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.

Post Author: Ruby H. Rosenbaum

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