Howard Stern Quit SiriusXM? Not for a 'Loser' Podcast

Radio Legend's Five-Year Contract With SiriusXM Expires This Week

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Howard Stern.
Howard Stern. Credit: Virginia Sherwood/NBC

Someday, inevitably, given the nature of entertainment, gravity and age, Howard Stern's magical satellite radio ride will end. It could even happen this week. We'll know soon.

On the morning of Wednesday, Dec. 16, Mr. Stern will host his final show under a five-year contract with SiriusXM. What he will do next remains a mystery. He could walk away from the medium, as he once did from broadcast, to try his hand at, say, Internet radio. Or he could retire. Or he could sign a new contract with SiriusXM. During his show last week, Mr. Stern told listeners he hasn't made up his mind. If past is precedent, he will probably reveal his next move on the air in the coming days. There's a lot of money riding on the decision.

Mr. Stern, who will turn 62 in January, remains one of the top rainmakers in American radio, and SiriusXM—which is flush, thanks to its large, growing subscriber base—would like to keep him. But these are tumultuous times for the industry, and any number of companies jockeying for market share in the emerging world of Internet radio could benefit immensely from luring Mr. Stern and his rabid fan base away from SiriusXM.

Over the past year, Mr. Stern has claimed to have at least one tempting offer, though he declined to name the suitor. In the meantime, his fans provided plenty of ideas on what he should do next. Clearly, he should join Apple, some insisted, or Google or Pandora or Spotify. Along the way, Mr. Stern suggested he's open to almost any scenario—except podcasting.

"If you want to be in radio, forget a podcast," Mr. Stern told his audience earlier this year. "Podcasts are for losers."

Wherever Mr. Stern lands, his talents won't come cheap. His current contract reportedly costs SiriusXM about $80 million a year. The satellite radio provider can afford such lofty programming costs, in large part, because of Mr. Stern's decision to leap to satellite radio in 2005. At the time, Sirius was the struggling runner-up in an unproven medium. Thanks to Mr. Stern, it soon caught up with, then surpassed, and finally swallowed rival XM Satellite Radio.

It has been a prosperous, if sometimes acrimonious, marriage ever since.

SiriusXM has grown into a thriving business with a large U.S. following, particularly among high-end car owners with built-in satellite radio. The company has about 29 million subscribers who typically pay from $9.99 to $18.99 a month. In addition to Mr. Stern, they get more than 175 channels of curated music, talk radio, and live sports, including professional basketball, baseball, football, and hockey. In 2014, SiriusXM racked up $1.4 billion in profit from $4.2 billion of revenue.

How much of that financial success depends on Mr. Stern is a favorite topic of debate among fans and critics. Satellite radio relies on a one-way signal, which is much more difficult to measure than Internet radio. There are no estimates of channel vs. channel ratings from a third party provider such as Nielsen. As a result, it's unclear exactly how many subscribers tune into Stern on a regular basis, or how many would follow him if he were to walk away.

There is some indication of how big a deal his decision will be, though. Last year, Macquarie surveyed 800 SiriusXM listeners and found 12 percent tuned in to Mr. Stern—the equivalent of about 3.5 million subscribers. Of those surveyed, 5 percent said they'd consider leaving SiriusXM if Mr. Stern took his show elsewhere. Those numbers suggest that the company could lose more than $240 million in annual revenue if it can't hold on to him. That would be a serious blow to SiriusXM.

In February, Chief Executive Officer Jim Meyer told Bloomberg Businessweek he would like to sign Mr. Stern to a new contract—that is, if they could agree on a price. At the same time, Mr. Meyer has worked hard behind the scenes to keep his franchise player happy. He threw Mr. Stern a lavish 60th birthday party, allowed him to start the show an hour later every morning, and even blessed his moonlightingactivities.

This week, we are likely to find out if all that was enough. At the end of his Dec. 9 show, Mr. Stern told listeners he still hadn't made up his mind. He didn't sound, however, like a media legend ready to shuffle off.

"I hope something works out," said Mr. Stern. "If it doesn't, we'll be somewhere, OK. Don't worry about us. ... You might find us on one of those fakakte podcasts."

He was kidding, of course.

-- Bloomberg News

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