Sirius Still Seeking Howard Stern Deal as Contract's End Nears
Sirius XM Radio Inc., the U.S. satellite radio broadcaster, said it’s continuing to negotiate a new contract with talk-show host Howard Stern less than two months before his existing contract expires.
Chief Executive Officer Mel Karmazin said in August that the company hoped to have an announcement about Stern’s contract before the release of third-quarter earnings, which came out today. Karmazin said on a conference call today the company still doesn’t have a deal with Stern, whose five-year, $500 million contract expires at the end of December.
“We do not have an update today, other than to say negotiations continue,” Karmazin said.
Stern helped draw consumers to the emerging technology of satellite radio as Sirius struggled with capital investments and losses. Stern is responsible for adding about 2 million subscribers to Sirius XM, or about 10 percent of the total, since he moved to satellite radio in January 2006, according to Tuna Amobi, an analyst at Standard & Poor’s in New York.
It “surprisingly seems like the negotiations are going down to the wire, which creates lingering uncertainty for investors,” said Amobi in an e-mail today.
In its earnings announcement today, Sirius, based in New York, reported third-quarter profit of $67.6 million, or 1 cent a share, compared with a loss $151.5 million, or 4 cents, a year earlier. Nine analysts surveyed by Bloomberg had expected the company to break even.
Revenue for the quarter rose 16 percent to $717.5 million. Analysts had projected $719.1 million in revenue.
Save $100 Million
Sirius, which ended the quarter with 19.8 million subscribers, had a net addition of 334,727 subscribers during the quarter, compared with a gain of 102,295 a year earlier, the company said.
“Today, we are stronger than ever,” Karmazin said on the call. The company, he said, “is in a position to soon pass 20 million subscribers.”
In an interview last month, Karmazin declined to give an estimate of how many Sirius XM 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, Karmazin said at the time.
Sirius fell 10 cents, or 6.4 percent, to $1.47 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have more than doubled this year.
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