Who Is Sirius XM’S Mystery Merger Beneficiary?

On the night of March 10—well after the U.S. markets had closed—Sirius and XM put out their first annual report as a combined company.

My colleague Tom Lowry—without whom this post would not exist— combed through it, wondering in part how CEO Mel Karmazin’s dogged efforts to pare programming costs last year had fared.

Not so well, it turns out.

Content and programming costs ballooned by 11%, or $45.2 million, according to the filing and the press release. (scroll way down if you clicked on the filing: this data appears on page 36 of the report, and note that all dollar figures listed in the text of the report are in the thousands—as in, add three zeroes to get the real figure. The real figure appears in the press release.)

More interesting, however, is a mysterious one-time payment of $27.5 million to a single program provider, which the report only identifies as “a one-time payment to a programming provider . . . due upon completion of the Merger.” Due upon completion of the merger?

Who could it be? The obvious thought is the guy involved with the one totally massive exclusive programming deal which everyone associates with Sirius XM: Howard Stern. His five-year, $500 million deal doesn’t expire until the end of 2010. But perhaps Howard’s people were savvy enough to insist on a contractual clause that got him a little more cash in case Sirius ever joined forces with its one satellite competitor.

Sirius XM deemed it not material enough to overall earnings to identify the programmer, save for saying that without that payment, programming costs would have risen 4%. (Which is still not that great a stat for a company trying to stifle cost growth.)

Sirius spokesman Patrick Reilly declined to comment. And Stern’s agent, Don Buchwald, did not return calls or an email seeking comment.

We will update this entry if and when he does, or when more information comes over the transom.

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