Sirius, the house that Stern built, in danger of losing marquee host


Howard Stern might be six live shows away from leaving the satellite pay-radio business he made credible five years ago.

If that doesn’t send a shiver through the executive suites at Sirius XM Radio,
it at least ought to chill those among the 20 million satellite
subscribers who also invested in Stern’s move from free over-the-air
broadcasting and will be reminded of what’s missing each time they look
at their dashboard.

Stern, who until now has largely downplayed whatever
tension there has been as negotiations continue, teed off for more than
a half-hour at the start of his Tuesday program about how his own
company ought to respect him more than it apparently does. It may have
been sincere. It may have been posturing. It was probably both. But it
was typically raw, relentless and riveting.

“I understand why (President Barack) Obama won’t give me the Kennedy Center Honors,” Stern said. “I understand why Oprah Winfrey is beloved and I’m not. I understand why people might say I’m coarse,
I’m not really funny, I’m not this or that. That, I can live with. But
the company that I’ve built from 600,000 subscribers … why would the
CFO come out and say Howard Stern might need to take a pay cut?”

What incensed Stern was a Hollywood Reporter story that the company’s chief financial officer, at the UBS Global Media and Communications Conference for investors Monday, “hinted” a renewal deal with Sirius XM would be for less money than the $100 million per year Stern’s previous contract was said to be worth.

“Why the (bleep) would I take a pay cut?” Stern
said. “I don’t know who this guy is, and I guarantee he’s not even in
the loop as to what I’m doing, whether I’m staying here or not. Well,
this guy decided I might have to take a pay cut. Now, let’s say I have
to take a pay cut, let’s say things aren’t going well. First of all,
why would you embarrass me like that? … Why would you broadcast that?
Why would you humiliate me like that?

“I’m calling my agent today,” said Stern, who will take his annual year-end vacation after his Dec. 16
show, 15 days before the end of his Sirius XM deal. “I need more
(bleeping) money because of this. I don’t want anyone perceiving that I
got a pay cut.”

“Hinted,” however, was the operative word.

Sirius XM’s David Frear didn’t
actually say Stern would have to take a pay cut. An investor noted that
some content deals should come cheaper as a result of Sirius’ 2008
merger with XM taking a rival bidder out of the equation, and Frear
agreed as a general point.

“You should expect (costs) to continue to come down
a little bit,” Frear said. “A lot of the big-name contracts that each
of the two companies entered into back in the early days when nobody
knew who we were, before the announcement of the NFL and Howard Stern and baseball … (came when) awareness of the two companies was under
10 percent. Today, it’s over 90 percent. So the marketing aspects of
these alignments don’t have the same kind of value component that they

“That being said, this is all great programming. The NFL is fantastic programming. Howard is great programming. Major League Baseball is great programming. Oprah, Martha (Stewart), Dr. Laura (Schlessinger), it’s all great stuff, and we’ll continue to try to get fair and reasonable costs for the company.”

Not exactly a big-time diss.

Frear even praised Stern’s ability to promote the
company and spur sales before he made his official Sirius debut. He
said management was “hopeful” Stern would stay, while allowing Stern
has other options.

Stern cited a $3.3 million figure for
Frear’s salary, said that money came off his back and said Sirius would
have been knocked out of business by XM had he not signed on.

“They hired me to come in and save the company,”
Stern said. “They knew at that point they had 600,000 subscribers. They
weren’t growing. They were getting their (behind) kicked by XM. And I
walked in like Jesus himself, and they said, ‘Save us.’ … We turned
it from a nonbusiness into a business.”

Both Frear and Stern acknowledged the need for
proprietary content as improved smart phones and ubiquitous Internet
access make a service such as Sirius XM only as marketable as what it
can offer that others don’t, regardless of the platform.

Frear allowed that Stern might not want to get up so
early anymore, might want to do a shorter show, might want to work
somewhere else.

One would think the memory of CBS Radio’s failure to replace Stern would be fresh in the mind of everyone at Sirius XM, especially Frear’s boss, Mel Karmazin, a longtime Stern ally.

Here in Chicago, Shane “Rover” French lasted a mere eight months after Stern’s syndicated show left WCKG-FM. The station itself was history just 22 months after Stern’s exit for Sirius.

“I will never get the respect (accorded) Oprah Winfrey,”
Stern said, referring to his fellow Sirius XM content provider.
“Because I dealt with taboo subjects and I was outrageous. … I’m
considered gross or I’m dismissed.”

He will not allow himself to be dismissed by Sirius XM. He is prepared, however, to walk away.


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