Howard Stern has decided to give his listeners the bird, as in satellite. He will move to Sirius Satellite Radio when his contract is up and stands to get a cut of stock, and subscriber and advertiser revenue if he draws a crowd.
The five-year deal begins when the shock jock's contract expires in 15 months, 0 days, 13 hours, 59 minutes and 12 seconds at press time (Stern has been keeping a countdown clock on his Web site).
Sirius didn't say how much of the total Stern was getting, but it put the cost of the show at $100 million, covering "compensation of show cast and staff, overhead, construction costs for a dedicated studio, a budget for the development of additional programming and marketing concepts, and payments to Stern and his agent." Sirius says it would need to generate about a million new subs to cover that cost.
In a filing with the SEC, Sirius said that as part of the deal, Stern will develop at least one additional channel. The deal includes subscriber targets. Once those are met, and if they can be trackable to Stern, he will recieve incentive payments in the form of stock and will begin sharing in ad and subscriber revenue.
Given the high fixed costs, Sirius is gambling heavily on Stern's fans making the switch. "In the event we generate substantially fewer than 1,000,000 subscribers in excess of our current plans due to the addition of Stern to our programming line-up, the large fixed obligations under the agreement with Stern could have a material negative impact on our financial condition and results of operations," it warned the SEC.
The deal expires at the end of 2010.
The Stern hiring is a huge move for Sirius, which is battling XM Satellite Radio for subscription radio hearts, minds, ears and pocketbooks.
XM's biggest recent gets were fired Infinity shock jocks Opie & Anthony (over the Sex in St. Patrick's Cathedral stunt), who began their XM show Oct. 4, and former NPR Morning Edition host Bob Edwards, but both had been looking for work. Stern, also distributed by Infinity, is the biggest talent raid in the history of the relatively young medium.
"Signing Howard Stern is, without a doubt, the most exciting and transformational event in the history of radio," said Joseph P. Clayton, CEO of Sirius, co-opting the P.T. Barnum-esque parlance of Stern, who has crowned himself King of All Media, though so have the 18-49 listeners who have made him the nation's top jock.
Stern has been restless and openly critical of his corporate parents, including Viacom Co-President Les Moonves, and has been threatening to bolt for some time.
Laura Mahaney, director of external affairs for The Parent's Television Council, the group whose complaints helped get Stern, CBS and NBC in hot water with the FCC, said of the announcement: "Stern says he is tired of censorship, but we think he is tired of the fact that the law is being enforced and that is the only reason he is jumping ship."Now that Stern will be moving to pay radio rather than free, over-the air broadcasting, does that mean PTC won't have their favorite indecency target to kick around anymore? Don't bet on it. We're not sure that indecency doesn't extend to satellite radio and we are going to look into that." In any event, says Mahaney, "Infinity should prepare to pay indecency fines until 2006."