How much are Mel Karmazin and Howard Stern worth to Sirius Satellite Radio Holdings Inc.? According to financial analyst IRG Research, more than $2 per share.
The company has upped its target price for Sirius shares from $4.50 to $6.75 (it is currently trading at $6.41).
That $4.50 was before Stern announced his $100 million-per-year deal to move to Siruis at the end of 2005 if not sooner, and before Stern's former boss and former Viacom President Mel Karmazin was hired as CEO of the satellite radio company.
"We're raising our price target because of the recent hiring of Mel Karmazin as CEO and radio personality Howard Stern, and, over the next several weeks, the company's strong holiday outlook and the Consumer Electronics Show in January," said the company.
IRG also predicted that Stern would bring 3 million of his 12 million listeners (Stern says it is more like 16 million) over to Siruis. If so, it could pay off big time for both Stern and the company. It would only take a million or so listeners at $13 per month to more than cover Stern's $100 million deal, which includes a cut of the profits for Stern if he beats certain sub and money targets.
IRG recommended buying the stock before the holiday selling season and electronics show. It probably could have added before the auto show in April, where more marketing deals with automakers could be announced.
At last year's show, Sirius announced a deal with Chrysler to market the radio and a year's worth of service as a feature on two models, with an additional dozen to follow.
Siruis also has a marketing deal with Ford beginning in 2006.