Outside the Beltway

Howard Stern May Leave Viacom Early

James Joyner · Thursday, November 18, 2004 · 3 comments

Stern stunt stirs talk of early Viacom exit (Variety)

Radio bad boy Howard Stern is planning a rally in Gotham’s Union Square today, where he’ll rail against corporate radio and hand out “electronic turkeys,” expected to be Sirius satellite radios, to fans. Shock jock is scheduled to appear later in the evening on CBS’ “Late Show With David Letterman,” where he may discuss his plans to ankle his contract at Viacom’s Infinity Broadcasting earlier than planned. Stern signed a five-year, $500 million deal to join the satcaster at the beginning of 2006, but has claimed on his show that he’s being “threatened” and “jerked around” by his bosses at Viacom, and may start at Sirius sooner than expected.

On his show Wednesday morning, Stern told listeners he would be giving away “something” new if they turn in something old. He added he doesn’t have 10 million to give out, so it will be on a first-come, first-served basis. He said he’s considering taking the old “ones” so he can smash them on the street.

A Sirius spokesman said Stern is not under contract yet, so they don’t know exactly what will transpire, but they helped obtain a permit for the gathering and cleared it with the New York Police Dept.

Sirius radios retail for $99, but they require activation and a $12.95-per-month subscription.
Since satellite radio is not regulated by the Federal Communications Commission, Stern would have more freedom to say and do what he pleases. Stern said his broadcast is censored at both the corporate and local levels, leaving the end product like Swiss cheese.

One would think Viacom’s contract with Stern would have precluded his negotiating, let alone signing, with a competitor this early and contained severe sanctions for this type of behavior. Certainly, having Stern devote his show to bashing his employers rather than, say, discussing the sex habits and IQs of Playboy playmates, has to be driving down the ratings.

Update (1224): Apparently, it’s not doing Sirius much good, either:

Stern Warning For Sirius Satellite (Fortune)

Banc of America Securities downgraded Sirius Satellite Radio to “sell” from “neutral,” mainly on valuation. The research firm however raised the 12-month price target to $3.68 from $3.19 to reflect slightly lower out-year subscriber acquisition costs, and slightly higher operating cash flow from increased deferred revenue collections. “We continue to believe Sirius is in a fast growing industry with tremendous potential. But our new price target of $3.68 implies a downside of 25.7% from the current stock price, necessitating a ‘sell’ rating based upon the Banc of America ratings system,” the firm said. Banc of America said the upside from an early switch by Howard Stern to Sirius “would be only slightly positive to overall firm value” and will be “expensive,” potentially increasing cash costs per user by about 30% next year. The research firm’s analysis assumes Howard’s standard costs of $100 million would occur in 2005, plus it assumes a one-time $80 million cash settlement with Viacom to buy out the last remaining year on the show. The firm said, “Upside for the stock from an early Stern move to Sirius Satellite Radio is limited, we believe, and more than priced in.” Sirius is Banc of America’s least favorite pick in its radio and television broadcasting coverage. The firm’s top picks are Clear Channel Communications and XM Satellite Radio Holdings, both rated at “buy” with respective price targets of $40 and $37.

Interesting. Sirius’ incredibly high bid for Stern may turn out to be as helpful as the signing of Herschel Walker, Steve Young, and Jim Kelly were for the USFL. Of course, it might also be analogous to Fox’s incredible overpayment for NFL rights, which put them on the map as a major network.