Why It Was Critical for Sirius XM to Hold Onto Howard Stern

When Sirius satellite radio announced it had signed shock jock Howard Stern to a five-year, $500 million contract in 2005, the company’s stock jumped 16%. Stern signed another five-year deal with Sirius XM Holdings Inc. (NASDAQ: SIRI) in 2010 for a reported $400 million. Tuesday morning, SiriusXM announced that Stern had signed an agreement to continue the satellite radio show for another five years. In addition, Sirius and Stern also signed a 12-year deal that licenses to the satellite radio firm Stern’s audio and video library built up over a 30-year career.

In typical Sternian mode, the radio host said:

I happen to think that [SiriusXM’s] best days are ahead. So, if you are not listening to SiriusXM and The Howard Stern Show, then you are really more like a zombie, a rotting corpse monster, living half a life, deadened and blackened inside. It’s as if you were still watching black and white television while shopping in actual stores on your way to the post office to fax a memo.

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Details of the deal were not announced, and SiriusXM does not reveal how many of its 29 million subscribers listen to Stern’s show. But the number is certainly significant, and it’s a safe bet that Stern’s thrice-weekly show attracts more listeners than anything else that SiriusXM offers.

There were rumors that Stern would skip to Apple Music or Netflix or even produce his own podcasts instead of re-upping with SiriusXM. But the satellite radio company needs him a lot more than he needs them, and so the deal got done.

SiriusXM shares traded up 3.8% in Tuesday’s premarket session, at $4.15 in a 52-week range of $3.31 to $4.20. If the stock posts a new high Tuesday, SiriusXM ought to pay Stern a bonus.