Viacom's Sterner Stuff

Some might label the decision by Viacom's (NYSE: VIA  ) Infinity Broacasting to add the Howard Stern Show to nine major markets courageous, while others might find it upsetting and foolhardy. The media giant is taking a calculated risk, but if it pays off, the gamble would be worthwhile.

Stern has been part of a major fracas for several months now. Ever since the baring of Janet Jackson's breast at the Super Bowl, Congress has been feverishly fashioning legislation to clamp down on broadcasters that air what some feel is objectionable material. Back in March, the House of Representatives passed a bill that would steeply hike indecency fines. A week ago, a new anti-indecency law moved another step closer to reality when the Senate approved its version of such legislation.

Faced with crackdowns, one broadcaster decided that the risk of carrying Stern's program outweighed the reward. Clear Channel Communications (NYSE: CCU  ) stopped airing the show in six markets and paid a record $1.75 million fine to the Federal Communications Commission to settle indecency charges. Stern has suggested that he might jump to satellite radio, which has had Sirius Satellite Radio (Nasdaq: SIRI  ) and XM Satellite Radio (Nasdaq: XMSR  ) investors abuzz with excitement.

Meanwhile, Viacom, which employs Stern, may have decided that the "King of All Media" is anything but a liability. Since Clear Channel pulled him off its airwaves, Stern has gone on the offensive, railing against the FCC and George Bush. This has generated plenty of media coverage and controversy. And as Mel Gibson's The Passion of the Christ and Michael Moore's Fahrenheit 9/11 have demonstrated, controversy sells. Even though Stern's political musings are a departure from his usual antics, his ratings are up in major markets.

Viacom has reined Stern in somewhat, to the celebrity's chagrin. But the firm has also stated that it will stand behind him, a claim backed up by the addition of new stations. Since the shock jock's higher ratings will no doubt entice more advertisers, if Viacom can steer clear of trouble, it surely will be looking at decent returns.

Fool contributor Brian Gorman is a freelance writer in Chicago, Ill. He does not own shares of any companies mentioned in this article.