Your Move, Howard Stern

In his first live show since Thursday's debut of the Sirius XM Premium Online application through Apple's (Nasdaq: AAPL  ) App Store, Howard Stern explained the absence of his signature Howard 100 and Howard 101 channels on the new smartphone offering.

In a nutshell, it was a "contractual rights thing" that may -- or may not -- be corrected.

Despite the glimmer of hope that he may eventually join the streams for iPhone and iPod touch owners, it seems unlikely at this point. Stern is savvy enough to negotiate publicly, through his show, but let's try to imagine what Mel Karmazin, Sirius XM Radio's (Nasdaq: SIRI  ) CEO, might be thinking.

Why would Karmazin have launched the app without Stern on board? Obviously, its best chance at success would have been with Stern available. But when Stern discusses "contractual rights," he's probably talking about money. His original contract clearly doesn't mention anything about premium mobile applications, and he either wants more money or is using his on-air comments as a tool to negotiate a contract extension under healthy terms. His five-year, $500 million satellite-radio deal is over at the end of next year. If the roadblock is that iPhone streaming would conflict with his "on demand" television deal, that problem can still be solved financially.

However, by not spending the money now, Karmazin is unlikely to meet Stern's demands later. After all, if the app becomes a hit without Stern, Sirius XM will argue that it doesn't need the popular morning-show host. But if the app bombs, paying up for Stern may be too little, too late for Sirius XM.

Then again, maybe Karmazin and Stern see what others have failed to consider: What if Stern has plans to either retire at the end of next year or just go it alone?

"Sirius is great, even without us," Stern told his listeners yesterday. That doesn't sound like someone negotiating for a bigger paycheck. Stern has no problem telegraphing his moves early, either. He signed his Sirius contract in the fall of 2004, while he still had another year and change to go under Viacom's (NYSE: VIA  ) terrestrial-radio wing.

Retirement is certainly a possibility. Stern should have plenty of money socked away. His current show schedule is already light -- just four shows a week, with several weeks off during the year -- so he's unlikely to get an even softer schedule come 2011.

If Karmazin and Stern are on the same page in terms of anticipating his retirement, it wouldn't make sense for Karmazin to pay up for Stern's presence on the app.

The more tantalizing option, of course, is that Stern is ready to break out on his own. The success of Internet radio apps will make satellites unnecessary in a smartphone future. He can launch his own premium network and broadcast into computers everywhere. The smartphone audience will also get bigger as Apple, Research In Motion (Nasdaq: RIMM  ) , and Palm (Nasdaq: PALM  ) will command even larger audiences in 2011.

On his own, Stern could also make his network available internationally. Even on the globally available iPhone, Sirius XM is restricted to stateside listeners. Stern wouldn't have the same licensing hoops to jump through on his own.

Is Stern ready for a third revolution, though?  

Turn up these other satellite-radio headlines:

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Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns no shares in any of the companies in this story and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.


Read/Post Comments (14) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 23, 2009, at 2:44 PM, corelblack2 wrote:

    Dear Author of this story: Why would you say, "Even on the globally available iPhone, Sirius XM is restricted to stateside listeners." Didn't you notice the number on the press release for international subscribers? Perhaps you should take note of that and write a nice article about how Sirius is no longer limited to stateside listeners? Of course that would require saying something positive about Sirius. Also, isn't this article more than a little confused when you mention that Howard Stern doesn't need more money and he's going to retire and then he can make so much more money by creating his own network. Strange! Please do your homework and write a positive article about the Global Reach of Sirius through what is soon to be the most popular app download of all time and the resulting new growth and income that will be generated by that. It's ok you can do it.

  • Report this Comment On June 23, 2009, at 3:20 PM, JPS007 wrote:

    This article is nothing but speculation from a partial and biased organization. You failed to mentioned that its possible that sterns could sign up for another five years, or he could partnew with siriusxm to offer another level of premium content.

    I'm not sure why I'm even responding to such a bogus collection of words.

  • Report this Comment On June 23, 2009, at 3:54 PM, Angiesan wrote:

    get rid of the bum !

  • Report this Comment On June 23, 2009, at 5:06 PM, m55555 wrote:

    WHY? AH THE HECK WITH THIS,RAG SHEET

    IDIOTS................

  • Report this Comment On June 23, 2009, at 5:22 PM, Jstondi20303 wrote:

    The motley fool, does nothing but sarcasticly make negative statements about sirius for as long as i can remember. As soon as sirius starts making progress, they jump on the band wagon and act like they predicted the positive the whole time, while they bad mouth them everyday anyways. Motely Fool is a waste of reading. State the facts morons! As far as im concerned you guys are irrelevant to reality! F U

  • Report this Comment On June 23, 2009, at 5:38 PM, TxTom wrote:

    What amazes me is that I paid good money to subscribe to this jibberish, only to find out (they say) that the REALLY GOOD STUFF is in yet another premium service that Motley Fool offers (or are there several?).

    I agree with Jstondi20303 that these guys have a wonderful way of saying "I told you so" no matter what happens with any particular stock - SIRI especially for some odd reason.

    I'll keep my Sirius/XM stock, and when it triples I'll read all about how Motely Fool had it right all along. Meanwhile maybe they'll find something positive (and non-contradictory) to say about the stock between now and then. Or maybe not.....

    These Fools are as wishy-washy as the talking heads on CNBC. No matter what happens, they know exactly why and claim they mentioned it beforehand. Yeah! If all these people sit around and guess enough, they HAVE to be right part of the time. Even I can do that... and I don't claim to be an expert. What a rip-off.

  • Report this Comment On June 23, 2009, at 6:33 PM, WoodyDog1400 wrote:

    Motley Fool. I finally realize what that means. You must be a FOOL to believe the BS they write.

    Do you have the remote ability to use any form of journalistic approach of applying research to anything you do? Or does Cramer just lead you Fools in the direction he wants to follow him in?

    Give up, you will never be as dumb as Cramer, but you will still be a FOOL to the rest of the world.

    I can't believe people actually pay for your investing advice. The dollar menu at McDonald's would give more knowledge than you fools.

    Since today is Tues, and you love to write about SIRI 2-3x a week, I can expect to see a partially positive article on Thrs about SIRI??

    Why write about a stock you don't belive in, or then again....

    Guess we'll have to see what Cramers tell's you do to first, I mean what you decide to follow, sorry, I mean what journalistic approach you take last, I mean next....

  • Report this Comment On June 23, 2009, at 6:36 PM, JRSmithman wrote:

    This will be at .40 easily has nowhere to go but up. Fools will always write something negative about this. I am so happy I have stuck it out with this stock. Today was just the first of many things to come with the stock hitting a solid .37 and with no short naked selling contributing to this. if you know the charts and how to read the stocks. The shorts are becoming extinct and so maybe fools and their bashing as well. That last part about fools dont hold your breath as long as there is speculation there will always be this Garbage that we read about news that is 5 years old

  • Report this Comment On June 23, 2009, at 7:34 PM, cantbefoolish wrote:

    Rick, since you listen to the show, then you would have also heard Howard say that he thinks "satellite is the future of radio". Do you really think he'll turn against it?

    I don't know how you can say that you're bullish on SIRI, when you are constantly bashing the company. Yes, we get the point - the app isn't as good without Howard on it. Get over it.

    It's laughable that you were negative on the stock when it was at $.06, but then you turn bullish after it gets back up to $.60. That's not late to the party - it's like not showing up at all..... you dumb ass.

  • Report this Comment On June 23, 2009, at 9:45 PM, siriradio wrote:

    STOP POSTING ...to anything Rick Aristotle Munarriz

    writes.

    Starting next Thrusday june 25th..pass it along !

  • Report this Comment On June 23, 2009, at 9:46 PM, siriradio wrote:

    We will communicate thoughts with other motley fools

  • Report this Comment On June 24, 2009, at 2:03 PM, WoodyDog1400 wrote:

    Sirius trading at .40 currently today Wed 24th.....

    Sorry Shorts, you just got shorted....

    Long SIRI

  • Report this Comment On June 25, 2009, at 10:11 AM, invbiker wrote:

    Rick - a few comments:

    Based on Howard's comments on his show today - he is currently in "discussions" with Sirius.

    The Howard Stern Show is already available to anyone with a computer and internet connection - thus international has been in play for some time.

    The reason the he (and I believe MLB and NFL) are not on the IPhone is that they control where their content is viewed an more importantly who profits from it. It's unlikely at this point that Stern gains listeners with an IPhone app. Stern doesnt get a cut of any of the App revenue - so why would he do this? Plus, Howard himself is a Blackberry Bold user now - he's not an IPhone convert.

  • Report this Comment On June 25, 2009, at 2:07 PM, TxTom wrote:

    To Rick Aristotle Munarriz :

    How do you like Sirius now, up 20% today?

    And the ride has just started. This company will get their act together. They now have room to breathe on their debt load, and when auto sales pick up after this recession, SIRI will again be what us "believers" thought all along - at least $2 and perhaps $3 per share.

    Happy investing everyone.

    What a country!!!

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