Howard Stern and Sirius XM Parting Ways?

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In a public sign that negotiations between Sirius XM Radio (Nasdaq: SIRI  ) and Howard Stern are getting testy, the satellite radio provider's biggest star blasted his company's CFO during yesterday's show.

Speaking at the UBS Global Media and Communications Conference, CFO David Frear made comments that The Hollywood Reporter interpreted as an indication that Stern may have to take a pay cut to keep his show going on Sirius.

"Why would I have to take a pay-cut," Stern said during yesterday morning's show, as retold by Forbes' Lacey Rose. "Oprah's out getting the Kennedy Center honor and I've got the CFO announcing to Wall Street that I have to take a pay cut. Never mind getting respect from the industry. I want respect from the company."

I heard the entire conference's webcast. Twice! I didn't get that out of Frear's response at all. Yes, at one point he did mention that Sirius XM was locked into many costly long-term contracts at the time of the merger. He said that there was an opportunity to achieve better economic terms. However, at no point did he single out Stern as a pay-cut candidate.

Of course Sirius XM is going to want to lower its programming costs whenever it can. Why else did it consolidate many of its music channels? Wasn't one of the unspoken merits of the merger between Sirius and XM that it would no longer have to bid against itself for content?

Stern shouldn't be insulted, and I'm guessing that he may have read The Hollywood Reporter's incendiary headline without checking the conference's actual webcast. Either way, this incident seems to indicate that Stern and Sirius XM aren't on the same page, as we count down to Stern's final live show a week from tomorrow.

It's a shame, because they do belong together. Surely they can work something out, at the very least for a year or two. This would be a good time for Stern to offer up smartphone streaming as part of his contract. One of the reasons that Sirius XM's streaming app for Apple (Nasdaq: AAPL  ) , Research In Motion (Nasdaq: RIMM  ) , and Google (Nasdaq: GOOG  ) Android phones hasn't taken off is probably that Stern's show isn't available for contractual reasons. Now would be a good time to rectify the situation.

We'll see how things go over the next few days. I'm still hoping that Sirius XM will be able to pull a rabbit out of its hat in time for its Paul McCartney concert on Monday night to celebrate to celebrate hitting 20 million subscribers. If not, the next obvious announcement would be during his final show next Thursday, milking the drama until the very end.

A deal doesn't have to be announced even then. Stern is slated to take a two-week holiday break, and negotiations may continue then in order to have him back in time for a sixth year come January.

Drama, tension, and mind games over the radio? H.G. Wells would be so proud.

Is Stern coming back and under what terms? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value pick. Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor choice. The Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He does not own shares in any of the stocks in this article. He 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 (22) | Recommend This Article (13)

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 December 08, 2010, at 4:37 PM, doubting wrote:

    From the long-term point, HS is irrelevant. Sooner or later, he will retire but the company will stay for any visible future. Short-term, he might be useful for the company just not to rock the boat that started sailing so impressively. It is highly unlikely that Sirius and HS will part ways. HS does have a lot of ego but not as much choice. Who will pay him so much money!!! Nobody!!! To start his own business, is for him to practically ruin his magnificent career. His true choice it to retire that is also unlikely. I believe that Mel, who goes back with HS a couple dozen years and has very strong relationship with him, will work something out to mutual satisfaction. It is absolutely fantastic being able to state today that Sirius is not longer dependent on any single individual or entity. This is another huge benefit of the merger due to absence of any viable competition.

    To claim that droves of customers in hundreds of thousands or even millions will run from the ship is simply preposterous and stupid. Many of HS fans are also siri shareholders. Are they going to sink their own boat? This does not make any sense. Up to 100K subscribers may leave but this is an infinitesimally small number with virtually zero impact on siri. There is no way siri can be stopped by HS, the likes and other entertainment and media geniuses no matter what they babble.

  • Report this Comment On December 08, 2010, at 4:43 PM, bridgesafe wrote:

    Let the foul mouth go!! the stock was at 7 when they hired this jerk, its at $1.35 today, need I say more, he doesn't have an adience, he has a fan club, cut him loose, I have siri radio, and never listen to the foul mouth F!!!!r ever, no one person on this earth is worth $100million per year, no one, and this foul mouth jerk demands it, shame on MEL for starting this debacle, maybe Mel should go as well

  • Report this Comment On December 08, 2010, at 5:16 PM, GWalcoff wrote:

    Apparently Bridgesafe isn't very good at math and his memory lacks as well. Their stock was selling in the $2.40 range when they signed Howard, went to $7.00 between the signing and the commencment of his show and went up to $9.40 shortly thereafter. What is far more important is the fact that they only had 600,000 subscribers and were on their way to being put out of business by XM. What would the stock be worth if they ceased to exist? Conserviative estimates give HS credit for at least 1 million subscribers. I would bet good money that the number is closer to 4 million but lets use 1 million for the sake of argument. At a base subscription rate of $12.95 per month plus $6.95 for each additional radio and the new streaming charge, Sirius is more than doubling their investment on HS alone not to mention the fact that nobody had ever heard of Sirius prior to signing HS. The residual value of his presence is invaluable. Now factor in the reality that HS brings in many more than the 1 million subscribers attributed by Sirius and you will clearly see what that Bridgesafe is a babbling idiot with personal bias. Do the math yourself. It's about profit rather than somebodies misconception of HS as a human being. If Sirius does not sign Howard to a new contract, everyone I know who has Sirius will immediatly cancel their subscription. I will be joining that group. Sirius offers nothing else for me that I can't get from Pandora, and ipod or my existing satellite tv. NFL, MLB and Nascar are not exclusive with Sirius. I can get all of them elsewhere. Oprah is not exclusive. Opie and Anthonie are not exclusive. Howard is exclusive. If it weren't for Howard there would be no Sirius today. Now that he put them on the map, they shouldn't lose sight of that. I look forward to either hearing Howard next year or saving about $30.00 a month.

  • Report this Comment On December 08, 2010, at 5:28 PM, SCWinehound wrote:

    Fire Howard, and give Jason Ellis (also on Sirius) his slot.

  • Report this Comment On December 08, 2010, at 5:37 PM, southernbeachguy wrote:

    "Why would I have to take a pay-cut," Stern said.

    Because the Economy Sucks and his audience base didn't make enought to pay his salary! That is why.

    Stern is Ok, but he is not a $100 million per year entertainer. I actually can't think of anyone that is.

  • Report this Comment On December 08, 2010, at 5:45 PM, girllpower wrote:

    GWlacoff. . .sound to me like you might be a babbling idiot!!! The person your slamming has SOME valid point! First, even IF HS has 4 million listeners, do you actually believe THEY ALL EILL CUT XM LOOSE? Again IF you think that. . .then YOU really are THE IDIOT!!! That leaves (roughly) 80% of XM's listeners in tact. . .hmmmm, seems like we'll do just fine w/o him or YOU for that matter. . .XM is about music w/o audio rape. . .yes having to put up with loud commercials, primodonna DJ's, and non-existenet sports coverage (unless you count local dino-AM-sauras). THAT IS WHY WE SUBSCRIBE!!! And hey, did you hear the news. . .KIA is now going to put XM in USED cars, Dr. Laura is coming, auto sales are UP (more new subscribers), and XM's neew sattelite is up and working well!!! Before YOU write about YOUR OWN PRSONAL BIAS (XM NOT having HS) Re-read your post and check your facts, so YOU DON"T SOUND LIKE A BABBLING IDIOT YOURSELF!!!

  • Report this Comment On December 08, 2010, at 5:49 PM, J56D wrote:

    It was good to sign HS at the time. The publicity was worth the cost in that it put Sirius on the front page. That was then and this is now. Sure it would be a positive to resign him at the right cost.

    These public negotiations have everyone talking about SiriusXM which is great publicity. But the only thing that HS cares about is HS. SiriusXM will thrive with or without this OLD DRAMA QUEEN.

  • Report this Comment On December 08, 2010, at 5:53 PM, girllpower wrote:

    One more thing GWalcoff. . .you say there would be no XM if there was no HS. . .YOU even talk about the co. before Howard. . .how are we supposed to take you seriously if you coutradict yourself, get your facts wrong, and are mean spirited? Again, I hope HS doesn't re-new, just so YOU won't be part of OUR special group. . .smart consumers who will not tolerate being sold something when all we want to do is listen!!!!! Sorry. . .one more thing. though you say the content (sports, Oprah, etc) is NOT exclusive. . .try buying all the apps, finding the places where those programs are being offered, and try to listen. . .hmmmmm, seems to me (again) that XM is a SMART buy. . .

  • Report this Comment On December 08, 2010, at 8:07 PM, shtmtlman wrote:

    Oh to make so much money for being so crude vulgar and arrogant... actuall if Sirius lost HS, subscriber count would probably go up. Plus the 100 mil a year could help out the bottom line a bit....

  • Report this Comment On December 08, 2010, at 9:25 PM, johndoe666 wrote:

    Howard is amazing for sure but worth $100m per year is laughable! That doesn't include the stock options he received and likely sold. Satellite radio does not need this ridiculous liability --> he needs to take his amazingness elsewhere!

  • Report this Comment On December 08, 2010, at 10:02 PM, JPDemers wrote:

    20M subscribers, 100M a year to Howard, works out to $5/year that I'm sending to a guy I don't care about and don't listen to. Not a dealbreaker by itself, but if you have too many of these overpaid performers, it gets to be a lot of money wasted on an overpriced product. (It's the cable TV problem: you buy a package, and pay for stuff you never watch.)

    As a customer, I don't listen, but as a shareholder I have to trust that Sirius knows what Howard is worth to them, and will pay him accordingly.

    Perhaps SIRI should consider selling day-old (or even hours-old) "reruns" to broadcast radio stations. It would help pay Howard's salary, and I doubt that many customers would cancel.

  • Report this Comment On December 08, 2010, at 10:31 PM, JPDemers wrote:

    If GWalcoff is an idiot, it's because he's coughing up $30 a month "just" to listen to Howard. I don't doubt that such fools exist, but there can't be very many of them.

  • Report this Comment On December 08, 2010, at 10:46 PM, rbarron01 wrote:

    Gwalcoff, you are spot on. I have been a due paying member with three (3!) subscriptions since 12/25/05. I will not renew if he leaves.

    Anyone care to bet on the subscriber loss if he goes? I've got $20 on 2 million gone in less than 12mos.

  • Report this Comment On December 08, 2010, at 11:02 PM, 702nitro wrote:

    Howard leaves and will take along with him 5 million.

    The 5 million will go out and buy an iPhone, sign up for a 2 year contract, pay $30 for a 5GB data plan, pay a monthly subscription for the show, and then buy an iPod iphone accessory for their car.

    Or they can download the podcasts and play it several times through the day. That way they can hear Howard's voice every hour and not miss a second of it.

    They are good to go!

  • Report this Comment On December 08, 2010, at 11:29 PM, Kazooskibum wrote:

    2 million lost subscribers is nothing. They won't be missed.

  • Report this Comment On December 09, 2010, at 3:44 AM, Typhoon1930 wrote:

    Amazing -- you have the fact based posts and the opinions... and the opinions are more "foul" than they guy their complaining about.

    I was a sirius investor... dumped every share when they reached 1.50. Not bad since I bought in at their lowest point approx 20 months ago. Even now, a lot of Sirius's value is emotion based. You don't need to know a lot to understand their financials. They've improved a lot, but the EPS just wont be there for a good time to come... what's more important is the dilutive EPS... after all Prefereds, Bonds with Options, Stock Options... are all considered, Sirius is still in Serious trouble. Bond Holders are the only people who've made any money off of Sirius in the last 2 years unless you bought in low 20 months ago and sold in October. F Sirius and their dumpy music channels. The worst thing they could have done was get rid of Starlite and replace it with the 40's... wtf?

    Not re signing Howard, at minimum for the same amount, is a big mistake. He paid for himself easily 10 fold. Stern single handedly made Sirius what it is. And when Stern goes, so do my 2 subscriptions and my internet subscription. Love ya Artie and a BabaBooey to ya all.

  • Report this Comment On December 09, 2010, at 3:46 AM, Typhoon1930 wrote:

    oops on the typo -- replace their with they're ;-)

  • Report this Comment On December 09, 2010, at 8:12 AM, brad72 wrote:

    For many years I paid for XM for their content. When I purchased a new Ford it was equipped with Sirius, which had many less stations I liked on XM. Yes, the programming is different and you need to pay for the XM package on Sirius, another cost.

    As an college educated, business traveller, I find HS entertaining for my long drives and have cancelled my 3 year subscription this week as it seems no deal will be done.

    I never listened to Dr Laura or Oprah for free on terrestrial TV and radio, why will I pay for them now!!! NFL is great, but who, other than truckers are in the car all Sunday.

    My $12/ mth are for the HS entertainment, the cornerstone by which Sirius sells it product. There are too many commercials on the talk stations and I can get the news and music for free on AM/FM. Sirus should really consider this as there are more HS fans out there than people think.

    My 2 cents....offer Siruis for $8/ mth and use HS as a $5/mth upgrade. Allow HS to keep 80% of the upgrade fee and both parties win; less risk for Sirius, and HS get his well earned money based on his exclusive listeners. See, that wasn't so tough!

  • Report this Comment On December 09, 2010, at 10:03 AM, Brent2223 wrote:

    Awesome, Stern re-signed, can we move on to more interesting conversations with SIRI now? I think it was a good move for Stern, he'll avoid the embarassment of seeing how little an impact his departure whould have had. I imagine at this point ego is more important than money.

  • Report this Comment On December 09, 2010, at 10:46 AM, bridgesafe wrote:

    I agree with you Brent2223/ thanks girllpower.

    HS resigned and siri shares only pop up 0.08 cents ??? interesting, that says a lot about his worth .I've been in and out of siri stock several times in the last 6 years, always made money trading it, I'm hoping we all as stock holders continue to do the same ( make money) on siri,

  • Report this Comment On December 09, 2010, at 4:19 PM, multi007 wrote:

    I paid for two lifetime subscriptions for both cars in my family. IF i keep the cars longer than 37 months, they will pay for themeselves. HS is irrelevant to me.

  • Report this Comment On December 10, 2010, at 1:05 AM, rbarron01 wrote:

    Welcome back, Howard. I just renewed my three subscriptions and I truly hope the rest of you choke on it. :-)

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