Howard Stern Is Back Where He Belongs

The "will he or won't he" drama is over.

Howard Stern announced this morning that he's sticking around with Sirius XM Radio (Nasdaq: SIRI  ) for another five years.

The two sides certainly cut things close. Stern's last live show under his original contract was coming up a week from today.

The bonus in the deal is that Stern's show will now be available on mobile devices. Sirius XM introduced its app for Apple iPhone and Web-tethered iPod touch owners 18 months ago. There was a lot of fanfare leading up to the smartphone streams, but that came to a screeching halt when it was revealed that Stern's show on Sirius and some of the play-by-play sports on both Sirius and XM would not be available.

The lack of Stern for a product that Sirius XM foolishly priced at the same price point as its receiver-based subscription was a buzz killer. Sirius XM went on to introduce a similar app for Research In Motion (Nasdaq: RIMM  ) BlackBerrys and smartphone devices using Google's Android platform, but the moment was gone. If the streaming allure was commercial-free music, smartphone owners have free access to that through countless Web radio and music-discovery sites.

Stern's arrival may not transform the iTunes, BlackBerry, and Android apps into winners worth bragging about, but it's clearly Sirius XM's best shot until we see what Sirius XM 2.0 has to offer in terms of extended features by the end of next year.

Terms of the deal aren't being disclosed. It remains to be seen if Stern signed for a sum similar to the $100 million a year he averaged during his first five years, or if he's getting a piece of the action on any future mobile subscriptions.

Regardless of what your opinion may be about Stern's on-air antics, this is the best resolution possible for both parties. Terrestrial radio would be highly unlikely to afford Stern or give him the creative wiggle room he needs. Launching his own premium streaming offering would leave one of the two sides smarting. Stern would have been humiliated if he hadn't wooed enough paying subscribers, and the Sirius XM model would be leaking if the migration was successful.

How big will Sirius XM be by the time this new Stern deal expires in 2015? 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 (8) | Recommend This Article (7)

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 09, 2010, at 12:35 PM, pondee619 wrote:

    "Terms of the deal aren't being disclosed" But that is all that is important. Anything and everything is either a great deal or a terrible deal. The only important factor is the price at which it is obtained or sold. You can not state that a deal is good or bad until you know the terms.

    "this is the best resolution possible for both parties" You can not know this without knowing price. I'd have thought fools would know this.

  • Report this Comment On December 09, 2010, at 12:46 PM, Brent2223 wrote:

    pondee619 - I have some swampland for sale, the price is really low so it must be a great deal! In fact, that toxic waste next door keeps making it a better and better deal! Sometimes strategy plays a little role in these decisions.

  • Report this Comment On December 09, 2010, at 12:58 PM, GWalcoff wrote:

    Tee f'n hee. Stern sighs. Stock spikes. All is well.

  • Report this Comment On December 09, 2010, at 1:17 PM, jm31563 wrote:

    Just bought more shares in the company today and will buy more in 2011. Glad to see Howie staying on-he finally sees the vision of what this company will be in the years ahead.

  • Report this Comment On December 09, 2010, at 2:30 PM, langco1 wrote:

    a aging stern put on a nice act but never had anwhere else to go,,,,

  • Report this Comment On December 09, 2010, at 3:27 PM, WhiteHatBobby wrote:

    The language of Sirius is allowed to be more obscene, and Stern allows the "pay for obscene" mentality to be there.

  • Report this Comment On December 09, 2010, at 3:28 PM, pondee619 wrote:

    Brent2223- at the right price everything/anything is a good buy. At the wrong price, nothing is. Without knowing price, the quality of a transaction in not known.

    "Sometimes strategy plays a little role in these decisions" Yep, getting the best property at the best price. Strategy, the good kind. Over paying, the bad kind of strategy, makes you broke. And , yes, even swamp land next to a toxic waste dump can be a buy at the right price. Factor in cleanup costs and the property's final utility... you do see that, right?

  • Report this Comment On December 10, 2010, at 9:48 PM, rookie2009 wrote:

    The comments are a bit of a letdown after all these months of fun. Is it not ironic, that my 1000 "free" shares of "Sternius" radio are roughly equal to the price of an ounce of gold.Do you know what Buffet would say if he could choose between the 2? He'd say, Is there a door #3? It's all good. Happy Holidays! I gotta sell something, my subscription is due!

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