330 Million Reasons to Like Sirius XM

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Sirius XM Radio (NASDAQ: SIRI  ) has won the latest legal tussle with its most magnetic on-air personality.

A New York state appeals court is standing by a trial judge's earlier ruling to toss out a $330 million lawsuit spearheaded by Howard Stern.

Stern's camp contends that his original contract featured subscriber bonuses that should have included the additional subscribers that Sirius gained when it acquired XM. The total compensation that Stern and his production company were seeking was $330 million.

On the surface, it was a ludicrous claim. Why should XM subscribers count toward Stern's appeal? Stern's two channels aren't even available on the standard XM package. If anything, an XM subscriber could be interpreted as a vote against the occasionally outrageous but insanely popular morning show host.

However, one can also rightfully argue that Sirius combining with XM -- with the then-smaller Sirius calling the shots -- wouldn't have been possible without Stern. His presence validated satellite radio in general and Sirius in particular.

Shareholders are naturally going to be pleased with the decision. Even if they're fans of Stern, a reward of that magnitude would've been brutally dilutive to a media giant that already has way too many shares outstanding.

What was Stern's on-air reaction? Well, there wasn't one. He's off the air today. He's not doing as many live shows as he was during his earlier terrestrial years. However, if he does decide to rant against Sirius XM on the air when he does return, would that be so bad? It would be good radio.

Stern is nearly halfway through his second five-year deal at the satellite radio provider. He has suggested that there won't be a third deal, and that seems even less likely these days as he pursues television opportunities and settles in on an early retirement while he can still enjoy it.

Sirius XM naturally will want to make sure that it's able to replace him come 2016. The market for premium audio has never been stronger, but it's also growing more competitive.

The Verge is reporting that Apple (NASDAQ: AAPL  ) negotiations with Universal Music Group -- the largest of the major labels -- are in the final stages. An Internet radio licensing deal could be in place as early as next week, giving Apple the long overdue leeway to enter into the music discovery and on demand streaming markets.

This isn't necessarily a threat to Sirius XM, for now, but it's one more reason why the premium radio leader needs to stock up on proprietary content -- anchored now by Stern -- to compete against cheaper Web-based offerings that are a mere trickle now but will soon be a deluge.

Thankfully, Sirius XM won't be $330 million poorer as it tackles Apple and everybody else.

Let's get Sirius
Despite Sirius XM being one of the market's biggest winners since bottoming out three years ago, there is still some healthy upside to be had if things go right for it -- and plenty of room for it to fall if things don't. Read all about Sirius in The Motley Fool's brand-new premium report. To get started, just click here now.

Read/Post Comments (3) | Recommend This Article (2)

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 April 12, 2013, at 7:11 PM, JoeBobsFineFoods wrote:

    You think this is GOOD for Sirius?

    Watch what happens to the subscriber base when he leaves.

  • Report this Comment On April 12, 2013, at 11:36 PM, fawazmn wrote:

    we will likely loose all the 35 subscribers who

    listen to Stern

  • Report this Comment On April 28, 2013, at 8:21 PM, DavidMHome wrote:

    If the Sirius Stock price had more room to go down, i would short it by 30% or more 6 months after Stern leaves. I don't need satellite for programmed music channels, i need satellite for Stern (censored or un-censored). You are mistaken about "loosing" the 35 listeners. Sirius probably hasn't even admited that they have conducted the survey to determine the percentage of subscribers that will leave when Stern does.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2361693, ~/Articles/ArticleHandler.aspx, 9/25/2016 7:07:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
SIRI $4.21 Down +0.00 +0.00%
Sirius XM Radio CAPS Rating: **
AAPL $112.71 Down -1.91 -1.67%
Apple CAPS Rating: ****