Sirius XM Is Cutting a Cake

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Sirius XM Radio's  (NASDAQ: SIRI  )  first Howard Stern Birthday Bash may also be its next-to-last Howard Stern Birthday Bash.

Bringing back an event that used to be a tradition during his terrestrial radio days, Stern's birthday celebration in January will be a star-studded affair that's broadcast on his channel. Jimmy Kimmel will be hosting the on-air soiree, and details of the venue, celebrity guests, and ways for listeners to win invitations will be trickling in during the coming weeks.

Stern will be turning 60. That's a pretty big deal. It's surprising that Sirius XM didn't bring back this tradition sooner since the polarizing yet ultimately magnetic radio icon has celebrated eight birthdays since joining Sirius XM in 2006.

Listeners may not want to get too attached if the event's a hit since Stern will have just one more birthday to go under the terms of his current five-year deal with Sirius XM that expires at the end of 2015.

That may seem pretty far away, but Sirius XM investors may as well start assessing the situation. The company's guidance is calling for revenue growth to decelerate to just 6% next year and that's with a small price increase kicking in come January. It won't provide a preliminary read on 2015 until the latter half of next year, but the real question now will be how Sirius XM can square away growth come 2016 if Stern walks at the end of his contract.

He probably won't come back. He will be about to turn 62 at that point, and he was public about his reservations of signing the current contract extension three years ago. He's earned a cozy retirement where he doesn't have to wake up early several times a week. Even with the live shows seemingly fewer in number now than during his terrestrial years, it's a safe bet that Stern will want to retire while he still has the capacity to enjoy his golden years. 

Sirius XM has evolved over the years. It's no longer all about Stern. However, it would be naive to think that subscriptions won't take a hit if he leaves the airwaves without a suitable replacement. That hunt probably can't begin soon enough. Sirius XM won't want to wait until the end of 2015 to make that happen. The stock has already shed 13% of its value since peaking two weeks ago, fueled largely by its decelerating growth projections. The last thing it wants is to cast more doubts about its growth potential.

Sirius XM may be cutting a cake during a celebrity-studded party in two months, but it shouldn't be just Stern playing America's Got Talent these days. 

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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 November 08, 2013, at 9:12 AM, vesprito1 wrote:





  • Report this Comment On November 09, 2013, at 6:51 AM, Editman999 wrote:

    Keep dumping this stock... because I'm buying all the way down. I love SAT radio and there is nothing else like it. (I have 4 subscriptions) Never listened to Howard Stern but if people bought XM for Stern only, that's like buying cable TV for one station. How boring is that? I really doubt it will have any impact except to help the bottom line of SIRI. (Stern was expensive)

  • Report this Comment On November 12, 2013, at 9:24 PM, kmacattack wrote:

    Rick, most of the time I agree with your analysis, but I am going to agree with the two comments above. Although Howard has a loyal following, I doubt that more than 1 to 2%, if that, subscribe to SIRI solely because of Howard Stern. SIRI can hire TEN well known personalities for the price they are paying for Howard, and none of the ten will be able to blackmail SIRI as Howard was able to do to some extent. They might want to take the "Howard money" and send another bird up and maybe cut a deal with some of the premier Movie networks such as HBO, etc. and sell A la Carte programming to people like me who now own both a "smart" Internet TV, and a "smart" blu-ray player. People everywhere are SICK of getting their heads ripped off by the local cable MONOPOLY. Another option would be to put up a satellite which made Satellite Internet available at maybe $40 per month. I don't know how many subscibers you can cram onto one satellite, but I've heard there is new technology which is able to divide the bandwidth into a fraction of the data it generally consumes. Satellite Internet for $40 when Cox is charging me $52, and it's not even that fast a tier. Again, you could take your internet with you without having to find a hotspot on the go, and maybe broadcast some TV via the internet also. I wouldn't mind sacrificing a little video quality to gain a bunch of channels. If people wanted everyting in HD, charge a little extra for the bandwidth consumed.

    Another possibility is expanding SIRI to China, and India where about 1/3 of the world's population lives, Or to the Hispanic market in the US, Mexico , latin America, etc.

    There was a time that SIRI REALLY needed Howard Stern, but I'm not sure that, on a "T" chart, at the money he's being paid now, that he is making money for SIRI. Maybe Howard could do a show on Weekends a couple of hours a day if he feels like working. No competitor in their right mind would pay Howard what he has been getting paid for the past 7 years or so. There are plenty of other shock jocks out there, which would love to have a shot at being on SIRI if Howard leaves, and they could be paid a LOT of money, and still be paid a FRACTION of what Howard was being paid.

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