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Howard Stern Proves His Value to Sirius XM Once Again

In case you missed it, Howard Stern again proved his value to Sirius XM (NASDAQ: SIRI  ) satellite radio with a fascinating "town hall" meeting with songwriting legend Billy Joel. The April 28 show got little attention in advance, but plenty of press afterward, much of it centering around Joel's revelation that he used heroin in the 1970s. Such moments have become a hallmark of Stern's celebrity interviews, and they're a great example of what sets Sirius apart from competitors like Pandora (NYSE: P  ) and Apple's iRadio.

Wikimedia Commons:Bill Norton

Those other services are all about content delivery. Sirius, since at least the day Stern came aboard in 2006, has been a content creator in addition to a delivery service.

Adding subscribers through original content
Sirius has grown its revenue in the double-digits for nine consecutive quarters, with the most recent number coming in 11% higher than the year-ago period. It continues to add subscribers, now at 25.8 million, and it expects to cross the 30-million mark within the next few years, CEO Jim Meyer said.

We don't know how many Sirius subscribers tune into Stern. But we know he had an estimated 12 million listeners on terrestrial radio. And we also know that Sirius XM experiences its annual renewal peak in January of each year – not coincidentally, the month Stern started broadcasting over satellite in 2006. What's more important is that we know the content he generates is important to Sirius.

Now 60, Stern and his radio show have evolved from its shock-jock past. Sure, there are still porn-star appearances and outrageous contests. But in an age of over-the-top media, the interview has become the show's true cornerstone. That's likely to attract a different kind of listener, say one who sees Stern on "America's Got Talent," or who reads about the Billy Joel interview.

But Stern is not the be-all, end-all of Sirius's original content. Meyer told analysts recently that he's "never been more excited about what we're doing here at Sirius XM across sports, talk, and music."

Executives touted new programming in news, and a channel dedicated to business and finance led by the Wharton School of Business. Such programming helps Sirius capture some of that long tail of listeners through their interests and occupations.

Is Pandora a worry?
Pandora continues to gain ground in the radio industry. It now boasts 75.3 million active users, up 8% over 2013. And users are listening longer, with total hours up 12% over the year-ago first quarter.

Wikimedia Commons: OpenPandora

That growth has allowed Pandora to ramp up advertising. It now airs six ads per hour, two more than it previously had, and advertising revenue was up 45% from 2013. It needs that growth to continue. It expects subscription sales to slow, with subscription revenue contributing around 19% to total sales.

That's where Pandora's weakness as a business is apparent. The fact that Pandora remains just a content distributor – no matter how good it is -- is what makes the rise of every new music streamer such a grave concern, whether that's Apple's iRadio, Google's Play Music All Access, or Spotify. Anything that can siphon off listeners with an equally good music platform threatens a major disruption of Pandora's business model. And the big players like Apple And Google aren't relying on their services to make money – only to draw listeners into their ecosystems.

The bottom line
And that's what sets Sirius apart from the competition. Its subscribers are willing to pay for its service, and subscriptions generate 85% of the company's revenue, compared to just 2% that comes in through ads. As long as it can continue to generate its own desirable content on top of the music, sports, and news programming it distributes, its moat becomes deeper and wider, and that much tougher for competitors to cross.

An important question moving forward is how well Sirius is positioning itself to remain a content creator post-Stern. Meyer addressed the need to continue expanding its original programming in the most recent call:

"What I will tell you is that the breadth of content matters a lot ... and that's why we spend what we spend ... and that's why we put the focus on it that we do. ... Creating and broadcasting unrivaled content is the core of our business and vital to attracting new subscribers and keeping existing ones."

As long as it can keep that focus, it looks set to succeed.

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Read/Post Comments (18) | Recommend This Article (7)

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  • Report this Comment On May 08, 2014, at 10:48 AM, Stable77 wrote:

    It's unfortunate that you take a press release from Howard's agent, and then post it here as if it were news. Buchwald's press release of the Billy Joel Town Hall is nothing like what really occurred. I challenge you to listen to the entire unedited broadcast.

    Let's face it, Howard has lost most of his listeners. Stats from Sirius/XM as posted on Hollywood Reporter last month indicate his daily listeners are around the 800k mark now. Given that Howard only shows up 3 days a week, and works 3 hours on those days, he no longer is identified with the regular Joes that made him who he is today. What with three mansions, a $10 million dollar remodeling of a bathroom in the Florida one, and dressing in teenage Varvatos skating outfits with scarves, he's lost touch with reality.

    Back to the Billy Joel broadcast ... in all honesty, Howard was not prepared at all. 9 out of 10 questions that he asked were followed up with his own answers to the question before Billy could even respond, and even then Billy had to say "No ..." or "That's not right ..." or "I never thought that..." or "That's incorrect ..." or "Never happened that way ..." etc, etc. Howard has literally become the worst interviewer in history. He projects onto his guest, they negate his statement, Howard simply ignores the rebuttal, and he then just asks another question in the same projecting format. It's almost unlistenable.

    They didn't have a real piano, just an electronic keyboard that looked like a piano, and Billy Joel complained on more than one occasion about it, how the keyboard felt, and how it sounded. Howard should have been embarrassed but instead just said it sounds even better than a piano. Wtf?!

    The one woman singer Idina from Frozen forgot her lyrics, stopped the song in the middle of it for 20-30 seconds, then continued on, and at the end Howard said it was one of the greatest performances ever. I guess the screwup will be edited out, and Howard's comments will sound appropriate then.

    Robin had no purpose being there at all. Just acknowledging Billy Joel's responses as if she knew the answer before it was ever answered, or as if she was the one conducting the interview.

    It was produced worse than most high school pep rallies -- Howard was an embarrassment while thinking he has the skill to just wing it with his psychiatrist-inspired interviews nowadays. A few times it seemed you could feel the frustration in Billy over the whole thing.

  • Report this Comment On May 08, 2014, at 12:42 PM, maximax1 wrote:

    Thank you Don Imus for the comment.

  • Report this Comment On May 08, 2014, at 1:14 PM, jojopuppyfish wrote:

    As a long time fan, because he's on 3 days a week I find myself less interested than I use to be.

    Since Artie left, its just not the same show.

    This week he had on Larry King again.


  • Report this Comment On May 08, 2014, at 5:50 PM, maximax1 wrote:

    I'm a long time fan and find his show more interesting than ever. He actually has real guests on and conducts great interviews. He's one of the main reasons to subscribe to Sirius - I'm sure his 9 million listeners (not 800,000) would probably agree.

  • Report this Comment On May 08, 2014, at 5:58 PM, JohnnyDaniels wrote:

    It's impossible to measure Howard's value to Sirius/XM, as we don't know how much he makes under his current contract, the number of listeners he has or the amount of money Sirius/XM had to spend on legal fees defending his ridiculous lawsuit asking for a performance bonus based on XM subscribers who can't even tune in to his show.

    I respectfully disagree with the claim that Howard is a content creator - he works 3 days a week (maximum) and also takes plenty of vacation weeks. When Stern started at Sirius in 2006, his Howard 101 channel featured radio veterans Scott Ferrall and Bubba the Love Sponge. They are long gone, and instead of hiring quality replacements, Howard fills the time with stale, edited replays of his old radio shows and gets hacks from his staff to do shows.

    Howard will occasionally get a mention for something a guest said in an interview, but many of the interviews are long and ponderous, with Howard playing armchair shrink trying to figure out if the guest has daddy issues or grilling the guest about his income and net worth.

  • Report this Comment On May 08, 2014, at 6:37 PM, brokerek wrote:

    The Howard Stern Show is awful. The woman Stern cheated on his wife with has neutered what was once a funny show. Stern is everything that he made his fortune rallying against. I can not believe this fraud has no self awareness. his fans hate him and his daughters Moved half way around the world to avoid him. The show now consists of content that won't offend Clooney, Anniston, Theroux and that prostitute he decided to marry despite alienating his three daughters. An insurance seminar is funnier than the current Stern Show.

  • Report this Comment On May 08, 2014, at 6:48 PM, brokerek wrote:

    On May 08, 2014, at 5:50 PM, maximax1 wrote:

    I'm a long time fan and find his show more interesting than ever. He actually has real guests on and conducts great interviews. He's one of the main reasons to subscribe to Sirius - I'm sure his 9 million listeners (not 800,000) would probably agree.

    Ha hahahahahahahaha oh man that is killer 9 million hahahahahahahahahaha lol lmfao roflmao lol lol lol are these the same 9 million people that make up the entire GayGT audience? Hahahahahahahahahahahaha 9 million hahahahahahahahahaha oh by the way Wiggy joined GayGT as a goof. Lol lmfao roflmao hahahahahahahahahaha!!!!!

  • Report this Comment On May 08, 2014, at 7:01 PM, brokerek wrote:

    On May 08, 2014, at 5:50 PM, maximax1 wrote:

    I'm a long time fan and find his show more interesting than ever. He actually has real guests on and conducts great interviews. He's one of the main reasons to subscribe to Sirius - I'm sure his 9 million listeners (not 800,000) would probably agree.

    haha haha haha haha can you tell that 9 million listener joke again. Come on tell us how 1/3 of the entire sirius xm platform Listen even though only 14 million are even able to tune him in. Hahahahahahahahaha can you tell the other joke about the auditing firm that was hired by sirius xm came to the conclusIon that he has about 800,000 listeners a day but you say its 9 million hahahahahahahahahaha oh man you are killing me!

  • Report this Comment On May 08, 2014, at 7:18 PM, brokerek wrote:

    I'm a long time fan and find his show more interesting than ever. He actually has real guests on and conducts great interviews. He's one of the main reasons to subscribe to Sirius - I'm sure his 9 million listeners (not 800,000) would probably agree.

    Can you please show us where the 9million number comes from. Additionally can you (A) answer the question that if he indeed has 9 million fans why do only 8 fans get to talk via telephone pretty much all the time? In addition 9 million is fairly similar to his audience when he was on terrestrial radio. Can you explain why when Howard makes public appearance there are 5 people cheering for him as he enters the venue. Oh 1 more you say the show is better than ever so i would imagine you are a long time fan. So what is better than ever dancing on the Katie Couric show or the Art projects he does with Rosie O'Donnell? Comment?

  • Report this Comment On May 08, 2014, at 7:18 PM, TheAlienTan wrote:

    I've never seen anything quite as disturbing as the shoe polish soaked Brillo pad that this old queen has superglued to his head. How long will he carry on the charade? Will he be a 90 year old corpse with jet black hair? The teeth, the chin, the Adam's apple, it's all gross. Vomit inducing.

  • Report this Comment On May 08, 2014, at 7:57 PM, jekoslosky wrote:

    Stern's show certainly has changed over the years, and he's likely not attracting some of the listeners he had before. But the 800K figure seems hardly believable. That would mean he's listened to by less than 3% of Sirius XM's total subscribers. Still, the point is, love him or hate him, Stern represents original content people are willing to pay for every month. That's what sets Sirius apart, and that's a priority for the company.

  • Report this Comment On May 08, 2014, at 9:06 PM, koolest43 wrote:

    The Stern show had a formula that worked for over 20 years it had Stern, cackling Robin, Fred, and either Jackie, Artie or even Billie West. When Artie left the show it jumped the shark.

    The internet exposed the Wig as a compulsive liar, back then we believed everything and he came across as an honest man but with the net we saw proof of all his lies. Two of his biggest lies, pitching the merger for Sirius and Xm, he ranted and ranted how great it would be for the listeners, all along he was salivating for bonus money. The other, working 3 days a week, he said he was doing it because he was getting older and was tired, he sounded sincere, a few weeks later he takes a second job with AGT. He has turned into a Hollywood kiss ass, pssy whipped wimp.

  • Report this Comment On May 09, 2014, at 5:34 AM, BustyoChops wrote:

    It's sad and clear that Howard's show now is after maximizing the almighty dollar with minimum effort (3 days a week, multiple weeks off). Skills as an interviewer? As his staff does all the research but Howard has to still ask how big one's genitals are, do they "orgy," and if they're a millionaire (fascinating and edgy, right?)

    "The most honest man on radio" is anything but. His denial of a wig and plastic surgery is just a small example of his deceptiveness. He sued his own employee over a flaw in his contact and often claims 20 million listeners when half or mist don't have the ability to listen to him because they have XM software. And his rabid fans with mental problems and/or low IQ show his appeal (Bobo, Maryann from Brooklyn, HiPitch Eric, etc.)

    His third rate sponsors should indicate his credibility and popularity. He still tries to spontaneously interject other sponsors (cheap product placement) and is also deceptive that they are sponsors (see his smoothie choice and clothes designer). Not to mention his attempt to get Tan Mom air time because of his relationship with her agent/promoter.

    YouTube and the Marksfriggin site is filled with evidence of his old shows displaying his lies and hypocrisy. For a man who made his bones as a "shock jock" through the humor of racism and gay jokes, he lies about this past to fit in with the liberal Hamptons and Hollywood crowd (remember the "homo room, the N word, and blackface?). Does Stern deserve another Sirius contact from the "company" man who sues his employer? Let his new AGT fans decide.

  • Report this Comment On May 09, 2014, at 8:12 AM, Garcia69 wrote:

    The only thing funny about Howard Stern is his wig.

  • Report this Comment On May 09, 2014, at 10:38 AM, jekoslosky wrote:

    Since the discussion here is mostly focused on whether people like Stern or not, here's a question to consider: Is Sirius as good an investment if Stern were not there? Eventually, the company is going to reach that point. What does it need to do to mitigate the loss?

  • Report this Comment On May 09, 2014, at 11:14 AM, Captainpass wrote:

    I was a huge fan for twenty years and signed up for Sirius because of the HSS. Two years later I cancelled because of the HSS. Howard became everything he claimed to be against: no work ethic, constantly recycling shows and content; no willingness to have anyone on his staff but yes-men; trophy wife; $500 bottles of wine; and his "gig" with Americas Got Talent that watered down his show even more. Terrible. I haven't looked back .

  • Report this Comment On May 09, 2014, at 11:48 AM, sirifair6 wrote:

    Although I do find HS the best radio guy ever I am not too fond of his topics. As they say, this is not my cup of tea.

    As to sirius xm itself, I have been listening to it for the past ten years and love what I hear now. The quality of the programming has improved dramatically across the board.

    Sirius xm is turning into a launch pad for discovery of musis talent. I am not sure many see that but this is the case. This makes siri infinitely more attractive than anyhting else.

  • Report this Comment On May 09, 2014, at 12:12 PM, DJenkin8 wrote:

    I believe the Howard Stern Show is still the best show on the radio, and I he is the greatest broadcaster in radio history. I love his new stance on gays and I am glad he embraces openly gay men like myself and my partner. We love him. Keep up the strong work Howard.

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John-Erik Koslosky

John-Erik Koslosky is a writer, journalism instructor, investor, and all-around Fool. He follows the media and social media industries, and writes about some of their publicly traded companies.

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