They say that content is king, but for Sirius XM Holdings (NASDAQ:SIRI), the "King of All Media" is also king. Bloomberg is reporting that Sirius XM is closing in on a contract renewal with Howard Stern, the popular morning show host who has called the satellite radio provider home for the past 15 years. 

Two longtime partners renewing their vows may not seem all that newsworthy, but it is in this case. Stern was a game-changer for what was then Sirius Satellite Radio in 2006. It was a lot smaller than rival XM when the deal was initially announced in late 2004, but by the time the two parties would combine in 2008, it was Stern's presence that financially made it a merger of equals -- with Sirius executives (not XM's) running the show.

Stern is Sirius XM. Losing him would be unfathomable, likely leading to a large dip in subscribers at a time when the audience count is already heading the wrong way for reasons outside the media giant's control.  

This is also a newsy nugget because there was some speculation that Stern would make the jump to Spotify (NYSE:SPOT), in light of the global premium-streaming leader paying big money to land Joe Rogan and Michelle Obama to fortify its podcasting efforts.

There's also at least one meaty piece of programming on Sirius XM that is potentially on the way out, and Stern leaving as well would turn content into a crater.

And lastly, we get to the terms of the deal itself. After initially signing a deal for $100 million a year in 2006 -- and then renewals reportedly in the $80 million to $100 million range -- sources are telling Bloomberg that negotiations here are in the ballpark of $120 million a year. 

Howard Stern with Madonna and co-host Robin Quivers on the set at Sirius XM.

Howard Stern with Madonna and his co-host Robin Quivers. Image source: Sirius XM Holdings.

Buy or bye-bye booey       

Stern has been a satellite radio staple through his initial five-year contract and two more five-year renewals, but he is 66 right now. Does he really want to keep going? This isn't a matter of age. Morning-show radio hosts last forever. Stern is a spring chicken relative to some of the industry's other icons. This is only a question because after all of the money that he has made over the years, wouldn't he rather enjoy his golden years in retirement? At times it seems like he's still working just out of loyalty to keep his crew employed. 

It's fortunate for Sirius XM if Stern is talking about staying on after his current contract is up at the end of this year. Sirius XM started 2020 with back-to-back quarters of declining net subscribers. Auto sales are slumping, and given the pandemic, folks aren't driving to work in the mornings in the numbers that they used to. Canceling a premium radio subscription seems like a no-brainer in a recession. 

There's also a chance that Stern would not be the only piece of tentpole content leaving the satellite radio behemoth. Barstool Sports and Sirius XM could also be going their separate ways if we go by a tweet posted by Barstool chief Dave Portnoy shortly after Tuesday's market close. 

 

Barstool Radio has been a staple with its own channel since 2018. There hasn't been a spike in Sirius XM subscriptions like we saw with Stern's arrival, but given the edgy sports icon's active and loyal fan base, it would be naive to think that there wouldn't be a wave of subscriber defections if Barstool hits the road. Sirius XM losing both Stern and Barstool would be a crushing blow for the platform. 

Stern going to Spotify tends to come up every so often, and with Spotify's premium audience expanding over the last five years since Stern's last renewal, it's not entirely out of the realm of possibilities. The problem here is that Spotify isn't likely to deliver the kind of live audience that Stern's show needs, and it may not have the morning-show scale to justify paying Stern as much as Sirius XM has (and probably will) pay. 

All of this is undeniably leverage for Stern. Whether it's another five-year deal or a shorter term, he's the one holding the cards here in renewals with the media stock giant. Paying a record $120 million (a sum that covers the production and crew salaries, too) is a lot, but Sirius XM has a lot more to lose if he leaves at this point.