If Sirius XM Holdings (NASDAQ:SIRI) keeps one of the market's more impressive winning streaks alive -- delivering positive shareholder returns for the twelfth consecutive year -- it will have to thank Howard Stern for making it happen. Shares of the satellite radio provider moved higher on Tuesday after it announced a five-year contract extension with the iconic morning show host.
The deal itself isn't a surprise. Sirius XM indicated that negotiations were going well with Stern in late October, when the media giant was offering its third-quarter financials.
"We are making significant progress in extending our relationship with Howard Stern," outgoing CEO Jim Meyer said at the time.
It was significant progress indeed.
King of all media stocks
Let's go back to the winning streak. Sirius XM was a fledgling penny stock on the brink of bankruptcy a decade ago, but it has somehow come through with positive shareholder returns every year since 2009.
It's had a challenging run in 2020. The pandemic has boosted the profile of some stay-at-home entertainers, but Sirius XM earns its keep largely on the open road. Satellite radio is consumed largely by drivers, and we haven't been revving our engines so much this year. Car sales, the lifeblood of subscriber growth, stalled through the first half of this year.
Business is picking back up again, but Sirius XM stock was still trading more than 30% below where it started the year as recently as late September. A strong third quarter, encouraging vaccine news that could get the country commuting again, and the inevitable Stern extension are helping. The stock isn't all the way back just yet. Sirius XM shares are still 7% lower in 2020, but it's now within firing distance to stretch its winning streak to 12 years.
Sirius XM has evolved to the point where it's not just about Stern, but locking him up through the end of 2025 matters. Terms of the deal weren't disclosed, but an important point is that the new contract also extends exclusivity to the Stern audio and video archives for another seven years. In short, even if Stern decides to move on in five years -- or even less -- Sirius XM will have exclusive replay of Stern's show content through the end of 2027.
With revenue growing again, churn under control, and now Stern on lock Sirius XM is back to being a darling among media stocks again. It may or may not make it to the 2020 finish line trading above $7.09, keeping its winning run going, but it's finally moving in the right direction.