Sirius XM Radio
Where will he be come 2011?
CEO Mel Karmazin was on CNBC yesterday, and Melissa Lee wrapped up the interview by asking him about Stern's situation.
"I'd love to have Howard stay," Karmazin said. "He's been a terrific partner. We make a lot of money with Howard."
However, when Lee interjected that he's worth every penny -- and perhaps a few pennies more -- Karmazin appeared to break into the role of a public negotiator.
"I didn't say he's worth every penny," he responded, before returning to his point about the great relationship that Stern has had with Sirius over the years.
Karmazin then raised the possibility that Stern might simply retire from radio altogether.
"He's been getting up early for a long time," Karmazin said.
So what's the sticking point? Is it money? Is it time?
Karmazin and Stern have been partners since their terrestrial-radio days with what is now CBS
Is that possible? Stern has ridiculed Jay Leno's late night flip-flopping in the past, so it seems unlikely that Stern has become the indecisive Brett Favre of the broadcasting space.
Let's go over the four possible scenarios, in light of Karmazin's comments and in order of Sirius XM favorability.
1. Stern signs a new deal with Sirius
This is what Karmazin, Stern fans, and Sirius XM shareholders want. It's also the most likely scenario. Ad-supported terrestrial or online radio can't pay what Sirius XM's premium subscription model can shell out.
We're simply down to a matter of the negotiated price and terms. Sirius was much smaller when it initially nabbed Stern, but that doesn't mean it can -- or should -- spend as much as it did on the original $500 million five-year deal.
Stern is likely to want a shorter deal, and probably one involving fewer hours. These shouldn't be deal-breakers. The Stern empire can run on autopilot. It's currently able to fuel two entire channels of related content, even though Stern is on for just a few hours for four days a week, with several vacation breaks along the way.
Still, that doesn't necessarily mean Stern would be paid less. Over the past year, Sirius XM has made its content available as streams to owners of Apple
Everything has a price.
Stern's audience would also widen if the channels were offered to all XM subscribers -- not just the ones paying more for the "Best of Sirius" package -- but that seems unlikely since it would kill off the potential for upsell.
2. Stern hangs it up
There's no shame in early retirement. Stern has earned it after decades of service to the radio industry.
Retirement would be a better scenario than having Stern bolt to a rival platform. Fans who would cancel Sirius to follow Stern elsewhere would probably stick with satellite radio if Stern wasn't available on any other platform.
There can also be a quasi-retirement, where Stern no longer performs his live show but stays on as a consultant, spokesman, and master architect of the content for either one or two Stern channels.
3. Stern goes elsewhere
During yesterday's CNBC gig, Karmazin pointed out that no terrestrial-radio operator -- even privately held Clear Channel -- can touch the $2.7 billion in annual revenue that Sirius XM is raking in.
There's no point in taking less money to be in the FCC's crosshairs. Besides, conventional radio has spent the past five years weaning radio listeners (albeit unsuccessfully) off Stern's boundary-pushing humor. It may be revisiting demons in bringing him back for Stern's final broadcasting years, only to lose him again.
Stern would also risk the embarrassment if his return to terrestrial were either poorly received or if Sirius XM manages to retain its subscriber base -- and grows -- after his departure.
There's always the possibility of a multimedia deal with a heavy. Viacom
4. Stern goes it alone
We live in a different world from when Stern inked the original deal five years ago. During this week's introduction of Apple's iPhone 4, Steve Jobs pointed out that his company will sell its 100 millionth device on the iOS platform of iPhones, iPads, and iPod touch devices. In other words, there are 100 million devices that can feed off Apple's App Store. If Stern can create a subscriber app and get just 1% of the iOS device owners to pay $10 a month for Stern, we'd be talking about more than the $100 million that he is currently making.
On a slightly smaller scale, Amazon.com's
Even if the math isn't there in going it alone, at least the flexibility and autonomy will be there for Stern to succeed or fail on his own merits and actions.
So, yes, Stern has a big decision to make in the next few months. Sirius XM investors are hoping he makes the right choice.
What will Howard Stern do? Share your experiences in the comments box below.
Longtime Fool contributor Rick Munarriz is a subscriber to both Sirius and XM. He owns no shares in any of the stocks in this article and is also a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its defiance. The Fool has a disclosure policy.