NEW YORK (CNN/Money) -
Howard Stern is looking expensive these days. His employer, Infinity Broadcasting Corp., is reportedly facing a whopping $1.5 million fine for an episode on Stern's morning radio program that included sexual references that government watchdogs say crossed the line.
Congress, meanwhile, is mulling legislation that would boost fines for television and radio programming deemed indecent from $27,500 to as much as $500,000 per violation.
But fans who fear that Stern is about to be muzzled on syndicated radio can relax. Turns out, Stern is a huge cash cow for Viacom unit Infinity.
Viacom (VIAB: up $0.07 to $34.30, Research, Estimates) does not disclose The Howard Stern Show's finances, but analysts estimate that the morning program hauls in roughly $175 million a year in advertising revenues. Factor out costs including the stratospheric $30-plus million take that Stern and his sidekicks get every year, and analysts say the show reaps as much as $25 million a year in profits for Viacom.
Those numbers make all the recent caterwauling over Stern's fate at Viacom look like much ado about nothing.
"There's only one thing that rules whether Howard Stern stays or leaves Infinity and that's money," said Michael Harrison, the publisher of Talkers magazine, which covers talk radio. "If Howard Stern brings in more money than it costs to have him, he stays. If it costs more money to have Howard Stern than he brings in, he leaves."
It's apparently that simple, despite what Stern said last week when he declared at a press conference he hosted that he was "so dangerously close to being forced off the air."
To be fair, there's a reason why Stern and his backers are nervous.
The crackdown on indecency
Janet Jackson's breast-baring stunt at the Super Bowl halftime show thrust into the political spotlight an epic battle between decency crusaders and First Amendment zealots over salacious programming.
The Federal Communications Commission responded with an investigation of the incident. At the same time, pre-existing efforts to push through federal legislation upping indecency fines gained widespread support within Congress. This week, the FCC dusted off a proposal to require broadcasters to keep recordings of their programs for a limited time, a move that critics said would help regulators pursue broadcasters more aggressively.
As for Howard Stern, an ongoing FCC investigation of a 2003 segment including crude sexual references resulted last month in the largest fine ever leveled against a broadcaster for indecent programming. To end government charges, Clear Channel Communications, which licensed the Stern show, agreed to pay $1.75 million.
The settlement came just months after Clear Channel booted Stern off its stations.
Viacom, meanwhile, is still under investigation for the same broadcast. Last week Broadcasting & Cable Today reported that the FCC would propose a $1.5 million fine, just shy of the $1.7 million that Infinity paid a decade ago in another dustup over Stern's show.
This time, however, Viacom is expected to fight the fine. The company publicly signaled last week plans to stand behind Stern, airing his show in 9 new markets, including a handful where Stern went silent when Clear Channel pulled him off the air. In response, Stern quelled persistent rumors that he would bolt to subscription-based satellite radio.
The price was too high for Clear Channel
Several analysts contacted by CNN/Money greeted the news with a yawn, saying they never believed he would exit Viacom.
"The radio business is a tough business and Howard Stern generates a ton of money," said Harrison. Echoed Tom Taylor, the editor of Inside Radio, a daily newsletter whose parent company is owned by Clear Channel: "I don't think (Viacom) ever wants to cut him loose. It would be a nuclear-sized event if they did part company."
For Clear Channel (CCU: down $0.35 to $34.95, Research, Estimates), the incentives to hold onto Stern were not so clear-cut. Unlike Viacom, Clear Channel doesn't own Stern, hence it doesn't make nearly as much money off the show as its rival. What's more, Clear Channel, like all broadcasters with multiple government licenses, has to tread carefully with regulators.
"Stern as a property is far more expendable to Clear Channel than to (Viacom), taking into account the money involved and the politics of dealing with the FCC," said Harrison.
That's not to say that Viacom doesn't face similar pressures to placate regulators. To operate its 39 broadcast television and 185 radio stations, Viacom needs government licenses. The FCC has not been shy lately about threatening to revoke licenses as a punishment for obscene content.
For this reason, analysts said the biggest risk Stern faces are not the dollar fines but the "back-channel, ugly things" that could happen between federal regulators and Viacom lawyers, said Harrison.
Analysts said those risks are unlikely to change even if Democrats reclaim the White House in November. Stern had run-ins with both Democrat and Republican administrations.
Stern is far from helpless. For one thing, the First Amendment is a powerful defense. For another thing, analysts agree that every run-in between Stern and his critics only increases his value. And he's proven adept at leveraging each controversy.
"I'm sure his ratings have gone up. I'm sure ad sales have gone up," said Steve Mather, a research analyst with Sanders Morris Harris. "I'm listening to him and I wasn't listening to him two months ago."