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Howard Stern jumps to satellite
Ending months of speculation, shock jock announces he's joining Sirius satellite radio in 2006.
October 6, 2004: 3:38 PM EDT
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - Howard Stern is taking his morning show to satellite radio -- a move sure to give the fledgling subscription radio business a huge shot in the arm.

Howard Stern talks Wednesday about his jump to satellite radio.  
Howard Stern talks Wednesday about his jump to satellite radio.

Stern announced Wednesday that he'll join Sirius Satellite Radio in January 2006 in what is being billed as a five-year, multimillion dollar contract.

Calling satellite radio "the next big thing," Stern said on his morning show that commercial radio is no longer a safe haven for shock jocks like him.

"The Super Bowl did us in," said Stern, a reference to this year's half-time show when Janet Jackson exposed her breast during a live performance. Viacom-owned CBS, which broadcast the game, was fined $550,000 last week for the incident.

Stern's jump, rumored for months, is a big win for Sirius and a major setback to Infinity Broadcasting, also owned by Viacom (VIA: Research, Estimates), industry analysts said.

The decision also fostered talk about whether recent moves by Stern and other radio personalities, including former NPR host Bob Edwards, to satellite spelled the beginning of the end of traditional commercial radio.

"It's time to go," Stern said on his show, noting he hasn't been happy for a long time. "I believe more in satellite than I do in radio."

The Super Bowl episode touched off a public outcry about indecency on the airwaves and led Clear Channel Communications, the country's No. 1 radio operator, to pull the "Howard Stern Show" off the six stations that carried it.

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CNNfn's Chris Huntington reports on Howard Stern's decision to move his show to Sirius satellite radio.

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It also led to renewed calls for news laws boosting fines for indecent programming to as much as $500,000 per violation, from $27,500. Congress is still considering whether to raise fines.

Stern suggested his announcement would be a surprise to officials at Infinity, which broadcasts his morning show in 46 markets.

In a brief statement, Infinity wished Stern well. "We at Infinity have enjoyed our years with Howard," read the two-sentence release. Stern's contract runs through the end of 2005 and he said he'll stay on Infinity stations until then.

Joins Opie & Anthony

Stern is not the only shock jock eyeing satellite radio, a subscription-based, commercial-free medium that, like cable television, is largely unregulated. On Monday, the "Opie & Anthony" show debuted on Sirius' larger rival, XM Satellite Radio.

The move by Gregg "Opie" Hughes and Anthony Cumia came two years after they were dumped by Infinity over a stunt in which they broadcast descriptions of listeners having sex in public places, including St. Patrick's Cathedral in New York.

Stern's announcement "splashes a little cold water on 'Opie & Anthony'," said Tom Taylor, editor of Inside Radio, a daily newsletter. For one thing, it forces fans of both shows to choose, since listeners wanting both shows would have to buy both services.

To get satellite radio, consumers can buy the hardware or a product such as a car that comes with it pre-installed. Sirius, with more than 600,000 subscribers, then charges $12.95 a month for access to 120 channels. XM subscribers, now numbering more than 2 million, pay $9.99 a month for about 120 channels and an additional $1.99 for the "Opie and Anthony" show.

Industry analysts said other, lower-profile shock jocks are also in talks with satellite operators, but warned that calls to regulate cable and satellite radio could grow, especially if Congress boosts indecency fines.

Sirius officials, however, were clearly jubilant.

 
Opie & Anthony jumped too. Click for more.

"This is a watershed event for the industry," Sirius CEO Joseph Clayton said on an analyst call. He said it established satellite radio as the successor to FM, the way FM replaced AM radio years ago.

"Sirius Satellite Radio is where the excitement, creativity and energy that FM once had is gravitating to, today and tomorrow," he said, adding Stern was the most valuable name in radio today.

Sirius (SIRI: up $0.54 to $3.89, Research, Estimates) stock jumped 16 percent on the news while XM (XMSR: down $0.29 to $29.19, Research, Estimates) sank nearly 2 percent.

Radio's demise?

Some analysts disputed Clayton's claim that Stern's move spells the beginning of the end for traditional radio.

"There's no question in my mind that satellite radio will take its place in the evolution of radio and that Howard Stern is a catalyst for it happening faster," said Michael Harrison, publisher of Talkers, a magazine about radio talk shows. "But it's not going to replace FM or AM radio."

But luring Stern was a major, if costly, move for Sirius. The "Howard Stern Show" costs about $100 million a year, including salaries for Stern and his staff, according to Sirius data.

 
So is satellite radio a buy?

To break even, Clayton said Sirius would need to add a million subscribers, which he said should be easy to achieve.

"It's a good move for Sirius," said April Horace, an analyst with Janco Partners.

For Infinity, Stern's defection is a blow. Traditional radio has struggled with falling ad revenue. And Stern has made a bundle, not just for himself but also for Infinity. Analysts estimate Stern & Co. brings in some $25 million in annual profits for Infinity.

The split also marks the end of an era of sorts. Now 50 years old, Stern got his big break in radio in the mid-1980s when Mel Karmazin, then head of Infinity, hired Stern and helped turn him into a national celebrity.

Over the years, as Stern repeatedly ran into trouble for a show known for its explicit and salacious discussions about rough sex, masturbation and the virtues of slavery, Karmazin emerged as one of Stern's chief public defenders.

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But Karmazin left Viacom in June after losing a succession battle. Given the backup Karmazin had given Stern and the current anti-smut climate on Capitol Hill, speculation talk was flying that Stern would leave Infinity once his current contract expired.

His sidekick, Robin Quivers, told Stern Wednesday that she saw this coming a long time ago.

"I saw how beaten down you were, how miserable you've been," said Quivers. "The last couple of years have been very difficult."

Responded Stern: "I've been so down, coming in here every day."  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.