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Stern's show adds stations
Embattled shock jock to remain over the air, says he won't leave for satellite.
June 30, 2004: 1:11 PM EDT
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - Shock jock Howard Stern, under pressure for broadcasts termed by some as indecent, said Wednesday he will not leave over-the-air radio for satellite and that his show will air in nine more markets.

Stern said he will be returning to four markets -- Pittsburgh, San Diego, Orlando, Fla., and Rochester, N.Y. -- after having been pulled off stations owned by Clear Channel Communications (CCU: Research, Estimates). The new stations are owned by Infinity Broadcasting -- the Viacom Inc. (VIAB: up $0.31 to $35.45, Research, Estimates) unit that syndicates his show.

Stern said his show will also air in Houston and Austin, Texas, West Palm Beach and Tampa, Fla., and Fresno, Calif., bringing to 45 the number of stations that broadcast his morning show. Of those, 27 are Infinity-owned.

At a press conference early Wednesday, the 50 year-old entertainer also dispelled rumors he would jump to subscription-based satellite radio.

"I have heard from satellite companies about going to satellite and I am giving it lots of consideration," said Stern. But he said he would continue to honor the 18 months remaining on his contract with Infinity.

In recent days shares of the country's two leading satellite radio operators, Sirius Satellite Radio and XM Satellite Radio Holdings were up in part, analysts said, because of speculation that Stern was about to make a big announcement, possibly even an exit from Infinity.

In the hours after the press conference, shares in Sirius (SIRI: down $0.06 to $3.02, Research, Estimates) had fallen 2 percent. Shares in rival XM Satellite (XMSR: up $0.15 to $27.10, Research, Estimates) shares were up as much as 1 percent, having shot up nearly 20 percent in the last week.

Both Sirius and XM Satellite have the cash on hand to buy out Stern's contract. Sirius was seen as the top suitor because of its willingness in prior deals to pay high premiums for content.

Stern left open the possibility that he could one day be satellite-bound. "I think satellite radio may be the future, not because the quality of music is better and not because there are less commercials," said Stern. "What satellite promises to someone like me is no censorship."

Wednesday's announcement came amid a widespread furor over radio and television programming that some critics consider both offensive and obscene.

Janet Jackson incident

While Stern has, through much of his 25 years of broadcasting, often run into government crosshairs over his on-air statements, he said the heat has become especially intense in the months since Janet Jackson bared a breast during the Super Bowl halftime show.

Since then, regulators have stepped up their scrutiny of both Clear Channel and Infinity. A bill wending through Congress would boost fines for programming deemed indecent as high as $500,000 per incident, up from the current $32,500.

Earlier this month Clear Channel agreed to pay a record $1.75 million fine to settle indecency charges related to shock jocks like Stern. The payment comes two months after Clear Channel yanked Stern off all six stations where his show aired.

Stern and Clear Channel are now battling over his exit and money that Stern says he is owed but Clear Channel has so far refused to pay. He said Wednesday it's possible the contract dispute would wind up in court.

He went out of his way to praise Infinity -- especially outgoing CEO Mel Karmazin -- for backing him through the indecency crackdown.

Analysts greeted the news with a yawn.

April Horace, an equity research analyst with Janco Partners in Denver, interpreted the public show of support by Stern and recent overtures by Infinity executives as signs that both sides have reached a truce.

"My guess is [Viacom bosses] said 'quit talking about satellite radio. You have a year and half to go on your contract so cut it out,'" said Horace. At the same time, by giving Stern 9 additional markets, Viacom officials are demonstrating that "they've come to terms with Howard."

Complicating matters, however, is the big question of how committed Infinity is to radio in general and Stern in particular.

Sumner Redstone, Viacom's chairman, is publicly signaling a willingness to shed all or part of Infinity, which includes both radio broadcast and outdoor advertising.

Analysts have pointed to Mel Karmazin, who built Infinity into a radio broadcast powerhouse before selling it to Viacom in 2000, as a potential buyer.

Karmazin, one of Stern's biggest and most powerful defenders, left as Viacom's president June 1 after losing an internal power struggle.

As long as Infinity's fate is uncertain, so too is Stern's.

"Sumner has made it clear that he doesn't like radio and is going to sell off pieces of it," said Dennis McAlpine, an independent stock analyst. "The more anti-Infinity comments that come out of Sumner, the more likely something like that is going to happen. If Mel buys Infinity, presumably that means that Howard will stay with Infinity and go with Karmazin."  Top of page

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