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Is Sirius radio nuts for paying $100M/year for Howard Stern?

JEDI

JEDI

Lifer
In 2005, Sirius has 2.2million subscribers.

@13/month, thats a annual gross of $343M.

And they werent profitable even when they had $343M w/o the additional $100M burden of Stern.

How did Sirius explain how they're going to survive w/such a heavy expense load?!

Edit:
Kind of reminds me of the XFL. and look what happened to them
 
yes, VERY crazy. they are banking on extra subscriptions and ad revenue. they are really betting the bank though. they offered that incredibly lucrative contract because they KNEW he would have hopped all over XM when they had offered (they would have if sirius hadn't scooped em up).

it's basically go big or go bust for sirius.
 
I heard that their subscriptions shot up since the contract. Who knows though. It was a fairly unprofitable area when I last looked at it though it is still new to the market technology so we have to make some allowances.
 
I know a lot of people in my office who are going Sirius because of Howard Stern. I personally think he is good for free but maybe just me.
 
Originally posted by: Reel
I heard that their subscriptions shot up since the contract. Who knows though. It was a fairly unprofitable area when I last looked at it though it is still new to the market technology so we have to make some allowances.
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I think they had less then 800K before Stern signed up. Since then they are up to 2.2mil. So even if Stern was the reason only half of them signed up, it still is a good deal. Also they have him for 5 years and when he does go on the air i am sure they will hit 3+ million by next year.

So even if you don;t like him, he does pull in the listeners,

 
Originally posted by: JEDI
In 2005, Sirius has 2.2million subscribers.

@13/month, thats a annual gross of $343M.

And they werent profitable even when they had $343M w/o the additional $100M burden of Stern.

How did Sirius explain how they're going to survive w/such a heavy expense load?!

Edit:
Kind of reminds me of the XFL. and look what happened to them
Click to expand...

it's insane, they paid the man 500mil over 5 years when they have 2 million subscribers. That's not a healthy risk of an investment.

The ceo was on msnbc the other day saying that they will have a positive cashflow some time next year....
 
Also that 100Mill a year is not for stern but his company. I think that includes of course him and his show, but he also has to produce 2 other shows for them? maybe a stern fan knows more.
 
I think the 100mil is for him to produce the entire show, including all the expenses and his own payroll. So Stern is not being paid 100mil. Still, considering how many listeners Stern has, I don't know if its really worth the cost.
 
Originally posted by: Marlin1975
Originally posted by: Reel
I heard that their subscriptions shot up since the contract. Who knows though. It was a fairly unprofitable area when I last looked at it though it is still new to the market technology so we have to make some allowances.
Click to expand...


I think they had less then 800K before Stern signed up. Since then they are up to 2.2mil. So even if Stern was the reason only half of them signed up, it still is a good deal. Also they have him for 5 years and when he does go on the air i am sure they will hit 3+ million by next year.

So even if you don;t like him, he does pull in the listeners,
Click to expand...

hm.. thought it was 2.2M b4 Stern.

Analysts are unsure how many new subscribers are because of Stern. (XM signed up 1Million new subscribers (now @ 5M total) this year w/o any major celebrity.)
 
Originally posted by: halik

it's insane, they paid the man 500mil over 5 years when they have 2 million subscribers. That's not a healthy risk of an investment.
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He'll never get all that money if they go bankrupt, and unless he brings millions of new subscribers in, they will go bankrupt. So if Stern wants his $500 million, he better start bringing in the new subscriptions. 🙂
 
last number i heard is they are up 1.3 million since stern's announcement, they needed 1 million to have it profitable.
 
Well it's not just Stern, it's him and his gang.

It's still crazy though, I had no idea people can make that much by talking on radio. Hell not even Oprah make that kind of money. I suspect the number is the result of some crazy cut-throat competition between XM and Sirius.

I guess Sirius also makes money on those receivers. But Howard better draw millions more subscribers.
 
For the business illiterate, please note. They are not paying Howard Stern $100m a year, but his pay will come out of that. The $100m a year is for his entire show. All the crew, all the production costs, and all the advertising, all of which, believe it or not, adds up.
 
Sirius had 2.2mil at the beginning of 2005, before the major influx of Stern fans. I'm betting they're close to 4mil now, although we won't know for sure until next year sometime.
 
Originally posted by: Cattlegod
last number i heard is they are up 1.3 million since stern's announcement, they needed 1 million to have it profitable.
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Do the math, 3mil subscribers won't make them profitable. Most likely it will leave them with positive net cashflow. (financing 500mill over X years at Y% will get you $Z annual payments). It's just a fun accounting way of looking at things.

"I just bought a $1.2 mil house and if I get a 10% raise, I'll have money left over after the monthly payments.... though i'm still drowning in debt "
 
Originally posted by: halik
Originally posted by: spidey07
they have other sources of revenue other than subscribers one would believe (advertising)
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the selling point of siriius is no commercials...
Click to expand...

Only on the music stations... Talk stations have commercials...
 
Originally posted by: aphex
Originally posted by: halik
Originally posted by: spidey07
they have other sources of revenue other than subscribers one would believe (advertising)
Click to expand...

the selling point of siriius is no commercials...
Click to expand...

Only on the music stations... Talk stations have commercials...
Click to expand...

lol... so Stern's show will have commercials?

ironic that you're now paying $ to hear commercials when it used to be free.. oh wait (Cable TV)
 
Originally posted by: JEDI
Originally posted by: aphex
Originally posted by: halik
Originally posted by: spidey07
they have other sources of revenue other than subscribers one would believe (advertising)
Click to expand...

the selling point of siriius is no commercials...
Click to expand...

Only on the music stations... Talk stations have commercials...
Click to expand...

lol... so Stern's show will have commercials?

ironic that you're now paying $ to hear commercials when it used to be free.. oh wait (Cable TV)
Click to expand...

Do you expect him to talk for 4 hours straight w/o a single interruption? It makes sence to have commercials on talk stations, no one can talk that long without taking breaks (except maybe my fiancee some nights)

The commercials on the sat radio stations are much shorter typically as well. For instance, on Sirius Stars 103 which i listen to Jay Thomas on M-F 2-5pm, he has maybe 4 commercial breaks an hour (if that), none lasting more than 2 minutes...

The local radio station here in Tampa, 933flz, does about 3-4 sets of commercials during a morning hour, each lasting between 5-8 minutes...
 
Both XM and Sirius have commercials, but the rumor is Sirius will need more commercials to pay Stern's salary. And yes, I do think they are crazy for betting the house on one show. But if Rush Limbaugh gets 250mil there's some justice in the world that Stern gets twice that.
 
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