US DJ Moves to Satellite Radio in $500m deal

Michael Hedges October 10, 2004

In a move that rattled American broadcasters but startled few financial analysts, notorious shock-jock Howard Stern will leave Infinity Radio for Sirius Satellite Radio in 2006.

Stern’s program airs daily on 47 American radio stations and reaches about 10 million listeners.

Calling the announcement a “transformational event, “ Sirius CEO Joe Clayton said he expected Stern to bring a million or more subscribers to satellite radio.

Stern said on his program Wednesday that traditional radio doesn’t allow him the “be himself.” The daily Howard Stern program is laced with jokes and comments about sex, body parts and functions and appeals widely to 18 to 34 year old men.

US radio industry watchers have expected Stern’s migration to one of the satellite broadcasters since the US Federal Communications Commission (FCC) fined Infinity Radio, a division of Viacom, nearly $500,000 for indecency violations and Clear Channel Communications dropped Stern’s program from six stations. Viacom president and long time, vocal Stern supporter Mel Karmazin was ousted in June by chairman Sumner Redstone.

Redstone, who recently announced support for the re-election of US President George W. Bush as “good for Viacom,” said Stern “created issues in Washington.”

Stern once said of Karmazin: “If it wasn’t for Mel, I’d be in telemarketing.”

American radio broadcasters meeting in San Diego last week for the National Association of Broadcasters (NAB) Radio convention viewed Stern’s move to satellite radio as one more piece of bad news for the commercial radio sector.

A press statement from Viacom owned Infinity Radio intoned a sigh of relief: “We at Infinity have enjoyed our years with Howard. We wish him well in his new foray into the world of pay subscription radio beginning in 2006.” By the end of the week, US media watchers speculated less about how good the news would be for Sirius or bad for Viacom/Infinity and more about Infinity simply gobbling up Sirius in the near future.

Merrill Lynch media analyst Jessica Reif Cohen released a report the day after the announcement stating that Viacom could “easily replace” the $10m annual cash-flow attributed to Stern’s program.

Sirius Satellite Radio offered Stern cash and stock valued at $100m a year for five years. He will program three Sirius channels. One channel will carry Sterns daily program in a continuous loop. Contents of the other Stern-produced channels have not been revealed. Viacom reportedly offered Stern a five-year contract renewal.

The FCC has fined broadcasters $4.5m since 1990 and half that amount is attributed to Howard Stern.

Other infamous“shock-jocks” have found safe haven on the satellite services, outside the FCC's reach. Opie & Anthony announced last Monday their return to the air-waves on the XM Satellite Radio after attracting indecency fines and a firing by Infinity two years ago.