I hate the radio I have now. Will not be getting satellite, just more channels to hate.
from yahoo
By Franklin Paul
NEW YORK (Reuters) - Howard Stern, the ribald radio host who has become a poster boy for bad behavior on U.S. airwaves, will jump to Sirius Satellite Radio (Nasdaq:SIRI - news) in January 2006, freeing him from the grips of regulators and giving the nascent satellite radio sector a big boost.
The $500 million, five-year deal, announced by Stern and Sirius on Wednesday, lures Stern away from Viacom Inc.'s (NYSE:VIAB - news) Infinity Broadcasting, and will propel a subscription-based radio business modeled on cable television.
It also shelters him from some of his critics.
"I haven't been able to communicate with my audience because of all the restrictions that the government has imposed. I am being hammered by the religious right," Stern said in an interview with Reuters.
"I am radio's biggest star and I have decided that satellite radio offers me more potential than terrestrial radio."
The deal gives a much needed shot in the arm to Sirius, which lags behind larger competitor XM Satellite Radio Holdings Inc.(Nasdaq:XMSR - news), and establishes the medium as a competitive alternative to traditional radio. Investors cheered the news, lifting Sirius shares 15.5 percent to a two-year high.
"This demonstrates that high-quality programing and talent are now willing to move to satellite radio (and) could change the...dynamics," said Banc of America analyst Jonathan Jacoby in a client note. "Other major radio personalities must now be thinking about their long-term future on terrestrial radio."
The deal also offers Stern free rein for his often off-color show, which includes such segments as "Lesbian Dial-A-Date," in which he plays matchmaker in a mock game show that has been criticized as being offensive.
Stern was dropped earlier this year from several stations owned by the largest radio station owner, Clear Channel Communications Inc.(NYSE:CCU - news), which was fined $1.75 million for indecency.
The U.S. Federal Communications Commission (news - web sites) regulates radio broadcast programs but does not regulate satellite radio programs. On his radio program on Wednesday Stern labeled the broadcast radio climate as "too restrictive" and lashed out at Clear Channel.
"I will bury you," he said. "I am not going to sit still and let Clear Channel win this battle against me, it's personal. Give me five years with this company Sirius."
Viacom spokesman Dana McClintock responded, saying: "We have 185 stations with a lot of great talent. This announcement is not material to Infinity or Viacom."
NEEDS A MILLION CLIENTS TO COVER COSTS
Sirius currently has more than 600,000 subscribers, a fraction of Stern's current audience of 12 million listeners on broadcast radio, where he ranks No. 1 in 46 large markets across the country. Sirius said it would need to add 1 million subscribers to cover the cost of the five-year deal.
Analysts' say the deal establishes satellite as a magnet for advertising dollars, likely at the expense of traditional radio.
"Howard Stern will most likely bring a large piece of his advertiser base with him, and that is incremental revenue and margin to us," Sirius Chief Executive Joseph Clayton told Reuters.
Sirius said it would spend $100 million per year toward Stern's broadcast, which includes $80 million for the salaries of Stern and his staff as well as other production costs, and the rest in stock-based compensation. Sirius declined to give details on how the stock will be awarded.
"It is rich -- they are paying a lot, and I'm sure XM helped bid the price up, but Sirius had to do it," said IRG Research analyst David Kestenbaum. "It is great news."
Indecency on the airwaves became a national issue earlier this year when Janet Jackson (news) bared a breast during the National Football League's Super Bowl half-time show on CBS, which is also owned by Viacom.
In August, XM, which boasts more than 2 million subscribers, signed bawdy morning talk show team "Opie and Anthony" to one of its premium channels beginning this month. The two were fired by Infinity in 2002 after they broadcast a segment on a couple purportedly having sex in a prominent New York City church.
XM charges an additional $1.99 a month on top of its regular $9.99 monthly fee for the service. In contrast, Sirius will make Stern's show part of its $12.95 monthly service, but it said Stern will have the opportunity to develop one or two other premium channels for the service.
Sirius shares rose 52 cents to $3.87 in active trade on Wednesday on Nasdaq, while XM shares fell 2 percent to $29.00 on Nasdaq. Viacom shares rose 25 cents to $36.16. (Additional reporting by Derek Caney in New York and Arthur Spiegelman in Los Angeles)
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