There's a really nice piece on the financial blog Information Arbitrage about Howard Stern's deal with Sirius, and the full implications of it. What I really like about it is that the author takes us from Stern's early days at Infinity, through the signing of his Sirius contract, into to the present; and breaks down the financials in a very effective and clear way.Interesting excerpt:
"Bottom line: all the chatter about Howard's big deal at Sirius ($100 million+ per year plus the $225 million of stock) is really not the point. The Sirius business model contains a massive amount of leverage that represents a virtuous cycle between subscriber growth and ad rates, and Howard is the engine to help the Company reach its inflection point and to begin generating gobs of cash. A few notable problems exist, however [...]"
Information Arbitrage goes on to discuss Sirius' dependency on Stern - despite Karmazin declaring that they're not - and even uses a post, and comments, from Orbitcast to back up his point. (Congrats to Pockpie and jkdillard1 for spearheading the debate. Despite some of the mindless banter in the comments here, many people do read them, and especially when intelligence is brought to the table.)
It's a long piece, but well worth the time to read and there's some pieces of info in there that you might find surprising.
[Information Arbitrage]
Thanks Robert!
Hoo Hoo I am radio Robin. Tell 'em Fred.
"Analysts are expecting Sirius 2006 revenues of approximately $615 million on about 6 million subs (up from 3 million prior to Howard's joining). "
same problem as always no one examines the fact that prior to "announcment" "signing" they were at less then 1 million.
what portion of the 1 million - 3 million subs that was the totat subs added between signing and starting on 1/6 does stern get credit for? i know i got my sirius 4 months before he started and my wife got it for christmas before he started.
then the 3-6m climb how much does he get direct credit for (listens everyday customer/got it for stern) vs got it because they "heard about sirius because of stern" "Picked Sirius because of the more reconized brand name"..ect.
i think there is two numbers when you talk about what stern is bringing in and what will "pay for stern's contract"
- Direct - people who listen because of stern
- Non-Direct- People who got sirius because of the brand name that stern helped build.
now that would be a different, interesting report.
Hoo Hoo, I invented quoting posts... ;)
Seriously, I think I did.
PNess - Why do Stern fans need the feel every person that has signed up for Sirius since he announced was a person that signed up because of Stern?
In that same time period almost the same amount of people signed up for XM. Don't get me wrong Howard had an impact on those numbers but the truth is most of those people signed up for satellite radio (the entire package).
If Stern fans claim every subscriber since he announced his move can O&A fans claim every subscriber as well?
Comprehend much PoopBoy?
Notice everything i said was in question form?
Notice there was not one statement of "Fact" or "claim" that stern WAS responsible for ALL subs. NOWHERE did i say he was responsible for ALL or even MOST, or NONE, ect.
Notice i asked and commented that this would be a great interesting report?
.
.
.
At least with O&A we HAVE numbers since they were Sub based for the first 6 months (guessing on time here) or whatever the time frame was before they were turned into a free portion of XM.
You would just be a fool not to consider the massive climb non-stern related, even O&A fans can consider this and stop the stupidity that ZERO of the 1-3m climb was "stern" related
For Poopboy - Because the zombies don't know what to think until their master tells them what to think.
I love this post I fount in alt.fan.howard-stern. It's edited so some of you don't get your panties in a bunch.
So, some of you are actually surprised that Stern would lie to you?
Even those of you who would not listen for all these years when you were
told that old Howie has always been a hypocrite and pathological
liar must now admit that he has proven beyond a doubt that you were wrong
to ever deny it, without reservation!
He fooled you, you bought it and now he has dished out a nice steaming
load of tasty dung that you will need to eat for him, as all good
lemmings always do, unless you finally regain your sensibility.
Just wise up, dump him,
move on and get on with the rest of your life, which will be much
improved, once you have purged all of the worthless Stern muck that has
polluted your mind for far too long.
i think its very safe to say Stern had 1.5-2 million come because of him
"Even those of you who would not listen for all these years when you were told that old Howie has always been a hypocrite and pathological liar must now admit that he has proven beyond a doubt that you were wrong
to ever deny it, without reservation! "
DUH thanks for the news, people lie, WOW people are hypocrits....WOW musta taken alot of thought there. go rest you need it after such insane work on such a hard topic.
"The Sirius business model contains a massive amount of leverage that represents a virtuous cycle between subscriber growth and ad rates, and Howard is the engine to help the Company reach its inflection point and to begin generating gobs of cash."
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I am actually curious as to what Homer would have to say to this, for this is his expertise.
But from what I understand, the advertising "revenue machine" that Mel is expecting will never come. Face reality, at 6.5 million subscribers, in which maybe 3 million listen to Stern channels, the ad revenue has got to be VERY low! The only time Sirius MAY see a $100M a year from it is at the very end of Stern's contract. IMHO there is no way adverstising revenue will be big enough on Sirius to even closely cover the contract.
Mel wants it to happen, for it is his forte, but even he can't control what advertisers will pay for a channel that reaches 1/20th of his former audience on terrestrial.
The Stern contract is STILL up in the air at this point, and is not a guaranteed money machine for Sirius. Especially if he retires at the end.
s.radio fan
all you have to do is number crunching
thats what the guy did . i did one last week
lets say they charge 6,000.for a spot and they do 7
spots a break 5 times a show the show plays 4 times
a day 7 days a week 365 1/4 of a billion dollars.
a year.
frank you have issues.
we are all sorry that your
parents didn't love you more.
remember people change their minds
and being entertaining at the same time
just because people are on the radio
doesn't mean we have to follow every word that they
say.
"s.radio fan
all you have to do is number crunching
thats what the guy did . i did one last week
lets say they charge 6,000.for a spot and they do 7
spots a break 5 times a show the show plays 4 times
a day 7 days a week 365 1/4 of a billion dollars.
a year."
-----
The math isn't the issue, the issue is how much is Stern now getting for a read. Last I heard, he was getting around $3k for a read, and these are only for certain reads (not all of the, nor the average).
Ad agencies simply aren't going to give you much if your audience is tiny compared to terrestrial, or even television.
PNess - At least with O&A we HAVE numbers since they were Sub based for the first 6 months (guessing on time here) or whatever the time frame was before they were turned into a free portion of XM.
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YOU DO? I would love to see these. AFAIK XM has never released these numbers but I'm sure an educated person like yourself would have a link to a press release.
Edit: Let me clarify something. I forgot to add that Stern himself receives a huge portion of the ad reads (this was part of the Sterns contract). There is nothing in the SEC that states how much that is. It could be 20%, it could be 80%. Knowing Stern, he probably receives at least 50%.
Another thing to consider when calculating the ad revenue, and the reason I believe it will never achieve what Mel is hoping for. $100M a year is looking well beyond reach now.
"YOU DO? I would love to see these. AFAIK XM has never released these numbers but I'm sure an educated person like yourself would have a link to a press release."
Sigh let me dredge up the quartly reports, there was a blurb about a number in there that was quoted when they switched over....
the numbers "exsist" since they recorded the subs, its just a matter of getting them..of course they are old and outdated now. tho they are two different monsters since O&A had to climb from obscurity while Stern had to drop from the tens of millions and convince people to pay....
I think Pockpie is a total fucking genius, that's what I think.
Sigh let me dredge up the quartly reports, there was a blurb about a number in there that was quoted when they switched over....
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Please do because I'm pretty sure you cant. And you don't want to sound like some uninformed zombie, right?
"i think its very safe to say Stern had 1.5-2 million come because of him"
I think it safe to say Howard had 5-5.5 million come because of him.
Weeeeeeeee, boy it sure is fun just making up unprovable shit and posting it.
There's no chance in hell 5.5 million or anywhere near hat number signed up for Sirius because of Stern. Not a chance in hell. And by some miracale that is true Sirius is in huge trouble as a company.
Im no expert, and im not as up to date in the XM vs SIRIUS facts and figures as yall seem to be. Let me speak from what ive seen. I got Sirius in MAY of 06 because Stern was on Sirius. no other reason. Out of my group of freinds I know 6 with sat radio subs, all are Sirius. everyone I know look at XM and Sirius as the same thing except one has Stren and one dosent. This may not be true but (im sure it isnt) but thats how ive seen people look at it.
as far as how many people listen to Stern.
my 1 sub = me and my wife so thats 2
my dads 1 sub = him and his entire 5 man paint crew so thats 6
my buddy jasons 1 sub = him and 2 room mates so theirs 3
my freind skinners 1 sub = him his wife and he takes to work where as many as 6-7 people all listen to the show. thats 8-9
my other 2 freinds with sirius im pretty sure are the only people to listen to their units and the stern show so thats 2
my point is out of the 6 subs i know of about 20-23 people listen to stern on a daily basis.
i also know if you scan the other stations sirius has to offer while theirs a live stern show on they get almost no calls, and you can get threw and on the air of almost any other sirius talkshow within 6 mins if theirs a live stern show on at the time.
that tells me that most sirius subs are listening to stern. in fact the best time to get a song request on shade45 is between 6am and 11am. itll normaly get played within the hour. after noon its very hard to get threw most of the talkshows or get a song request.
thats the way i see it. if or if not thats good for sirius in the longrun i seriously doubt it.