Fans of the shock jock won’t like the conclusions that Macquarie Equities Research’s Amy Young reaches in a new report on this provocative question. While Howard Stern was a big draw for SiriusXM in 2004 when he agreed to join the satellite radio service, “the sub base is now at 25M and there’s less necessity to strike a deal when his contract comes up for renewal at the end of 2015,” the analyst writes. She bases that conclusion on a survey of 800 SiriusXM customers. It found that 12% listen to Stern, and 30% of this group tune in less than twice a week. More to the point, just 5% of all subs “would consider leaving Sirius XM if he were no longer available.” In addition, 96% say that they aren’t willing to pay extra to have him in the lineup. That indicates that Stern “could have less leverage in the next contract negotiations.” Young says that he took a 20% pay cut in 2010 with a contract that paid $80M a year, and estimates that it could drop another 13% to $70M a year in 2015. “What this tells us: for new entrants or ‘niche’ players, obtaining high-profile anchor content is a key differentiator and important in building a critical mass,” she says. “As the business evolves, it becomes less vital.” That lesson could also affect DirecTV as it negotiates to extend its deal for NFL Sunday Ticket. Although she expects them to renew, DirecTV “may now be in a better position to negotiate” than it was in 2009 when it struck its last deal. She estimates that DirecTV will agree to pay 25% more — about $1.25B a year — vs the 43% increase it accepted last time, with additional flexibility to stream the games or offer Sunday Ticket as a standalone package.
By DAVID LIEBERMAN, Financial Editor | Thursday January 23, 2014 @ 11:30am ESTTags: DirecTV, Howard Stern, Howard Stern Sirius Contract, NFL Sunday Ticket, Sirius XM
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This article was printed from http://www.deadline.com/2014/01/should-siriusxm-ask-howard-stern-to-take-a-pay-cut/
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