October 22, 2010
/ by inVocus Staff
October 22: Last Wednesday, Sirius XM Radio released its Q3 earnings report, in which they announced they had experienced a membership increase of over 334,000, bringing their total number of subscribers to just shy of 20 million – a record high for the satellite radio giant.
For a company that had taken a hit in 2009, as its subscribers – and ultimately, its earnings – are attached to the struggling auto industry, this is certainly good news. In fact, Sirius XM is in such good cheer that CEO Mel Karmazin announced earlier this month that the company expects to reach close to 20.1 million subscribers by the end of year.
It’s funny Karmazin should mention that time frame; Dec. 31 marks the end of Sirius XM’s five-year contract with Howard Stern, one of the company’s programming lynchpins, who signed with then-Sirius Satellite Radio in 2004. With less than three months left to go, Stern has remained hesitant to renew the show. While this could spell danger for the company’s subscription numbers, no “Stern” could make the company inviting to investors, Kyle Johnson, Vocus Media Research Group’s managing editor of radio content, explained. “On the one hand, you could have millions of satellite radio customers pull their subscriptions if Stern does leave. On the other hand, the reported five-year, 500 million dollar deal Stern signed in 2005 was considered to be too much by some investors. If he signs a similar deal to stay on, it could hurt the network financially,” he said.
Seems a little like a rock and a hard place, doesn’t it? Just as subscriptions were hitting record numbers, one of radio’s most listened-to hosts wavers on continuing his exclusive broadcasting rights. But if Stern does sign, there remains the possibility that investors could back off, which could send the company’s stock prices back down to under $1.00 a share.
Certainly keep on eye – or rather, an ear – on how this story plays out. Either way, it will be interesting to see how Sirius XM Radio reacts and ultimately survives.
— Jeff Peterson
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