Howard Stern's contract at Sirius XM has been the subject of rumors for a year. December 2020 marks the last month in his previous five-year contract and fans (and Sirius stock holders) have been desperate to know if the platform's biggest star would bolt for another service, sign a lucrative new deal with Sirius or retire for good. Well, today brought good news to fans and stock holders alike!
It was just officially confirmed that Howard had signed a new five-year contract extension with Sirius. It's reportedly a five-year $600 million deal. That works out to $120 million per year. For perspective, his previous deals have worked out to $80 million and $100 million for five-year terms.
When you hear that Howard "makes" $120 million per year, it should be noted that the money from these contracts are used by Stern to cover all show production costs including salaries of personalities like Robin Quivers and Gary Dell-Abate. We estimate that Robin and Gary earn $10 million and $4 million per year, respectively. That alone is $14 million. If you conservatively assume $10-15 million in additional costs, Howard would be personally left with around $90 million before taxes and agent fees. Agents typically take around 10%, bringing him down to around $80 million. Taxes would take another roughly half, leaving Howard with net income of $40 million per year.
If Howard maintains his current schedule of three new shows per week, roughly 40 weeks per year, that works out to around 120 new shows per year. After taxes, show production costs and agent fees, Howard Stern makes $333,000 per show. Basically a brand new Ferrari every time he broadcasts.
Rumors have been swirling about Stern's contract all year, but the last few months have been especially intense.
In October it was widely reported (including here on CNW) that Stern had signed an extension with Sirius. Howard quickly shot those rumors down. When Stern first heard the reports of his new deal, he called his agent to find out what was going on. His own agent was baffled by the news. On October 6, Howard told Robin Quivers:
"I'm telling Sirius now, whatever I read, I want. I'll take that, right now. I'm a bad negotiator. I'm like, 'OK, I'll take it, I'm in, let's do it.'"
Photo by Getty Images
In confirming the latest deal, Stern made the following statement:
"Fifteen years ago, I joined SiriusXM, a fledgling group of broadcasters. I had been in a toxic relationship with terrestrial radio. And no matter how well I treated the medium, no matter how successful I made them, they abused me. Going to SiriusXM liberated me. I felt like Tina Turner freeing myself from Ike. And despite the naysayers and the ridicule, we have persevered, and are thriving. I've been proven right about satellite radio over and over again. With this contract renewal, I can't wait to see what else I'll be right about. Certainly, I have a lot more to say about Metamucil crackers and stepmom porn. Plus, now that I can work from home, I simply don't have an excuse to quit."
Sirius is facing competition from Spotify and other streaming services and desperately needed to lock Stern into another contract. Stern has been negotiating with Sirius all year. He reportedly also had some talks with Spotify. Those negotiations didn't get far. Spotify made news in October when it became the exclusive home of Joe Rogan's podcast, for the low-low price of $100 million per year. Perhaps Joe got the deal that Howard turned down?
Sirius has made investments into the podcast market. In July, the company acquired Stitcher, which hosts popular podcasts including "My Favorite Murder" and Marc Maron's "WTF." In February 2019 Sirius acquired music streaming service Pandora.
Sirius' CEO Jim Meyer is set to retire at the end of the year. He understood Stern's importance to SiriusXM. When Howard joined Sirius in 2006, the Satellite radio service had around 600,000 paying subscribers. At that point the company was losing $226 million per year on revenues of $13 million. Today the service has 35 million paying subscribers and earns around $2 billion per year in profit off $7 billion in revenue.
Wall Street analysts predicted that if Stern did not renew, roughly 15% of Sirius subscribers – around 3.5 million paying customers – would flee the service. If true, that alone would cost the company $580 million in lost subscription fees. Even if that was half correct, $120 million was a small price to pay to lock-in Howard Stern.
