NEW YORK (Reuters) - Howard Stern will be shocking Sirius XM Radio Inc listeners for at least five more years, news that pushed the satellite radio company’s shares up more than 6 percent.
Under a new contract announced on Thursday, Stern will be broadcasting until December 31, 2015, and the shock jock’s content will be available for the first time on mobile devices, Sirius XM said in a statement.
Stern’s previous five-year, $500 million contract with Sirius XM Radio expires this month, and investors had been concerned that subscribers would abandon the service if he were to move on.
One estimate says Stern brought 1.2 million subscribers aboard when he joined Sirius in 2006. Sirius merged with XM Satellite Radio in 2008, and the service now reaches 20 million listeners.
No other terms of the new contract were disclosed. (For a Breakingviews story on Stern’s worth, see [ID:nN09102988])
Stern, who often swears on air and features adult content on his show, is famous for shocking audiences. He was fined several times when he was on terrestrial radio.
Analysts said investors can now breathe easier that Stern’s future has been settled.
“It’s been a cloud over Sirius XM this year,” said Lazard Capital Markets analyst Barton Crockett.
The full impact on Sirius XM will not be clear until more details of the new contract come to light, analysts said.
“The question is what kind of package was put together?” said Maxim Group analyst John Tinker.
Sirius XM has stated that its programing costs would continue to fall year-over-year, and Wall Street is hoping Stern will receive less under the new deal.
Crockett estimates that Stern will get $80 million a year in cash, the same amount he makes now, but not the $100 million in stock over five years that he had previously received.
Stern first announced that he had reached an agreement with Sirius XM on his morning show and on his website.
Sirius XM said last week that it had struck a new contract with the National Football League to broadcast games until 2016 and stream the play-by-play online.
Sirius XM is also home to programs by Oprah Winfrey and Major League Baseball. It has posted four straight quarters of profit and is steadily adding subscribers, distancing itself from years of huge losses and questions about its business model.
Much of its subscriber growth comes from buyers of new cars that have the radios installed. Nearly half of the trial customers become full-paying subscribers after the promotions end.
Sirius XM shares were up 6.4 percent at $1.40 in afternoon Nasdaq trading.
Reporting by Liana Baker; Editing by Derek Caney and Lisa Von Ahn