Thursday, March 01, 2007

Is Howard Stern Worth $100 Million a Year?

Sounds too hard to believe, but maybe he is worth that much. Read this story to see why.

Here are some basic details:

He signed a 5-year, $500 million dollar deal in October 2004. Sirius now has 6 million subscribers yet they were only projected to have 3.5 million. So after Sirius signed Stern, they ended up with 2.5 million more subscribers than expected. That may not all be due to Stern. But Sirius charges subscribers $12.95 per month. That is $155 per year. Times 2.5 million extra subscribers, that makes $388 million more per year in revenue than expected. So Stern is only getting about 25% of that. Even if you throw in the $82.9 million bonus and spread it out over 5 years, he is still only getting about 30% of the increased revenue. Is it possible he is underpaid?


Mother of 5 said...

As a fairly new Sirrius subscriber, I will let you know that Howard Stern did not influence my choice in selecting my satellite radio provider. I do not think it is fair to imply that Howard Stern merits the credit for the increase in subscribers.

In the three months I have subscribed to Sirrius, I think I listened to about 30 seconds of Howard Stern, more than enough time in my books, and changed the channel.

Cyril Morong said...

Do you know any other Sirrius users? (I don't and have XM Radio, although they might merge) Do you know anyone that signed up because of Stern? Why do you think Sirrius paid him the additional big bonus?

champ said...

Maybe Stern is worth the money he is being paid. Simply because he has a huge following due to his controversial topics. Most people still don't believe that controversy, sex and violence sells well. As far as him being under paid, I'm not sure I can say that. If there is or was a way to cut out the middle man (which would be sirius in this case), I'm pretty sure he would have done so before now. I don't know all of the politics that are involved, but I do believe that Howard sells a great show. Considering radio is a business, we can never give employees too much money on the account of over head. Let's just say Howard caused a 2.5 mm spike @ 12.95 per customer, then he certainly deserves that type of money. If more people were as good as Howard, there would be no such thing as a 100mm dollar contract.