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Stern’s Sirius deal a shocker for radio

Traditional radio begins to recognize threat
/ Source: Billboard

Music radio programming has a new champion: Howard Stern.

Not only will Stern beginning in 2006, but the shock jock plans to launch three Stern-branded channels to showcase music, comedy and new talent.

“Music is so much a part of what I do. I’m about rock ’n’ roll,” Stern told Billboard. “With what’s going on in this country and the war in Iraq, music is more important than ever. I think there is going to be a rebirth of protest music. (My stations) will also represent music and lifestyle. I’m going to mix it up.”

Stern, with his long dark mane and constant flow of go-go dancers as guests on his show, in many ways embodies the rock star lifestyle. Scott Greenstein, Sirius president of entertainment and sports, told Billboard that while Stern has not programmed music on his talk show in the past, he has had a huge impact on music culture by bringing on musical guests, being a music advocate and, above all, fighting for creative rights.

FCC falloutLike Stern, the music industry has been affected by the Federal Communications Commission’s indecency enforcement --many songs, especially in rap and hip-hop, have to go through a stringent editing process to become “clean” enough for traditional radio.

Additionally, radio programmers often shy away from politically charged music for fear of alienating listeners.

Increasingly, labels see satellite radio as an avenue to reach music consumers who feel shut out of traditional radio because programming has become so restricted. In fact, earlier this year Sirius signed a deal with Eminem, Shady Records and Interscope Records to create a hip-hop music and lifestyle channel.

“Howard coming to Sirius is great news for the music business,” Greenstein said.

Stern’s decision to continue working in radio is good news, period. He said the past year has taken its toll on him. Creatively shackled by the FCC and incessant editing by current employer Infinity Broadcasting, Stern had been threatening to defect to satellite radio for most of the year.

“I was going to get out of radio,” Stern said. “I was going to get back into books and movies, reinvent myself. Then I realized that it wasn’t that I hated radio: It was the situation. This is a whole new future. It was time for me to say, ’I am abandoning the old way of doing things.”’

Traditional radio certainly recognizes the threat. Stern’s Sirius deal was all the buzz at the National Assn. of Broadcasters convention in San Diego. Radio general managers and executives spoke in hushed tones about the implications.

Radio revolutionStern said he could not be happier to lead the revolution.

“This is the day satellite has become a business,” he said. “I’ve already gotten so many calls from people who want to defect. I’m going to put Clear Channel out of business.”

Stern’s five-year multimillion-dollar deal with Sirius will start Jan. 1, 2006. It has enormous implications for the 40-plus terrestrial stations that currently air his show, including Infinity powerhouses KLSX Los Angeles; WCKG Chicago; WYSP Philadelphia; KITS San Francisco; WBCN Boston; WJFK Washington, D.C.; and Stern’s WXRK New York flagship.

Specific terms of the deal weren’t disclosed, but Sirius pegs total production and operating costs for the Stern show --including salaries for the cast and staff, overhead, construction costs for a dedicated studio and a budget for the development of additional programming and marketing concepts --at about $100 million per year.

Greenstein said Stern would need to generate approximately 1 million subscribers paying the monthly $12.95 subscription fee to cover the costs of the deal.

Sirius has 600,000 subscribers. Rival XM Satellite Radio is at 2.1 million.

Loyal followingStern’s listeners are arguably the most loyal in radio and have migrated with the self-proclaimed “King of All Media” as he crossed over to such formats as books, pay-per-view, movies and TV. Sirius is making a reasonably safe bet that his millions of fans will follow him again and become subscribers.

Above all, the deal will help make satellite radio a household name. The hope for Sirius and the music industry is that this movement will translate into a huge increase in subscriptions to Sirius, as well as an important outlet to expose music.

For the next 15 months, Stern will stay with the terrestrial radio medium that made him what he is today. “We at Infinity have enjoyed our years with Howard,” his current employer said in a statement. “We wish him well in his new foray into the world of pay subscription radio, beginning in 2006.”

Stern noted, “My show ratings have never been higher, and ad (rates) are stronger than ever. I’m walking away from an empire. It’s a creative decision. Clear Channel does not pay its bills, and they don’t stand for free speech.”

But he also leaves a group of stations that have relied on his power to draw an audience. Some have built their brand around Stern.

Infinity Broadcasting’s 27 stations that carry Stern include KHWD Sacramento, Calif., which calls itself “Howard 93.7.” According to Infinity spokesperson Karen Matteo, “We are weighing our options. We have great talent at our 185 stations, not to mention at (parent company) Viacom.”