Stern quitting Sirius?

Howard Stern is threatening to leave Sirius XM Radio Inc. now that the shock jock and the satellite radio provider are getting set to enter contract talks in 2010.

That threat probably seems less daunting to Sirius than it once would have. Sirius originally wanted Mr. Stern so badly that it gave him the most lucrative radio contract ever: a five-year deal that started in 2006 and paid him $500 million in cash and stock.

Today, he doesn’t have many places left to go — at least if he wants another huge payday.

Free radio stations are struggling with steep drops in advertising and high debt loads and probably can’t pay top dollar to get Mr. Stern back to the medium where he began. He also likely would chafe at being censored again after enjoying the freedom of satellite radio, where his racy banter hasn’t been subject to federal restrictions on language and content.

He can’t switch to another satellite-radio provider. Sirius swallowed the only other one, XM, last year.

So, if Mr. Stern, 55, does re-sign with Sirius, it’s likely to be for less this time around.

Sirius nearly had to file for bankruptcy protection this year and is still trying to reduce costs. The company is feeling the brunt of weak auto sales, which deliver many of its new customers. It also faces new threats from emerging commercial-free rivals such as Internet radio.

For these reasons — and because Mr. Stern has warned other times that he might quit or retire — his latest threat rings hollow to some analysts.

“It’s probably positioning for contract negotiations,” said Brett Harriss, an analyst at Gabelli & Co., whose parent, Gamco Investors Inc., owns 1.1 million shares of Sirius. “I don’t think he would give up his bullhorn.”

In a recent interview, Sirius Chief Executive Mel Karmazin said that he will work hard to retain Mr. Stern, but the company would not offer more detailed comments. Mr. Stern’s agent, Don Buchwald, did not respond to requests for comment.

Mr. Stern made his name on traditional, or “terrestrial,” radio. While Sirius makes its money mainlyfrom selling subscriptions, the money that flowed to the shock jock on traditional radio came from syndication rights. In that setup, radio stations pay companies that distribute programs such as Mr. Stern’s.

Many of those radio stations have struggled since he left the free airwaves, and the recession compounded the problems. In the first nine months of the year, radio advertising revenue fell by 21 percent, to $11.8 billion, according to the Radio Advertising Bureau.

Citadel Broadcasting Corp., the nation’s third-largest operator of radio stations, filed for bankruptcy protection Sunday. Other big station owners also are wrestling with debts, and the syndication division of the largest station owner, Clear Channel Communications Inc., already is believed to be paying Rush Limbaugh $400 million over an eight-year contract.

“Who else can afford Howard Stern?” Mr. Harriss asked rhetorically.

When Mr. Stern signed with Sirius, the company trailed XM Satellite Radio Holdings Inc. in the race for customers. It badly needed a marquee name to attract subscribers to its service, which delivers 130 radio channels anywhere in the country for $6.99 a month to $19.99 a month, depending on the package.

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