It appears that Sirius/XM satellite radio continues to bet its fortunes on big names, to the extent to which its willing to cut the salaries of its less well-known names. As we covered here, the big drama at the end of 2010 was whether or not the self-proclaimed King of All Media, Howard Stern, would renew his contract with the satellite radio provider. In the end he did, but the full financial terms of the contract still have not been made public. It was widely speculated that Stern was being pushed to take a hit to his salary, given how expensive it was to sign him five years ago.
It seems safe to guess that Stern probably came out of this new contract with even money. The key is probably his agreement to permit his show and dedicated channels to be offered on the Sirius mobile apps for the first time. But keeping Stern, even with being able to distribute his content more widely doesn’t come cheaply. Neither does signing Dr. Laura, Jamie Foxx and Oprah.
The pressure of these star salaries appears to have fallen upon Sirius’ second-tier talent. Most prominently, the Florida-based shock jock Bubba the Love Sponge Clem refused to renew with Sirius at the end of the year after being offered an 80% reduction in his salary. Reportedly making $1 million a year before, Bubba would have been cut down to $200 grand. Still good money for a morning shock-jock DJ, but I’m sure that would have cut into Bubba’s beer, porn and wild boar budget.
Bubba was featured on one of Stern’s channels, and this week Howard told listeners that he would like to see the Love Sponge return to Sirius. The big question is if Howard is willing to pony up his own cash or make other concessions to Sirius to make the deal happen.
What I find ironic about Sirius’ celebrity strategy is that it is so reliant on names that became famous in conventional broadcast radio and television. So far Sirius/XM has failed to find or nurture any radio stars on its own. Even many of the second-tier hosts, like Bubba and fellow shock jocks Opie and Anthony, defected from broadcast.
Yet, it’s arguable that a sizable percentage of Sirius/XM subscribers are not drawn in by names like Stern, Dr. Laura or Oprah, instead getting on board for the commercial-free music and other talk programming. This makes me wonder if the headline-grabbing celebrity signings are worth it for the service.
As a result, 2011 will prove to be a very pivotal year for Sirius, demonstrating if the big signings and renewals add any more subscribers than the previous few years. With 20 millions subscribers at the end of 2010, satellite radio is not a fringe service. But at the same time it’s still not an overall profitable service, either.
I’ve always been of two minds about satellite radio, especially since the merger in 2009. Yet, in addition to exclusive and ad-free content, satellite radio does offer a useful service for a lot of listeners, especially people who spend a lot of time in a car or truck. But I really wonder if the company’s pursuit of celebrity doesn’t thrust it down the same road the music industry got lost on, betting big on top artists, which can also mean losing big on them. I also wonder if the money spent on the Sterns and Schlessingers won’t take a toll on the less flashy channels, draining them of the qualities that separate satellite from the wasteland of commercial broadcast radio.
It should be an interesting year.