It’s almost hard to believe that satellite radio is a decade old this year. Actually the XM service launched in September, 2001 while Sirius launched service in four states in February 2002. I remember clearly the hoopla around the debut of this new radio service, and devouring a feature article about XM in Sound and Vision magazine. I actually first heard Sirius on satellite television when I subscribed to Dish Network around 2003, and then after that primarily heard the service in rental cars.

As I’ve noted before, it always seemed to me that the service didn’t quite live up to its billing as a richer, more diverse and commercial-free alternative to the declining quality of commercial terrestrial radio. For example, the XM Unsigned channel, which focused on up and coming artists who didn’t have big record contracts and was featured prominently in that 2002 Sound and Vision article, effectively disappeared in 2005 when it was merged with the more conventional indie rock XMU channel. As well, many listeners were disappointed when satellite talk stations first introduced advertising (although music stations remain free of commercials).

That said, I do understand how satellite is an attractive option for people who spend a lot of time on the road, especially outside major radio markets, and for listeners interested in exclusive specialty programming, like Howard Stern. And while it hasn’t always been smooth sailing, and it required a previously verboten merger of Sirius and XM, satellite radio appears to be on relatively solid ground as it hits its tenth birthday.

We’ll know more about just how solid that ground is on Thursday when the company will report its fourth quarter 2011 earnings and year-end results. Analysts expect revenue to be up around 6%, while its stock (“>SIRI) price sits at $2.12 as of close on Tuesday. While a little more than two bucks doesn’t sound like the best stock performance, it’s a significant gain from two years ago when SiriusXM was under threat of delisting from the NASDAQ as its stock dipped below a dollar.

Perhaps the company will have good reason to celebrate a month later, on March 9, when it throws a birthday concert with Bruce Springsteen at the Apollo Theater in New York City. The concert will air live on Sirius’ E Street Radio channel, three days after Springsteen drops his new album, “Wrecking Ball.”

Federal Communications Commission, et al v. Fox Television Stations, Inc., et al. 

Interestingly, former FCC Chairman Michael Powell, who championed the enforcement of fines on broadcasters who aired fleeting expletives unbleeped, commented that he wouldn’t be so quick to discipline networks in today’s environment.  From Bloomberg.com:

…[T]he FCC said in 2004 that it would begin punishing broadcasters for fleeting expletives — one-time utterances on live shows.

Powell said in an interview this week that he now regrets that vote, saying, “if I were voting again, I would have dissented.” He also questioned the logic behind singling out broadcasters for scrutiny at a time when cable and satellite television reach at least 85 percent of American homes.

“I’ve always been deeply troubled by the way the First Amendment changes when you change channels,” said Powell, now president of the National Cable & Telecommunications Association in Washington, which represents Fox Networks Group along with cable operators.

The Supreme Court case concerns incidents at the Billboard Music Awards, shown on Fox. At the 2002 show, Cher referred to critics of her work by saying, “F— ‘em. I still have a job and they don’t.” A year later, Richie said, “Have you ever tried to get cow s— out of a Prada purse? It’s not so f—ing simple.”

The FCC concluded that the broadcasts violated its indecency regulations, though the agency stopped short of imposing fines. Federal law lets the FCC levy a $325,000 fine on each station that airs indecent material between 6 a.m. and 10 p.m.

The case will also look at a scene involving brief nudity on a 2003 episode of “NYPD Blue.”

(Sidenote: Howard Stern famously challenged Michael Powell [link opens MP3 file] regarding his indecency rulings and fines on KGO’s “The Ron Owens Show.”  Although a bulk of the conversation concerns Stern’s questioning of Powell’s political credentials, it’s still an interesting listen on indecency enforcement nearly 8 years later, whether you’re pro- or anti-Stern.)

Of course, the upcoming ruling will also affect radio broadcasters, who are under essentially the same indecency guidelines as their television counterparts.  The Obama administration has stated in court that broadcasters should present a “relatively safe medium for…children.”  One hopes, however, that while this case looks at off-the-cuff profanity, the FCC will begin to move closer to specific guidelines so broadcasters can be certain what is, in fact, deemed indecent and what isn’t.

As stated in the Bloomberg article, a federal appeals court stated that the FCC indecency rulings were too inconsistent, and that broadcasters “are left to guess” what will be enforced by the FCC and what will pass without a fight.  Incidentally, this is the same issue that plagued the UK’s Ofcom, who announced in October 2011 that they “intend to publish guidance by the end of the year to clarify the rules in the broadcasting code.”  As far as I can tell, this year-end deadline has come and gone without further explanation of said rules.

As we being another all-important election year, I’m hopeful these cases will be addressed in a timely, yet through, fashion.  Then again, we’re still talking Cher saying the f-word, once, on live television almost ten years ago, so I’m not holding my breath.

Talk is heating up on Wall Street that satellite radio purveyor SiriusXM might be on the verge of a sale. Most of the talk centers on Liberty Media, headed up by chairman and early player in cable television John Malone, which turns over media properties pretty regularly, and currently owns the QVC shopping network, Starz premium cable network and the Atlanta Braves, amongst other properties. Liberty has a 40% stake in SiriusXM, obtained as part of a $530 million loan deal that helped the satellite radio company stay out of bankruptcy.

The big question is whether Liberty will choose to divest itself of its SiriusXM holding, or instead take on a bigger piece. Liberty has the option to buy in for up to 49% of SiriusXM, and go for more than that after March 2012.

At an investor meeting before Thanksgiving, Liberty Media CEO Greg Maffei wouldn’t say which way the company was leaning. SiriusXM CEO Mel Karmazin told investors that his company’s prospects for 2012 look good, predicting revenue growth combined with lower interest expenses and capital expenditures.

But at the Reuters Global Media Summit on Tuesday Karmazin expressed doubt about a Liberty takeover of SiriusXM. He also said he doesn’t know what company is willing is willing to pony enough for a full buyout, and that he’s not sure he’d be happy working for someone else. Karmazin’s contract is up in 2012.

SiriusXM stock has bounced back from the first quarter of last year when it hovered just under a dollar a share, risking delisting from the NASDAQ. By comparison the stock closed Tuesday at $1.72, after more than 21 million shares traded, making it one of the ten most-active stocks on the NASDAQ. The interest is likely fueled by speculation of a Liberty Media buy.

If nothing else, the satellite radio service appears relatively stable, having kept star talent Howard Stern on board and riding the coattails of the auto industry’s slow comeback. However, just like terrestrial radio, SiriusXM faces still competition from the rise of internet radio and music services like Pandora and Spotify, as well as competition for customers’ attention from outside the radio world.

I honestly don’t know what Liberty Media would do with SiriusXM, or if there would be any kind of synergy with its other holdings. Liberty does have ownership stakes in Barnes & Noble and Live Nation, so there are interesting possibilities, even if I’m not thrilled with smell of consolidation all around it.

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.

Sirius XM satellite radio is celebrating the renewal of its contract with Howard Stern with yet another installment of its “History of Howard Stern” series. This would be the “highly anticipated fourth chapter in the award-winning series that offers an unprecedented celebration and rare behind-the-scenes look at the life, career and achievements of Howard Stern,” according to the press release that we received.

There is a certain cult of personality tone to all this, but what do you expect? Anyway, one has to give credit to Stern for his ability to recycle himself as a kind of ongoing rags-to-riches success story . . . endlessly on the brink of failure, catastrophe, or disgrace, then the comeback. Makes you want to root for the guy, or not.

In any event, The History of Howard Stern: Act IV premieres today, December 20 through December 31 on Howard 100 and Howard 101—beginning at 6:00 am ET on Howard 100 and 6:00 am PT on Howard 101.

Part IV will explore (this is from the release):

• Memorable moments from the late 90′s/early 2000′s era of the Stern Show
• An in-depth look behind the scenes of the acclaimed film Private Parts , from the casting process and the filming to the larger than life premiere at Madison Square Garden in 1997.  Exclusive first-hand accounts and backstage stories from the cast and crew.
• Rare in-studio interviews with JFK, Jr. and David Letterman
• Fred Norris and “The Rainbow Room incident”
• First appearances from show legends Artie Lange , Hank the Angry Drunken Dwarf, The Jesus Twins, Beetlejuice, KC Armstrong, Sal & Richard, Benjy Bronk, High Pitch Eric and other members of “The Wack Pack”
• Staff fights and famous feuds with celebrities like Rosie O’Donnell
• Howard’s continuing battles with station management
• The Scott Salem Push Up Contest
• In-studio musical performances from Aerosmith, Green Day, and Goo Goo Dolls, plus Dave Grohl ‘s original acoustic performance of “Everlong”
• Stories behind the Howard-produced F/X series, Son of the Beach
• Highlights and stories from the “drunk show” backstage at the 2000 MTV Video Music Awards
• Gary’s legendary “love tape”
• Howard Stern meets future wife Beth Ostrosky
• Archive interviews with Hollywood heavy-hitters Robert Duvall, George Clooney, Warren Beatty and James Caan
• Behind the scenes of staff band The Losers and their memorable performance on Magic Johnson ‘s ill-fated talk show, The Magic Hour
• Truth behind Jackie Martling ‘s departure from the Stern Show and the comedians who auditioned for his chair
• A look back at Howard’s historic broadcast from September 11, 2001

None of the drama over Stern’s place at Sirius seems to have hurt its stock, which now hovers at a little above $1.40 and has even gone higher than 1.50 over the last few months.

Howard and Sirius still stuck with each other

So much for the drama. Howard Stern announced this morning that he signed a new five-year contract with Sirius satellite radio, ending a protracted negotiation. He did not indicate how much the contract is for, only saying that it is “very fair.”

The end of this contract will be a different sort of drama since Stern also said that this will be his last five years in radio. Whether that means he’ll pursue other media opportunities or choose to retire altogether is anyone’s guess. No matter what he decides I’m sure that Stern will milk the mystery for all it’s worth.

Of course, this puts to bed the absurd rumor that Stern was contemplating a $600 million contract with Apple to distribute his show exclusively on iTunes. However, we still don’t know the terms of Stern’s new deal with Sirius, although eventually investors are going to want to know the details. There has been some speculation that a new deal would involve a little less cash and more stock, though the stock isn’t exactly performing its best. Nevertheless Sirius (SIRI) stock was up over 6% this morning following the news. I’m guessing that’s all the bump the stock is going to see unless it turns out Sirius got some real cash concessions in this contract.

We don’t know yet whether Sirius decided that a Stern-less future was too risky, or whether Stern realized that there are likely no more lucrative options than staying put at Sirius. Status quo is obviously the safest option for both parties, especially as Sirius closes in on celebrating the milestone of 20 millions subscribers. Losing Stern and triggering a possible exodus of possible hundreds of thousands of subscribers would have certainly marred the occasion.

Is Howard ready to stick it to Sirius?

Tuesday morning on his radio program Howard Stern reportedly discussed his ongoing contract negotiations with Sirius satellite radio, announcing that, “I am not taking a f—ing paycut.” His tirade was in response to comments made by Sirius CFO David Frear at a UBS investor conference where he hinted that a new contract with Stern might be for less money than his current $100 million a year. Frear also observed that the Stern contract happened in a climate where there were two competing satellite radio companies, whereas now there is only one. He said that as these contracts come up for renewal, “we’ll have the opportunity to get more favorable economic terms there.”

Last week a completely unsubstantiated rumor surfaced on Twitter claiming that Stern might get lured away by Apple, of all companies, in order to do an iTunes-exclusive show for even more money–$600 million. Despite the Columbia Journalism Review chiding journalists for reporting the completely anonymous tweet, the rumor took on a life of its own, with commentators left and right speculating about Stern’s next move, even if most doubt Apple would pony up that kind of cash for an exclusive deal with Stern. Nevertheless, even the Sirius CFO mentioned the possibility of Stern starting his own internet streaming channel.

The real question at hand is whether or not Stern and his power to draw listeners to Sirius is worth $100 million a year. I don’t doubt that Frear was testing the waters at the UBS conference to find out what investors might think of a Stern-less Sirius.

If Stern decides to walk away from Sirius I’m highly doubtful that he’ll find another company willing to pay him nearly as much to do his program, whether its online, on television or back on broadcast radio. He certainly could choose to go independent and online, but again, I’m doubtful he could gross anything close to $100 million anytime soon. Sirius’ gross income is only about eleven times Howard’s annual take, and the company’s got a couple of hundred other channels.

If Sirius decides that Stern isn’t worth $100 million annually, and Stern decides he won’t settle for less, it will be interesting to see if his departure costs the company. That $100 mil amounts to the price of 7.7 million monthly just over 641,000 annual subscriptions, about 39% 3.2% of the service’s current subscriber base. Are there really 7.7 million 641,000 Stern fans ready to dump Sirius if he goes? I really don’t know, and I’m sure that’s the question Sirius executives are trying hard to answer right now.

What we didn’t know last week when I last pondered the situation was if Howard was willing to accept less than his current salary. If one is to believe his tirade on Tuesday, the answer is, no, he won’t accept less. But Howard also trades in controversy and a willingness to bite the hand that feeds. So his on air comments might also be his way to stay in the news and stick it to Sirius.

Whatever happens may be a real test of both Stern’s star power and the value of Sirius’ entire slate of programming. It could also be a test of whatever medium Stern chooses after Sirius. The most boring thing that can happen is that he’ll sign that renewal.

Howard Stern may be the face that launched four satellites (now 9), but as he wraps up his fifth year on Sirius satellite radio both his listeners and stock analysts are wondering if the King of All Media will continue to broadcast from orbit come 2011. Stern’s current $500 million contract is set to run out on December 31, and his last show of the year is December 17. But so far there’s been no word about how negotiations are going.

What little has been said publicly is vague. Last Friday morning Stern’s producer Gary Dell’Abate told a New York morning program that, ” Howard is negotiating, but we’ve never gone this far before … everybody is nervous, including me.” Tuesday on his show Stern also cryptically discussed his plans for the program once he signs a new contract.

Even post-merger, Stern is still arguably the most prominent personality associated with Sirius-XM. But with the financial troubles that have dogged the whole satellite radio industry, one has to think that Sirius is much less willing to pony up another half-billion to hold onto him.

Now, Sirius has signed Dr. Laura, but her transition from broadcast wasn’t nearly as dramatic as Stern’s, who was still at the top of his game when he left FM in 2005. I doubt Dr. Laura can possibly be as big a draw as Howard, and I wouldn’t be surprised if losing Stern would cause thousands of his most loyal listeners to cancel their subscriptions.

Of course, the big question is if Stern is enough of an asset to make or break Sirius-XM at this point in its development. If so, how much is he worth? If not, how much will it cost Sirius?

I guess we’ll find out soon enough.

Back in July of 2008, Sirius XM agreed to lease out four percent of its combined full time audio channels—a minimum of twelve channels all told—to “qualified entities,” which everyone presumes means minority broadcasters. A whole lot of candidates have offered to take these channels, but there’s a problem. The FCC has to come up with a process that doesn’t get it sued for establishing an unconstitutional ethnic quota system, or something like that.

So the Commission has been kicking this little monster down the road for almost two years. But a new filing in the Sirius docket suggests the agency may finally be getting its act together (hope springs eternal).

During a phone conversation, one channel candidate reports in his ex parte statement, an agency staffer “stated [that] the FCC had been working through several issues regarding whom, what and or how the Qualified Entity or Entities would be granted the proposed channels. She also hinted that the FCC had been working through several of the issues including Adarand and an application process that is being devised to be implemented.”

You’re probably wondering what that italicized word means. In the Supreme Court case Adarand vs. Pena (1995) the court ruled that Federal affirmative action minority contractor programs must be based on “strict scrutiny.” That is, if they employ racial and ethnic criteria, they have to demonstrate that the racial/ethnic group receiving favor has historically and/or presently faced a disadvantaged situation. The program can’t just be based on race alone.

So, generally speaking, government agencies now do what are called “Adarand Studies” to justify their affirmative action programs. Perhaps that or something like it is being planned here. It should be noted that that summary of this conversation did not come from the FCC but from a channel applicant. But it does seem like the Commission is still trying to get this program going, and may even succeed prior to Howard Stern’s 95th birthday.

After languishing in near-penny-stock territory for the last year, Sirius XM Radio stock hit the dollar menu on Wednesday, topping out at $1.05 a share. Investors who bought their stock a year ago when it sold for less than 20 cents are probably cheering. Sirius hasn’t seen the plus size of one buck since September of 2008.

The prevailing opinion on Wall Street seems to be that investors think Sirius XM has finally gotten its financial affairs in order, along with adding a net of 257,000 listeners–more than expected–in the fourth quarter of 2009.

There also seems to be a growing confidence that, despite all the recent hoopla, Howard Stern will sign a new contract with Sirius. I don’t really understand how that’s a strong sign of strength for Sirius, although I guess it can be seen as a indicator of stability. If Sirius has to cough up another $300 million to keep Stern I really wonder if it will really be worth it. Even given Stern’s recent headlines over his claimed invitation to join American Idol, I doubt he has the magnetism to draw a significant number of new listeners. At best, Sirius can hope to hold onto the current crop of die-hard Stern fans.

But, then again, getting the stock price over $1 is only a relative achievement. Although the increase will likely help the company avoid a reverse stock split. Sirius’ viability will depend on how costly it is to retain Stern and how well it can continue to add listeners, despite very few new receivers being announced at last month’s CES.