Money Matters - Simplified

Howard Stern Is Back Where He Belongs

 The "will he or won't he" drama is over. Howard Stern announced this morning that he's sticking around with Sirius XM Radio (Nasdaq: SIRI) for another five years.

 

 The two sides certainly cut things close. Stern's last live show under his original contract was coming up a week from today.

The bonus in the deal is that Stern's show will now be available on mobile devices. Sirius XM introduced its app forApple iPhone and Web-tethered iPod touch owners 18 months ago. There was a lot of fanfare leading up to the smartphone streams, but that came to a screeching halt when it was revealed that Stern's show on Sirius and some of the play-by-play sports on both Sirius and XM would not be available.

The lack of Stern for a product that Sirius XM foolishly priced at the same price point as its receiver-based subscription was a buzz killer. Sirius XM went on to introduce a similar app for Research In Motion (Nasdaq: RIMM) BlackBerrys and smartphone devices using Google's Android platform, but the moment was gone. If the streaming allure was commercial-free music, smartphone owners have free access to that through countless Web radio and music-discovery sites.

Stern's arrival may not transform the iTunes, BlackBerry, and Android apps into winners worth bragging about, but it's clearly Sirius XM's best shot until we see what Sirius XM 2.0 has to offer in terms of extended features by the end of next year.

Terms of the deal aren't being disclosed. It remains to be seen if Stern signed for a sum similar to the $100 million a year he averaged during his first five years, or if he's getting a piece of the action on any future mobile subscriptions.

Regardless of what your opinion may be about Stern's on-air antics, this is the best resolution possible for both parties. Terrestrial radio would be highly unlikely to afford Stern or give him the creative wiggle room he needs. Launching his own premium streaming offering would leave one of the two sides smarting. Stern would have been humiliated if he hadn't wooed enough paying subscribers, and the Sirius XM model would be leaking if the migration was successful.

© 2010 UCLICK L.L.C.