In a deal that must have required a lot of arm-twisting, shock jock Stern and his agent Don Buchwald will collect about $221.7 million worth of Sirius stock now that the pay radio shop has hit agreed-upon subscriber targets.
The neatly crafted arrangement helps validate the half-billion dollar price tag Sirius put on the five-year Stern contract. And for Stern, it is an even richer bonus now that the stock has doubled in the year since he agreed to join the company. The 34,375,000-share award was originally valued at $110 million when the deal was struck.
Sirius says it plans to file a federal registration to issue Stern and Buchwald their shares on Monday. If Buchwald retains an agent's customary 10% fee, Stern will get about $200 million in stock the day his show debuts.
For the year, Sirius ended with 3.3 million subscribers, exceeding its more than 3 million goal. Looking ahead, the New York broadcaster expects to end 2006 with more than 6 million users.
Meanwhile, satellite radio rival XM missed its 2005 subscriber target, but managed to raise its 2006 projection to 9 million users. The Washington, D.C., broadcaster had 5.93 million subscribers at year-end, below the 6 million promised and weaker than some of the higher estimates analysts had for the big growth service.
In fact, in a head-to-head comparison, Sirius outsold XM in the fourth quarter, gaining 1.14 million new users compared with 900,000 signed by XM.
Analysts say Stern's arrival at Sirius and sluggish car sales at GM helped drag down XM's growth for the period.
"We believe General Motors' problems have become XM Satellite Radio's," says Morgan Joseph analyst Dave Kestenbaum, in a research note Thursday. Kestenbaum rates XM and Sirius buys.
Also, unlike XM, Sirius
counts the arrival of satellite radio-equipped cars at dealerships in its subscriber totals, helping to pad the numbers a bit.
Sirius shares rose 8 cents to $6.44, while XM shares fell 37 cents to $27.50 in midday trading Thursday.