Howard Stern announced yesterday that he is leaving the Viacom broadcasting empire to join the world of satellite radio, creating what could be a breakthrough moment for a three-year-old medium.
The raunchy radio morning man stunned his staff by saying he has signed a five-year, $500 million deal with Sirius Satellite Radio, portraying the move as a response to "censorship" efforts by the Federal Communications Commission, which does not regulate the content of satellite programs.
"It has been one big nightmare the last couple of years, really the last 10 years," Stern, who plans to fulfill the final 15 months on his Viacom contract, said in an interview. "I lost my joy for radio." As for his new home, he said: "I believe this is the future. This satellite radio will overtake terrestrial radio."
Combined with the defection of Bob Edwards, the former National Public Radio host who debuted this week on XM Satellite Radio, Sirius's Washington-based rival, Stern's decision could lead a flood of subscribers to begin paying for what has long been taken for granted as a free part of the media landscape. Sirius, which last year signed a seven-year, $220 million contract to carry all regular-season National Football League games, charges $12.95 a month. XM's monthly fee is $9.99.
"We think this is a transforming event as the top radio personality has moved to a new technology and a relatively new company," said Joseph P. Clayton, chief executive of New York-based Sirius, adding that half the country has never heard of satellite radio. He said Sirius, which has 600,000 subscribers, can turn a profit on the deal -- which includes a new studio and salaries for Stern and his on-air gang -- if the move attracts 1 million new paying customers. Stern's show is estimated to draw more than 10 million listeners.
Stern, 50, who pioneered the syndication of a local radio show, likened his motivation to the creative freedom that comedians enjoy on HBO as opposed to the broadcast networks. He accused "religious groups" of "throwing a jihad at my advertisers, threatening them, bullying them, threatening boycotts." He also castigated the chairman of the FCC, which has been fining Stern's stations for more than a decade.
"We can't even figure out what Michael Powell, Colin Powell's son, wants," Stern said. "This guy is able to tell everyone what's decent and what isn't. . . . You've got the government ripping apart the show." He said that comedy bits he was able to air two years ago -- talking about bodily functions, as opposed to hard-core sex -- were now barred by Viacom. The company was recently hit with a $550,000 FCC fine for Janet Jackson's breast-baring Super Bowl escapade on CBS.
"Viacom's back was up against the wall," Stern said. "They are fighting for their lives."
Powell said in an interview yesterday, "It is not surprising that notable performers and journalists are turning to a medium that allows them to paint with a broader palette."
More programs and performers will migrate to pay cable and satellite channels unless Congress holds them to the same decency standards as broadcasters, Powell maintains.
The Stern announcement is a setback for Viacom's 185 stations, including Washington's WJFK-FM, since a popular morning show can generate as much as 50 percent of a station's revenue.
Joel Hollander, president of Viacom's Infinity Broadcasting, said he would "take Howard's headaches all day long. He is one of the great broadcasters of the era. . . . But nobody's bigger than any single medium." As for the cost of Stern's new deal, Hollander said: "At $100 million [a year], not happening on my watch. I'm not going to spend that kind of money. To me that is fiscally irresponsible."
With guests ranging from celebrities to porn stars and a seemingly endless stream of women who are coaxed into disrobing in the studio, Stern's show is a huge draw among a group coveted by advertisers -- males age 18 to 49 -- in many of the 46 markets that carry the five-hour program. While breaking the news yesterday, he told a 21-year-old model: "I'll have to undress you quickly because we're in the middle of a big announcement."
Sirius, which offers 120 channels of commercial-free music, sports, news and entertainment, is available to more than 10 million people through the Dish satellite television network or specially equipped car radios. The company, whose stock jumped 15.5 percent yesterday, to $3.87, has partnership deals with Ford, DaimlerChrysler and BMW.
Both Sirius and XM received FCC licenses in 1997 and took on the personalities of late-1990s start-ups, with XM setting up shop in a cramped Dupont Circle basement. The companies' stock soared as high as $65 a share.
Sirius had its three-satellite system in orbit before XM, which scrubbed launch attempts before successfully positioning its two-bird system. But Sirius soon fell behind, struggling with management difficulties and technical problems and replacing its chief executive. By early last year, Sirius was trading for pennies per share.
XM launched nationally in November 2001 with a splashy ad campaign featuring David Bowie and B.B. King. By the time Sirius debuted the following year, XM had more than 100,000 subscribers. Since then, XM has grown to 2.5 million subscribers, largely due to a partnership with General Motors that offers its radios in new GM vehicles.
Sirius offers National Basketball Association and National Hockey League packages in addition to pro football. XM, while carrying some baseball and college football games, has no similar sports lineup. But it snatched up Edwards after NPR abruptly dropped the host of "Morning Edition" after 25 years. XM has also hired Opie & Anthony, who were fired by Infinity in 2002 for an on-air stunt involving a couple having sex in a church.
XM, which had tried to lure Stern, views the announcement as "a good thing for satellite radio and, given the price tag, a very, very good deal for Howard Stern," said spokesman Chance Patterson.
Jim Farley, vice president of news and programming at Washington's WTOP, called yesterday's news "a seismic shift" in the industry. Satellite radio, he said, "is paying the price to get programming and cherry-picking the most popular stuff from broadcast radio. Satellite radio is bloodying the nose of over-the-air broadcasters."
Farley said stations such as his must fight back by making clear that over-the-air radio is still relevant, providing local news, traffic and weather and critical information in times of natural disasters and emergencies.
Stern's newfound freedom to use foul language and X-rated material could stir controversy among some satellite subscribers. Sirius's Clayton acknowledged that people like Stern "can be controversial and can polarize audiences," but he said users can automatically block any station on the network.
Stern transformed FM talk radio from his earliest days, spawning a legion of imitators. He was fired by Washington's WWDC in 1982 and by New York's WNBC three years later, but controversy seemed only to fuel his popularity. The self-styled "King of All Media" has written a best-selling book, "Private Parts," that was made into a movie, and portions of his radio show are rebroadcast on the E! network.
Stern said he had planned to abandon his show but now is "jacked up and turned on" by the possibilities of satellite radio. "It dawned on me: I don't want to leave radio. That's what I'm best at. What's been bugging me is all this interference. I literally can't be funny the way I want to be," adding that he has become so conscious of his language that "I can't even get a thought out."
He is clearly angry at the Bush administration, regularly calling for the president's defeat, and at Clear Channel Communications, the radio giant that dropped him from six of its stations last spring. Clear Channel later reached a $1.75 million settlement with the FCC over indecency charges involving Stern and others.
"My dream was to be syndicated across the country," Stern said. "Then Clear Channel gets in bed with President Bush. After 10 years on the air, they suddenly say, 'You're too dirty for us, goodbye.' These stations are worth $85 to $100 million to Clear Channel, and my goal is to make them worth five cents. Screw 'em. I think this can be done by making satellite a viable business."
Stern said he insisted that Sirius not charge a premium fee for his program because "I don't want to gouge my audience."
