It’s good to be the King of All Media
Posted by Ron Coleman on February 11, 2009
Howard Stern made hundreds of millions of dollars to “legitimize” Sirius satellite radio. If you ever wondered how such numbers could be justified as a business matter, well, guess what — they couldn’t. At least not with that business’s own money:
Sirius XM, which never turned a profit when both companies were independent, is laden with $3.25 billion in debt. Its business model has been dependent, in part, on the ability to roll over its enormous debts — used to finance sending satellites into space and attract talent like Mr. Stern (who was paid $100 million a year) — at low rates for the foreseeable future until it could turn a profit. . . .
Sirius XM owes about $175 million in debt payments at the end of February that it is unlikely to be able to pay.
$100 million for Stern. Of course that can’t be justified, unless the only risk being taken is taken by someone else. Like a bank.
And, of course, that bank isn’t really risking all that much. If it fails, or threatens to, why Uncle Sam will just bail it out, right?
Guess who’s $100 million that ends up being?
UPDATE: “I remember my dad looking at the stocks a few years ago and saying that Sirius’s only viable business plan was to be bought by XM, and XM’s only viable business plan was to hope for some kind of miracle.”
James H said
I can’t fault Howard Stern for seeking a $100 mil salary or accepting it. After all, he was hired as on-air talent, not as a CEO. Howard Stern’s first responsibility is to Howard Stern.
Now, as far as PAYING an over-the-top profanity diva an exorbitant salary … well, nobody held a gun to Sirius’s head and said they had to take the deal.
James H’s last blog post..Melrose returns
Ron Coleman said
James, who suggested Howard Stern is at fault for holding open his basket and letting a fortune fall into it? Not me.
James H said
Ron —
I wasn’t suggesting you suggested it. Just ruminating on it briefly.
–James
James H’s last blog post..Your evil corporations at work