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Sirius’ hefty talent deals are “scary”: CEO
NEW YORK (Hollywood Reporter) – Sirius Satellite Radio Inc. CEO Mel Karmazin said Tuesday it was “scary” paying huge amounts to secure Howard Stern, the NFL, NASCAR and other high-profile programming, but still well worth it.
“It’s scary how much they cost, but I would rather have them and find a way to make money with them rather than compete against them,” Karmazin said at the Sports Business Journal’s annual World Congress of Sports event.
Stern’s deal is worth $500 million over five years. Despite the big bucks, Karmazin said he met with Stern on Monday to try to get him to extend his term with similar pay structure.
“He wasn’t interested,” Karmazin said. “He’ll take his chances when the contract is up.”
Karmazin joined Sirius in 2004 after a long career in traditional radio that culminated in a turn as president and chief operating officer of Viacom Inc. In that time, he has seen Sirius’ subscriber base grow and snagged Stern from Viacom’s CBS unit.
Stern’s old employer recently sued the shock-jock, his agent Don Buchwald and Sirius for alleged breach of contract and fraud stemming from his much-ballyhooed move to satellite in January. The suit, seeking hundreds of millions of dollars in damages, was described by Stern as “a personal vendetta” launched by CBS chief Leslie Moonves in response to the network’s sagging radio fortunes since Stern left.
Karmazin said the lawsuit only served to put Stern back on the front page.
“The last thing I would want to talk about today is Howard Stern,” Karmazin said. “But I’m sure CBS had its reasons.”
Karmazin was interviewed onstage at the Pierre Hotel event by noted media journalist-analyst Jack Myers.
He said that sports, along with Stern, are a major driver of subscriptions to satellite radio.
While Sirius and its bigger competitor, XM Satellite Radio, are locked in a battle for subscribers, Karmazin said the more important battle is for the entire field of satellite radio.
“This is not about us vs. them,” he said. “It’s about satellite radio.”
He said terrestrial radio would be good for free cash flow. “It’s just not going to grow much,” he added.
Sirius, based in New York, reported a widened net loss of $311.4 million in the fourth quarter, due to a surge in promotional costs for the holiday season in the weeks before Stern’s arrival. Revenue tripled to $80.0 million.