NEW YORK – Just three days after starting his new job at Sirius Satellite Radio Inc., shock jock Howard Stern is now able to sell the roughly $200 million in Sirius stock that he received as part of his five-year deal with the company.
Sirius' contract with Stern runs through 2010, but the company disclosed last week that it was giving Stern and his agent 34.4 million shares of stock right away because it had already reached certain undisclosed targets for subscriber growth under the deal it signed with Stern in late 2004.
On Wednesday, the company made another regulatory filing saying that entities controlled by Stern and his agent, Don Buchwald, would receive the proceeds of the sale of the shares, which could occur at any time. It's not yet clear when or how much they will sell, and Buchwald did not return a call seeking comment.
Nearly all of the stock is going to Stern, but Buchwald also received a substantial chunk: 3.125 million shares, worth nearly $20 million at current share prices, or 10 percent of the 31.25 million shares that Stern received, which are now worth just under $200 million.
Sirius originally said its deal with the shock jock was worth about $100 million per year in cash and stock over the five years of the contract, or $500 million, including costs for producing and marketing the show
But thanks to the nearly doubling of Sirius' shares since then, the value of the stock portion of the contract went from about $110 million to more than $200 million, making the total deal now worth more than $600 million at current stock prices.
Stern could also stand to get even more stock grants as well as a portion of the revenues from advertising on Stern's show if other, "substantial" targets for subscriber gains are met, according to Sirius spokesman Jim Collins. Collins declined to say how large those grants might be or what targets needed to be met in order to trigger the additional payments.
Stern began his broadcasts from Sirius' Manhattan studios on Monday after a long career at Infinity Broadcasting, which is now known as CBS Radio and is a part of CBS Corp.
Unlike traditional radio broadcasts, satellite radio is free from federal decency rules, something Stern long railed against on his show. Stern, a hugely popular radio personality, has promised his fans on Sirius a stripper pole, live sex and other programming that would be likely to raise the ire of federal regulators.
Sirius is engaged in a high-stakes battle with its rival XM Satellite Radio Holdings Inc. to build up programming and subscribers in hopes of becoming profitable one day. Sirius said in its regulatory filing Wednesday that as of last Sept. 30 it had racked up an accumulated loss of $2.4 billion so far.
While neither company is profitable, both have also been quickly adding subscribers, who pay about $13 a month for either service. Sirius ended 2005 with some 3.3 million subscribers, compared with 1.1 million a year earlier and well ahead of its earlier forecasts. XM says it now has more than 6 million subscribers.
Sirius shares fell 33 cents or 5 percent to $6.17 in active trading on the Nasdaq Stock Market Wednesday, while XM shares fell 1 cent to $29.57 also on the Nasdaq.