NEW YORK – Sirius Satellite Radio Inc. (SIRI) will give Howard Stern 34 million shares of stock — worth about $220 million at today's prices — because the company has met agreed-upon targets for gaining new subscribers under its 2004 deal with the shock jock.
In a regulatory filing Thursday, Sirius said its subscriber count as of Dec. 31, 2005, exceeded the target it had agreed upon with Stern in October 2004, when it made a five-year deal with him.
At the time, Sirius said its deal with Stern would be worth about $100 million per year beginning in 2006. The 34.4 million shares were worth about $110 million then, but the stock has roughly doubled. The increase has given Stern a windfall of about $100 million to date.
Stern begins his new show on Sirius on Jan. 9, having left his longtime employer Infinity Broadcasting (INF), which has been renamed CBS Radio, a unit of CBS Corp.
Last month the former president of an accounting firm that Stern used pleaded guilty to insider trading in Sirius shares before the news of Stern's move to Sirius was made public. Gary D. Herwitz, 50, formerly of Mahoney Cohen & Co., faces up to 16 months in prison at his sentencing in March.
Sirius and its rival, the Washington, D.C.-based XM Satellite Radio Holdings Inc. (XMSR), have been spending heavily to line up programming and lure in subscribers to the paid radio services, which work around the country and carry more than 100 channels of commercial-free music as well as talk programming. Both services cost $12.95 per month and require special radio receivers.
New York-based Sirius didn't say what subscriber target it had agreed to with Stern, but it also announced Thursday that it finished 2005 with more than 3.3 million subscribers, compared with 1.1 million at the end of 2004. XM said Wednesday that it now has more than 6 million subscribers.
Separately, Sirius also announced Thursday that it would start a new 24-hour Playboy-branded channel early this year with Playboy Enterprises Inc. (PLA) that will include live call-in shows, talks with Playboy founder Hugh Hefner and broadcasts from the Playboy Mansion.
Shares of Sirius rose 3 cents to close at $6.39 Thursday on the Nasdaq, while XM shares fell 55 cents, or 2 percent, to close at $27.29.