Radio: Howard Stern - Will He Drive Up Sirius Stock?

11.21.05 - Unless you have been living under a rock, you must have heard by now that shock jock Howard Stern is leaving terrestrial radio to start a new era in satellite radio. Stern's show promises to be raunchier and more salacious than his current show on Infinity Radio. Howard has said he is looking forward to the day when he can express himself freely and not be bogged down and silenced by the prospect of stiff fines imposed by the Federal Communication Commission.

Although Stern is expected to lose some listeners following his move to a pay service, he still stands to bring millions of loyal fans with him to Sirius Satllelite Radio. The number of listeners who will follow Stern to his new home remains to be seen but is likely to be high—since his show will be broadcast to every radio market in the U.S.

Will Howard Stern's move to Sirius help drive the company's stock price higher? Obviously, Sirius thinks so, for it agreed to pay its popular new radio personality the unprecedented sum of $500 million for the next 5 years.

Sirius's subscriptions will certainly climb as Stern establishes himself as the new de facto standard in pay radio. If the recent trend continues, Sirius Satellite Radio will likely see its market share growing and possibly surpassing that of the current industry leader, XM Satellite Radio.

I believe that Howard Stern will indeed change the face of radio, with reverberations of his move already felt throughout the industry. Radio stations across the U.S. are already announcing new hosts for their radio shows, with some going as far as changing their programming formats or adding the words "Free Radio" to their names. Such responses clearly point to the threat perceived by traditional radio operator due to Stern's move.

The profound impact a single person can make on an entire industry will also likely affect Sirius' bottom line. I, for one, am going to invest in Sirius stock. I trust Howard to deliver the best radio he has ever presented to his fans, and to directly improve the fortunes of his new employer.

I know what it's like to be an avid fan of Howard Stern. I am one. And I'll pay whatever it costs to continue being entertained by Howard every morning.

See you January 9th, Howard.