The argument that losing Howard is no big deal was voiced third hand (as it often is) by industry "analyst" (ie: corporate friendly mouthpiece) Matthew Harrigan. In a Hollywood Reporter story, Harrigan uses dubious math to suggest that the loss of Howard Stern's show would be a wash. He states that since Howard is paid a hundred million dollars a year, Sirius could lose a million subscribers and still come out fine. He goes on to say, that if Sirius loses less than a million subscribers, it would even come out ahead.
The first problem with this is Harrigan himself estimates that Howard has 3 million Sirius XM listeners. So why would only one third of them drop Sirius? If half of them dropped Sirius, we're talking about a loss of revenue of over 50 million beyond any savings in Howard's salary. Howard's fans are pretty passionate, and Harrigan doesn't bother to wonder what would happen if Sirius lost them all. The answer is, bloodbath. The loss of that many would mean a cut of 300 million in revenue.
But the true numbers are even worse. Sirius XM doesn't release stats on Howard's listenership, because the truth is too frightening. 3 million is the number of regular, and that means daily, listeners. Over 6 million Sirius XM listeners sample Howard every month. And the number is almost 10 million who sample him once a year. Would ten million subscribers drop Sirius XM if Howard left? No. Or at least, not right away. But the impact of Howard Stern's loss would be far greater than the number of his regular listeners would indicate.
Because Howard Stern provides a special value to Sirius that it has been unable to duplicate with anything else. Howard is currently the only thing that satellite radio has exclusively that anyone cares about. These days you can get music anywhere, and even without commercials. Sirius XM has a lot of sports, and those get good ratings, but you can also gets sports a lot of other ways. Howard has had value beyond his regular listeners because he is the poster boy for Sirius XM's marketing. You can't get him anywhere else, and everyone knows who he is. Even people who don't listen regularly to him, understand they have something exclusive. Howard is valuable to Sirius XM like The Sopranos was valuable to HBO. It was something unique you couldn't find on network television. Howard was something you can't find on traditional radio, and that had a marketing value far beyond his number of daily listeners. If you're buying a car, and decide to shell out extra money for a subscription radio, you want it to feel like you're getting something extra. Howard was it.
Of course, the logic goes that there are a lot of other reasons to enjoy satellite radio, coverage, extra channels, extra sports, more music, etc. But none of those are as clearly defining as Howard Stern. The most simple proof of this was the fact that XM started out with a much larger subscriber base than Sirius, yet Sirius rapidly grew every year until XM was forced to merge with it. Howard Stern was the sole completive advantage Sirius had, and it worked. Even people who didn't listen regularly, liked the idea that they had something special.
If Howard leaves, it's quite likely all three million of his regular listeners will quickly jump ship, just to support him. And it's also quite likely millions more will gradually start to leave, because satellite radio won't seem quite as special without him on it.
But it gets worse. If the issue was simply Howard leaving satellite to go back to traditional broadcast, Sirius might just lose 3 million quickly and a few million more over the years. But the problem is that the real competition for satellite radio is no longer traditional broadcast, but car equipped internet service.
Sirius XM CEO Mel Karmazin has been smart enough not to say anything about the Stern negotiations publicly, for fear of pissing Howard off, but he did unconvincingly attempt to dismiss the serious threat of internet radio in a recent interview.
His argument, which is thin, is that internet radio either would have to charge a subscription, so it would be the same as paying for satellite or it would have to be ad supported, which would make it the same as traditional broadcast. There are more holes than I care to comment on in this argument, but the biggest immediate one is… Howard Stern.
Howard has already proven that he can move millions of his listeners to any medium he wishes, and if he moves to internet radio, it would overnight become a big option. Beyond the millions of subscribers who would leave Sirius for either ad supported or subscription options, the PR damage to Sirius XM would be enormous. Howard Stern would be saying satellite is over, internet radio is the wave of the future. The impact of that, could be something that would go beyond hurting Sirius XM.
It might eventually shut them down for good.
