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Who Is Sirius XM’S Mystery Merger Beneficiary?

Posted by: Jon Fine on March 11, 2009

On the night of March 10—well after the U.S. markets had closed—Sirius and XM put out their first annual report as a combined company.

My colleague Tom Lowry—without whom this post would not exist— combed through it, wondering in part how CEO Mel Karmazin’s dogged efforts to pare programming costs last year had fared.

Not so well, it turns out.

Content and programming costs ballooned by 11%, or $45.2 million, according to the filing and the press release. (scroll way down if you clicked on the filing: this data appears on page 36 of the report, and note that all dollar figures listed in the text of the report are in the thousands—as in, add three zeroes to get the real figure. The real figure appears in the press release.)

More interesting, however, is a mysterious one-time payment of $27.5 million to a single program provider, which the report only identifies as “a one-time payment to a programming provider . . . due upon completion of the Merger.”

Due upon completion of the merger?

Who could it be? The obvious thought is the guy involved with the one totally massive exclusive programming deal which everyone associates with Sirius XM: Howard Stern. His five-year, $500 million deal doesn’t expire until the end of 2010. But perhaps Howard’s people were savvy enough to insist on a contractual clause that got him a little more cash in case Sirius ever joined forces with its one satellite competitor.

Sirius XM deemed it not material enough to overall earnings to identify the programmer, save for saying that without that payment, programming costs would have risen 4%. (Which is still not that great a stat for a company trying to stifle cost growth.)

Sirius spokesman Patrick Reilly declined to comment. And Stern’s agent, Don Buchwald, did not return calls or an email seeking comment.

We will update this entry if and when he does, or when more information comes over the transom.

Reader Comments

Ron Mwangaguhunga

March 11, 2009 4:18 PM

Oh, this is juicy. Don Buchwald drives a mean deal. There could be backlash, though ..


March 11, 2009 9:41 PM

Talk about milking a company for all it's worth. Proof that Howard Stern has no shame.

Riley Martin

March 11, 2009 10:00 PM

pay me goddamit!

Mutt's whore wife

March 11, 2009 10:38 PM

Hampton's Howie needs money for his helicopter rides to the Hampton's every Thursday afternoon.

Tom Cipriano

March 11, 2009 10:55 PM

Howid makes money like me and Smith Barney. We EARN it. Sometimes we steal some too.

Howie's Alter Ego

March 11, 2009 11:10 PM

"I don't need this money. Beth was in show business before I met her..."

Eff you Howard.

Beth Stern

March 11, 2009 11:32 PM

Howard beeds the money for my Horse Face removal operation.

Baba Booey

March 11, 2009 11:53 PM

Gotta love this "reporting." Ownership at Sirius has not changed. And at the time the Stern deal was done, Karmazin was not at Sirius and there was a specific exclusion at the FCC that did not permit the two companies to merge. Think of something that was closer to the deal (Oprah) or another big deal that XM made (MLB). The MLB contract is so exclusive to XM, you can not get it on ANY Sirius radio. You must purchase XM hardware.

Eric the Midget

March 12, 2009 12:43 AM

I gave Johnny Frado herpes. ACK! ACK!

bubba the love sponge

March 12, 2009 1:33 AM

way to go my boss. lets rip the fans off.

now to go to and buy my merchandise.


March 12, 2009 4:39 AM

"there was a specific exclusion at the FCC that did not permit the two companies to merge"

No. It said FCC approval was required for it.


March 12, 2009 6:01 AM

Howard Stern is a financial genius.


March 12, 2009 9:10 AM

That Howard Stern is always a few chess moves ahead of everyone. Extremenly savvy!

Anybody who feels that he doesn't deserve this is dillusional and my suggestion to you is: - "Learn how to work kid?"


March 12, 2009 9:13 AM

If the expenditure was directly tied to completion of the merger, it would have been expensed in Q3, not Q4.

It seems more likely to me that the payment is tied to content that was previously exclusive to one service being cleared for carriage on the other. The NFL would fit that bill.


March 12, 2009 11:51 AM

Great. So the fans are pissed at Howard over SPECULATION that he might be the mysterious benefactor?

You're all gonna feel stupid when you find out it's some faceless businessman. Or Oprah.

Spare us all the moral outrage until you've got facts, not speculation. Good christ.


March 12, 2009 1:52 PM

If you look at the FCC's recent rulings on

Baba Booey!

(sorry, for a second there I just wanted to fit in with the crowd who read about this thread on their message board)


March 12, 2009 7:57 PM

Since Business Week is in the same building as Sirius, why don't you go up/down to the 36th floor and ask Howard yourself?


March 13, 2009 1:32 PM

Howard should go to JAIL. Getting 27 million when the stocks worthless.

Bob Levy

March 13, 2009 10:40 PM

It may be Howie, but I'm saying it is MLB.

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The media world continues to shapeshift as new forms arise and old assumptions erode. On this blog, Bloomberg Businessweek will provide sharp analysis and timely reports on the transformation of this constantly changing terrain.



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