When Howard Stern signed with Sirius Radio in 2004, there were still two major players in satellite radio, Sirius and XM. They both courted Stern, but Sirius won, not least because it offered him huge bonuses if Sirius, with Stern’s help, met certain audience growth goals. Stern met those goals easily the first two years, netting himself $150 million. (He missed the third year goal.) But in year four Sirius bought rival XM adding 10 million customers to its base. That was enough to trigger a huge Stern bonus, but Sirius claimed the audience that came with its XM purchase didn’t qualify as part of Stern’s package.
Howard Stern took them to court to say otherwise, and lost. Stern’s point was that without his signing with Sirius, it could have never purchased XM — and that the XM customers were all the de facto spoils of Stern’s move. (If the 10 million customers had been accounted for in Stern’s way, he’d have been due $300 million, according to Lawrence Cunningham at Valuewalk.) Stern re-signed with Sirius after the lawsuit, but there remained some bad blood about the deal even though Stern did receive a $25 million bonus triggered by the XM acquisition. (Hey, that’s not $300 million.) With Stern’s SiriusXM contract expiring this year and a host of options for him, including going over the top (direct to fans), will SiriusXM end up regretting fighting Stern back then?