Monday, September 25, 2006

$500 Million Reasons to Stay at Sirius and That's Just the Beginning

One of the goofy things about this "rumor" that Howard might return to traditional radio (planted by the traditional radio companies) is that Howard has a contract for five years to work for Sirius. So even if he wasn't happy (he is) with his fan base, there isn't anything he could do without permission from Sirius. And Sirius has no reason to cooperate with traditonal broadcasters just as it has overtaken XM and is rapidly gaining subscribers.

The lies about Howard being disappointed about his new audience are particularly silly for another reason.

Howard made a $500 million deal with Sirius with the promise of delivering 1 million subscribers.

Howard has delivered 3-4 million subscribers in just one year.

What's going to happen when Howard's contract comes up in five years? Even if we assume that Sirius doesn't continue to grow, that Howard's audience doesn't expand to ten or twenty million.

What if all Howard can do is four million subscribers, four times what his contract for $500 million required?

How much money can Howard ask from Sirius five years from now? Four times his last contract, 2 Billion dollars?

It wouldn't surprise me if Howard ends up owning Sirius.

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