No Title [Briefing.com] Sirius Satellite Radio (SIRI 3.92 +0.57) and Howard Stern announce what they call a "landmark deal" as the self proclaimed "King of all Media" will broadcast from the SIRI platform beginning January 1, 2006. The multi-million dollar deal lasts 5 years and calls for a budget for the show to be approximately $100M. SIRI estimates that it needs 1 mln new subs to cover the cost of the deal. Stern is easily the most coveted property in radio, his syndicated radio show is consistently among the highest rated and his ultra-loyal fan base has followed him from radio to books to movie and even pay per view specials. The move comes after XMSR, the chief competitor of SIRI had signed on another controversial radio show that recently began broadcasting on the XMSR platform, the Opie and Anthony show. Opie and Anthony were pulled from the free airwaves after a sex stunt in New York City's St. Patrick's Cathedral. A significant difference in the two services is that XMSR requires listeners to purchase a premium service to access the often off color Opie and Anthony radio show while the Howard Stern show will be part of the standard offering from SIRI. Stern noted on his show today that he will have control of three channels to program. He went on to state the show will air from 6 am to 10 am and then be repeated on another channel. SIRI also has a contract with the less controversial NFL, broadcasting two feeds from each game, one feed for the home team and one feed from the away team. This services allows transplants to listen to their favorite team called by the local announcers. This deal is much like the one that the DISH cable network signed with the NFL which allowed it to differentiate itself from its competitors. There has been plenty of interest in play between the two players in the satellite radio market. That play has generally been to short XMSR and use the proceeds to buy SIRI. This idea is based off the idea that XMSR was overvalued and SIRI has been undervalued. This play however is taking into account share price and not market cap. While XMSR, whose stock trades around $29 per share, its competitor SIRI trades below $4. The market caps of each stock are much closer than the price of the stock would imply. XMSR has a market cap of $5.95B and SIRI carries a market cap of about $4.8B. This difference in market cap denotes that the opportunity for such a short and buy scenario is much more limited that the share price would suggest. While this deal does change the landscape of the market, we doubt that the short and buy scenario and regression to the mean thesis will push both stocks to $16 a share. Such a move ($29 +$4 = $32 / 2 = $16) would imply a quadrupling of the value of SIRI. It would also imply that XMSR would lose about half of its market value. The only problem with this is that a short and buy scenario is generally a zero sum game, where the moves in market cap would be roughly equal. This is a positive announcement for SIRI, but it would be hard to imagine that a share price of $16 would come about over the next year unless there is a reverse stock split. -- Briefing.com

RSI is at 65.6 way overbought. Should dip some more.

Questions that I don't hear being asked are:

...how many out of his current puberty male audience have to rely on Mom and Dad to pay for the service?

Out of those, which have Mom's or Dad's that will choose XM Radio instead which already has 2.5 million subscribers?

How much longer can a 50 year old guy continue this schtick? Even Rodney DangerField had his limits.

Just seems half-baked to me.

By Rick Aristotle Munarriz (TMF Edible)
October 12, 2004

Is Howard Stern's rowdy radio show becoming the next hot spot for stock trading tips? Last week he beat Sirius Satellite Radio (Nasdaq: SIRI) to the punch by announcing that the two would team up come 2006 to produce three channels of no-holds-barred content before Sirius could issue a press release to make it official.

Yet now some investors are dissecting comments that Stern made later, suggesting that his deal with Sirius didn't necessarily mean an end to his relationship with his friends at Viacom (NYSE: VIA).

That birthed two juicy rumors. The first was that former Viacom COO Mel Karmazin would be joining Sirius. That makes sense. He left Viacom four months ago, and while his name has been tossed around as a possible successor to Michael Eisner at Disney (NYSE: DIS), only Karmazin knows whether he is truly interested in the Mickey Mouse gig or whether he's willing to wait until next year for Disney's board to arrive at a decision.

The second rumor is a bit more radical. However, it was more widespread and had even the New York Post wondering whether Viacom would just flat-out acquire Sirius.

A merger would make sense on the most basic of levels. Viacom stands to lose the most with Stern's departure. It's not just that the show is highly rated in its syndicated markets; it's more dire than that. If Stern's switch to Sirius causes a migration away from free radio, Viacom's Infinity Broadcasting will be dealt a brutal blow.