Last week, Sirius announced that it had granted Mr. Stern and his manager more than 34 million shares of common stock, currently worth about $225 million, because certain subscriber levels had been reached. That is on top of the $500 million that Sirius had already agreed to pay Mr. Stern for his salary and production costs. Mr. Stern now holds more shares than any other single investor, according to David J. Frear, Sirius's executive vice president and chief financial officer.
Whether or not Mr. Stern's show, which begins at 6 a.m., is a success, his decision to jump from free broadcast to subscription radio has bestowed legitimacy to a medium that many had regarded with skepticism. Sirius's number of subscribers has jumped from 660,000 at the time Mr. Stern's deal was announced in October 2004, to 3.3 million today.
Satellite Radio and the Stern Effect
Satellite Radio And The Stern Effect
Trend Themes
1. Satellite Radio - Opportunity to capitalize on the growing popularity of subscription-based radio services like Sirius.
2. Subscription Radio - Disruptive innovation opportunity to challenge traditional free broadcast radio through exclusive content and higher quality programming.
3. Celebrity Influencers - Leveraging celebrity partnerships to legitimize and promote emerging technologies and platforms like satellite radio.
Industry Implications
1. Entertainment Media - Potential for growth and innovation in the satellite radio industry as subscription-based services gain traction.
2. Broadcasting - Opportunity for broadcasters to explore partnerships with celebrity influencers and adapt to changing consumer preferences for subscription-based radio services.
3. Technology - Innovation opportunities in the development of satellite radio technology and infrastructure to support the expansion of subscription-based radio services.