Stern’s deal is fatter, but he’s got to work a four-hour day. Still, $93,000 an hour is nothing to sneeze at – unless you’re Winfrey, pulling in $705,000.
By MSN Money staff and wire reports
Think Howard Stern is getting a lot to be on Sirius Satellite Radio? Well, if Oprah Winfrey worked as hard as a shock jock, her pay package from XM Satellite Radio would be worth more than $3 billion.
That's the analysis of Ron Reuven, president of Reuven Enterprises. Reuven told CNBC's "Squawk on the Street" that when looking at the contracts by a per-hour basis, Stern doesn't look so expensive compared to Winfrey.
Here's how it breaks down: Stern has a four-hour show, five days a week, and he and his crew are paid $150 million a year. That works out to about $93,000 per hour.
Winfrey is doing a 30-minute show every week. At about $18.3 million per year, she's raking in about $705,000 for every hour.
If Winfrey were spending as much time on air as Stern, XM would have to pay her $3.7 billion for five years.
"This is not to say that (Winfrey's) contract is a bad contract," Reuven said. "It is going to give them a lot of publicity. But the reality is that the Howard Stern's contract technically is not as expensive as some make it out to be."
So, which is the better stock? Reuven likes Sirius because of its lower valuation.
The battle for the skies
Sirius closed out 2005 with 3.3 million subscribers and expects to top the 6 million mark before the end of the year. XM, currently about 6 million subscribers strong, expects more than 9 million by year's end. That’s explosive growth and a reason so many investors continue to believe, despite the ever-rising cost of acquiring new subscribers.
Both Sirius and its larger rival are spending heavily to expand their emerging businesses, which charge about $13 a month for dozens of channels of commercial-free music, as well as talk, news and sports.
Sirius said the cost of adding new subscribers, or subscriber acquisition costs, was $113 per subscriber for the fourth quarter and $139 for the year, below its forecast of $145 for 2005. By contrast, cost per user at XM, which launched its service one year ahead of Sirius, was $89 in the quarter, though that was up 39% from the previous year.
Last year, Sirius posted a loss of $261.9 million, or 21 cents per share. For the full year, XM posted a loss of $675.3 million, or $3.07 per share. Forecasters see their subscriber base reaching as high as 20 million, spreading their huge fixed costs for talent and hardware over a much larger number.
Building big-name lineups
Sirius, which is based in New York, said it added a total of 1.27 million subscribers in the fourth quarter, the lead-up period before it added the hugely popular Stern to its lineup in early January.
During that time, rival XM spent heavily on marketing and promotion to counter the threat from Stern. XM surprised investors on Thursday with much higher marketing expenses and the sudden departure of one of its directors over concerns that the company was spending too much money.
Sirius's five-year contract with Stern was originally worth $500 million, but its value swelled to $600 million due to the appreciation of Sirius' shares. Sirius also announced Friday it had reached a new agreement to carry the Fox News and Fox News Talk channels beginning March 15; both are currently in the XM lineup. Sirius also counts Martha Stewart among its talk radio staples.
In addition to Winfrey, XM has also signed big-ticket programming deals, including a $650 million pact with Major League Baseball and an exclusive NASCAR broadcast.
http://moneycentral.msn.com/content/invest/extra/P145081.asp
By MSN Money staff and wire reports
Think Howard Stern is getting a lot to be on Sirius Satellite Radio? Well, if Oprah Winfrey worked as hard as a shock jock, her pay package from XM Satellite Radio would be worth more than $3 billion.
That's the analysis of Ron Reuven, president of Reuven Enterprises. Reuven told CNBC's "Squawk on the Street" that when looking at the contracts by a per-hour basis, Stern doesn't look so expensive compared to Winfrey.
Here's how it breaks down: Stern has a four-hour show, five days a week, and he and his crew are paid $150 million a year. That works out to about $93,000 per hour.
Winfrey is doing a 30-minute show every week. At about $18.3 million per year, she's raking in about $705,000 for every hour.
If Winfrey were spending as much time on air as Stern, XM would have to pay her $3.7 billion for five years.
"This is not to say that (Winfrey's) contract is a bad contract," Reuven said. "It is going to give them a lot of publicity. But the reality is that the Howard Stern's contract technically is not as expensive as some make it out to be."
So, which is the better stock? Reuven likes Sirius because of its lower valuation.
The battle for the skies
Sirius closed out 2005 with 3.3 million subscribers and expects to top the 6 million mark before the end of the year. XM, currently about 6 million subscribers strong, expects more than 9 million by year's end. That’s explosive growth and a reason so many investors continue to believe, despite the ever-rising cost of acquiring new subscribers.
Both Sirius and its larger rival are spending heavily to expand their emerging businesses, which charge about $13 a month for dozens of channels of commercial-free music, as well as talk, news and sports.
Sirius said the cost of adding new subscribers, or subscriber acquisition costs, was $113 per subscriber for the fourth quarter and $139 for the year, below its forecast of $145 for 2005. By contrast, cost per user at XM, which launched its service one year ahead of Sirius, was $89 in the quarter, though that was up 39% from the previous year.
Last year, Sirius posted a loss of $261.9 million, or 21 cents per share. For the full year, XM posted a loss of $675.3 million, or $3.07 per share. Forecasters see their subscriber base reaching as high as 20 million, spreading their huge fixed costs for talent and hardware over a much larger number.
Building big-name lineups
Sirius, which is based in New York, said it added a total of 1.27 million subscribers in the fourth quarter, the lead-up period before it added the hugely popular Stern to its lineup in early January.
During that time, rival XM spent heavily on marketing and promotion to counter the threat from Stern. XM surprised investors on Thursday with much higher marketing expenses and the sudden departure of one of its directors over concerns that the company was spending too much money.
Sirius's five-year contract with Stern was originally worth $500 million, but its value swelled to $600 million due to the appreciation of Sirius' shares. Sirius also announced Friday it had reached a new agreement to carry the Fox News and Fox News Talk channels beginning March 15; both are currently in the XM lineup. Sirius also counts Martha Stewart among its talk radio staples.
In addition to Winfrey, XM has also signed big-ticket programming deals, including a $650 million pact with Major League Baseball and an exclusive NASCAR broadcast.
http://moneycentral.msn.com/content/invest/extra/P145081.asp
