NEW YORK (Hollywood Reporter) – Sirius XM and Howard Stern on Thursday morning did not detail the finances of their new five-year relationship, but at least one analyst estimate of $ 400 million during the contract period, compared with $ 500 million for the previous contract for five years.
Lazard Capital Markets analyst Barton Crockett in the first reaction is estimated that the agreement may be inconsistent with expectations and consistent with Stern has accepted a cash payment in the first transaction of his Sirius, but the athletes roll the possible loss of the portion of his compensation.
Wall Street analysts to wonder though if Stern could work only three, not four days a week, given that he has expressed interest in scaling back the time commitment.
“We have been modeling the Stern will remain, as part of the overall cost of programming flattish, where Stern has continued to receive $ 80,000,000 in cash, consistent with the agreement of the former expires at the end of the year,” said Crockett. “We also assumed there is no stock, move off the sections of $ 100 million, of five years from the previous agreement.”
Crockett told The Hollywood Reporter that while there may be another way Stern could take advantage of his new contract. He mentioned the success of which is based compensation, such as in-kind bonus payments if the launch of its programming on the mobile device hits a certain target, as a possibility. Or it may work less than under the agreements. “There are tons of flexibility to this structure, but we just do not know for sure without disclosure,” said Crockett.
Analysts say it is considered that the new agreement Stern Sirius cost less than the first or the same amount as the most driven CFO David Frear Wall Street observers expect “a long term reduce the overall cost of a simple programming” in the appearance of the conference earlier this week. Crockett said he is maintaining his $ 1.65 price target on Sirius shares.
David Joyce, an analyst at Miller Tabak, also said he was not sure how much of the day Stern will work. Most new model calls for $ 60 million in three days a week, but Stern may well have decided to stay in a four-day total of $ 80 million in the year. Assuming that cash income does not change, a hat will give Stern $ 300,000,000, $ 400 million.
Either way, Wall Street reacted positively to news about a contract extension, which observers believe will allow Sirius to maintain the momentum of new customers without paying more. Plus, giving the company the right to get Stern to mobile devices. shares ended 5.7% higher at $ 1.39 Thursday, far exceeding the overall market was flat.
“This is a net positive Sirius,” Joyce said: “This customer retention talent must save Sirius’ … (and financial) growth.”
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