Sirius XM Holdings Inc (SIRI)

[LonJandis]

Howard went on a rant this morning slamming CFO David Frear. Frear made a public statement recently that if Howard wants to stay, he will have to take a pay cut. Article and link are below.

Howard's argument is that Frear makes 3.3 mil a year and is 100% replacable by any CFO in the business, where as Howard is a unique talent, and joined the company when they had 600,000 subscribers and today they have 20+ million. His best point though, was that Frear has no business announcing any of this, as he is not in the loop with Howard's contract negotiations, and he has no business publicly stating his opinions on the matter. Howard has also certainly brought on and retained more subscribers than most of the content on SiriusXM, such as Oprah, NFL radio, Martha Stewart, etc.

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From: http://www.hollywoodreporter.com/news/sirius-xm-cfo-howard-stern-56702

Sirius XM CFO: Howard Stern Might Have to Take a Pay Cut; Possible 10 Days Left on Air
4:09 PM 12/6/2010 by Paul Bond
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433But David Frear remains 'hopeful' that Stern will stay with company.
Howard Stern could broadcast live on Sirius XM for the last time on Dec. 16.

After that, he heads for his annual end-of-year vacation and there still is no decision as to whether he’ll renew his contract, which expires on Dec. 31 and sets Sirius XM back a hefty $100 million every year.

Speaking at a UBS investor conference in New York on Monday, Sirius XM CFO David Frear said he is “hopeful” that Stern sticks with the company, but hinted that if he does it would be for less money.

Frear also acknowledged that there could be other offers Stern is considering, maybe even one from Apple to do a show on iTunes.

“He could decide that he doesn’t want to get up that early in the morning. That he’d like to do a shorter show. That he’d like to do it somewhere else,” Frear said. “The Internet, whether it’s through iTunes or something else, is always a possibility.”

Apple did not respond to requests for a comment.

And it's not only Stern who is expected to take a pay cut, because since Sirius and XM merged there aren’t two companies bidding against each other for content.

“At the time of the merger we were in many long-term contracts,” Frear said. “As they come up for renewal, we’ll have the opportunity to get more
favorable economic terms there.”

When Sirius and XM were competitors striking early content deals with Stern, the NFL, Major League Baseball, NASCAR, Oprah Winfrey, Martha Stewart and others, only 10 percent of the country knew what the satellite radio brands were. Today, 90 percent are familiar with them, said Frear.

“The marketing aspects of these alignments don’t have the same kind of value components to them today that they did several years ago,” Frear said.

Therefore, expect renewal costs “to come down a little bit,” he said. “We go after each new negotiation as if it’s the first time.”

Sirius XM recently inked a new five-year deal with the NFL, but this time around it wouldn’t divulge financial details. It’s first arrangement with
the NFL in 2004 set Sirius back about $220 million for six years worth of programming.

Other big commitments the two companies made prior to their merger include: $600 million to Major League Baseball, $108 million for NASCAR, $100 million
for the National Hockey League, $55 million for Winfrey and $30 million for Stewart.

“It’s all great stuff,” Frear said. “We’ll continue to work hard to get fair and reasonable costs for the company.”