CNBC Host Blames 'Overpaying' Howard Stern for XM Sirius Woes
Times have been tough financially for media companies across the board and satellite radio has been no exception.
On Aug. 6, Sirius XM Radio (NASDAQ:SIRI) posted a second-quarter loss and the company hasnât lived up to expectations after Sirius and XM completed a merger a little over a year ago. According to âCNBC Reportsâ host Dennis Kneale, part of the satellite radioâs problem is shock jock Howard Sternâs compensation and the companyâs debt.
âI feel so, bad â thereâs, being run by one of what I think is the best executives in media, Mel Karmazin, a great salesman,â Kneale said on CNBCâs Aug. 6 âPower Lunch.â âBut in the end, does it turn out they just overpaid for Howard Stern and they have too much debt? I wonder if John Malone bailed them out temporarily hoping that they kind of go belly-up so they can get a hold of those assets really cheap.â
Julia Boorstin, CNBCâs media and entertainment reporter, agreed with Kneale that the problems could be attributed to Sternâs salary, but also said Sirius XM banked on a better market for auto sales.
âI think that a high-cost structure is a problem, but itâs only one of their problems,â Boorstin said. âThis is a business model that counted on Americans going out there and buying cars and paying for this service once they got it already in their car.â
She explained the company was attempting to expand its business model by offering subscriptions on Appleâs iPhone, but said there was no guarantee that would bring in revenue for the company despite its early popularity.
âI think the meltdown in the auto industry has been a huge problem for Sirius XM and now theyâre trying to figure out another model,â Boorstin continued. âThey have this, this uh, application to download to your iPhone. Tons of people, I believe over a million people very quickly downloaded this application, but once you download it you have to start paying. We have heard a lot of people have downloaded it, but we donât know how many people actually paid for the service.â