Wednesday, December 13, 2006

Howard Stern's Math Doesn't Add Up
December 13, 2006

Howard Stern usually makes headlines for his appearances on David Letterman's late night program because of outrageous stunts. After last night's stop by the Ed Sullivan Theater, he's making them as "Bravo Sierra" is being called over the satellite radio personality's claims regarding Sirius Satellite Radio subscription counts.

"It is going so great," Stern said on Letterman's program last night. "We started out with 600,00 listeners. In one year - January will be one year - we now have almost six million."

That statement prompted a letter from WFNY (Free-FM)/New York PD John Mainelli to Sirius SVP/Communications Patrick Reilly asking, "Are you penny-ante Sirius people so desperate for subs these days that Howard Stern has to go on David Letterman as he did last night and flat-out lie -- brazenly and shamelessly? From '600,000 to 6-million subscribers in one year'? I thought he misspoke himself when I saw that in a Sirius transcript two weeks ago. But I guess this is how low he, you and Melvin have sunk."

Let's take a look at the numbers:

  • Stern announced his move to Sirius on October 8, 2004. According to their quarterly earnings report, Sirius closed out the third quarter of 2004 with 662,289 subscriptions. Sirius also announced at the same time that they had surpassed 700,000 subscriptions on October 18, 2004, ten days after Stern's announcement.
  • Meanwhile, XM announced in their quarterly earnings report that they had closed out the third quarter of 2004 with 2,516,023 subscriptions.

Using those numbers, if Sirius hits the low end of their year-end guidance of 5.9 million subscriptions, it will mean the company has added 5,237,711 million subscriptions since Stern's announcement that he would be joining the company. Meanwhile, if XM hits the low end of their year-end guidance of 7.7 million subscriptions, then XM will have added 5,183,977 subscriptions in the same time period.

The bottom line... In two years, not one year, as Stern claimed, Sirius will have gone from 700,000 to just under six million subscribers. And Sirius will have added just 53,734 more subscriptions than XM since Stern announced he was leaving terrestrial radio.

"You'd think this blatantly false public dissemination of information -- at a time when satellite radio is under severe attack on Wall Street -- is something the SEC and NASD would look into," wrote Mainelli in his email to Sirius. Whether that holds true or not remains to be seen, but one thing is for certain, the numbers don't add up to back Stern's statements.