Lots of similarities between Yankees' situation with Derek Jeter and Sirius XM's talks with Howard Stern

If Derek Jeter ever went on Howard Stern's satellite radio show, many of the questions would no doubt be about the bevy of beautiful women the Yankees shortstop has dated over the years.

While that would fascinate the bulk of Stern's male audience, the radio personality himself might benefit more by talking with Jeter about his recent renegotiations with the Yankees. There are a lot of similarities between what the Yankee shortstop just went through and what the self-proclaimed king of all media is dealing with right now.

Both Jeter and Stern are New York institutions with national fan bases. Both are considered tops at their position and each has made clutch plays for their teams for years. And lastly, both are arguably approaching the twilight of their incredible careers.

Jeter just finished negotiating a new deal that should keep him in pinstripes until he hangs up his glove in a few years. Stern, who turns 57 next month, is coming to the end of his contract and Sirius XM would like to hold onto him.

The question, though, is at what cost.

The Yankees decided to play hardball with Jeter and talks got heated at times. Perhaps knowing Jeter wasn't really interested in jumping to another team so late in his career, the Yankees negotiated in public and made clear that they felt Jeter's age and disappointing 2010 season meant he should be prepared to take a pay cut.

It's not that the Yankees didn't have a point. After all, prior to this current deal Jeter had made over $200 million with the team. It's not like his next deal was supposed to be some make-good for previous slights. The Yankees saw it more as a reality check. To borrow from Michael Corleone, "It's not personal ... it's strictly business."

Still, Jeter felt disrespected and some fans got irked, because even though they know their idol's best days are behind him, he still puts people in the seats and sells jerseys. Jeter is an icon for the franchise. He has avoided scandals and no one ever questions his work ethic.

Jeter ended up signing a deal that will pay him less (his annual salary dropped from almost $19 million to $17 million) than he was making, but probably more than any other team would have given the aging player. 

Stern was paid handsomely for making the jump from broadcast radio to satellite. His deal is valued at $100 million annually. That's a big figure, but keep in mind that it's for the cost of the show. In other words, his sidekicks and crew get paid out of that as well. Even after that, though, Stern is still being compensated tens of millions a year.

Sirius XM has indicated that it wants to rein in some of its programming costs, although contrary to some reports, it has not said Stern would necessarily have to take a pay cut. It's only natural that Sirius XM wants to save some money. Its stock is trading at under $2 a share, and after merging with XM it has removed one of its biggest competitors. 

"At the time of the merger, we were in many long-term contracts," said the company's chief financial officer, David Frear, at the UBS Global Media and Communications Conference earlier this week. "As they come up for renewal, we'll have the opportunity to get more favorable economic terms there." 

When Stern joined Sirius in 2006, it was groundbreaking, sending a signal that satellite radio was for real. Other stars have followed, including Rosie O'Donnell, Dr. Laura Schlessinger and Oprah Winfrey. It also has a slew of specialty music and sports channels. The service has grown from 600,000 subscribers before Stern joined to almost 20 million now.

Though Stern may not be as crucial to Sirius XM as he once was, like Jeter he is still a vital cog in the machine. Without him, Sirius XM loses not only his followers, but all the free publicity he generates for the company. Is he still worth such a huge paycheck? That's up to the two of them to decide. Stern is brassy on the air, but he is also pretty savvy behind the scenes, and he has a sense of loyalty for Sirius XM boss Mel Karmazin. The two have worked together for decades.

Stern does have some options. A return to broadcast radio is unlikely given that he's probably gotten used to swearing whenever he wants. But Stern has a big-enough following to give going truly solo serious consideration. Stern could launch his own subscription radio show on the Internet and would easily find backers.

That scenario may seem intriguing, but it comes with lots of risks. For starters, much of Stern's audience listens to him in the car on their way to work. While it's not impossible to get streaming Internet content in the car, it's also not as easy as pushing a button. There would be heavy marketing expenses for any new venture. There is also no guarantee that all of Stern's fans would follow him. A chunk went to Sirius, but a lot of the rest just found someone else to listen to on broadcast radio.

There has been speculation about Stern doing some sort of deal with Apple and its iTunes service. But  Apple does not usually pay directly to talent. Stern could sell shows on iTunes and keep a big chunk of the money, but again anything that takes away the live element to his show, or is on a platform that not all his listeners can enjoy together, is a big gamble. It's also not clear that he could make any more money from either approach than what he's making now.

Like Jeter, Stern is probably worth the most to his current employer. If he's offered a new deal for less money, perhaps his producer Gary "Baba Booey" Dell'Abate will take one for the team.

-- Joe Flint

Related post: Gary Dell'Abate talks about life as Baba Booey.

Photos: Top: Howard Stern. Credit: Getty Images. Right: Derek Jeter. Credit: Marcus Donner / Reuters. Bottom left: Mel Karmazin. Credit: Jonathan Fickies / Bloomberg.

 

Comments

[Rick]

The money for Howard's show and crew do not come out of his $100M salary. Also, why would you think listening to his show while it isn't live is a gamble? Don't you in LA listen on H101? That's 3 hours behind "live". Oh yeah, and what about all the people that listen any of the hours night or day on the H100 replays? Please get the story right!

[Joe Flint]

Thanks for your comment.

My reporting, which includes talking to people with knowledge of Stern's deal with Sirius, indicates that the $100 million is for the show, not just Howard. I'm not the first to report this nor will I be the last. If Howard or Sirius call me with a correction, you'll be the first to know.

I think you are confusing listening to something on delay vs listening to a show that is never live. That's what I meant.

Oh, and fyi comments don't appear automatically. We approve them, so if you don't see yours ten seconds after the comment, that doesn't mean you're being ignored.

[White Glossy]

Stern... Stern... Stern... Stern... http://wp.me/p106i6-1Iu

[noodle]

i've heard the same for years about the $100 million.

i dload his show off utorrent and its still awesome a day late. and free. and i can hit pause on my ipod and not miss a thing.

pirate pirate pirate pirate

[Brendan Ryan]

Yankees professional baseball player Derek Jeter, and disc jockey Howard Stern do have a lot in common. In the first place, both men have pledged allegiance to New York City, and have contracts that they're renewing this year. In this case, both parties are two of the world's most famous people, but because of those that work for the organizations who provide the two with jobs not showing signs of being willing to pay them as much money as each person had been making annually or should deserve to be making now, it's become something of a problem in question; it should be reasoned that both Howard Stern and Derek Jeter could be making more money then they are, and that they are having difficulty with the people that they work for when it comes to negotiating how much money they should be getting paid, and that in all hopes they should hang on with the organizations that represent them and renegotiate later under friendlier circumstances. The real question is, are the companies that represent these big acts willing and able enough when it comes to the needs of their talent?

Brendan Ryan

The Brendan Ryan Company
Houston, Texas

[Randy F]

this is high stakes poker.
Sirius is gambling that if Stern leaves then Sirius will lose only 1 million subscribers ($10 million per month, approx $120 million per year).

But if Stern moves to the internet, he becomes a super salesman for his new format. And Sirius will look like a house of cards and lose more than 3 million subscribers.

Stern is essential to keep Sirius intact. In fact, if Sterns signs with Sirius for another 5 year deal, then in 5 years Sirius will face a similar situation.