Mel Karmazin driving force behind Sirius XM’s position that Howard is owed no additional compensation

Deadline Hollywood has a great story this morning about the deteriorating relationship between Howard Stern and Sirius XM head Mel Karmazin.

The two have always been close, as any Stern listener knows. Throughout Stern’s career, Karmazin has backed the talk-show host’s often lewd chatter even when it hurt his own career. When Viacom had to pay $3.5 million to the FCC over obscenity charges related to Stern, Viacom head Sumner Redstone used it as an excuse to fire Karmazin.

Stern followed Karmazin to Sirius in 2004. The deal was mutually beneficial. Stern got a platform where he could say anything he wanted to and Karmazin got a high-profile star to help boost sales. At the time Sirius only had 675,000 listeners.

As my colleague Joan Lappin has written, after recent contract renegotiations, Stern sued SiriusXM claiming he had been cheated out of subscriber-related bonuses. Subscribership at the satellite radio company grew to 3.3 million one year after Stern signed on. Today the combined Sirius XM has 20.5 million subscribers. According to our estimates, Stern earned $76 million over the last 12 month which helped him rank 26th on our annual Celebrity 100 list.

Now Deadline is reporting that the suit reflect Stern’s falling out with Karmazin.

But the real surprise, several of my sources with knowledge of the dispute tell me, is that Mel is the driving force behind Sirius XM’s position that Howard is owed no additional compensation. Even more of a shocker, they claim Karmazin was never happy with the original Stern/Sirius- $80 million a year in cash and $20 million in stock to program two channels starting in 2006 as well as bounties if Sirius’ subscriptions passed certain milestones — negotiated before Mel arrived. And, here’s the real stunner from my sources: allegations that Mel didn’t take care of Howard financially as well as the world believes: “Mel Karmazin does a much better job of taking care of Mel Karmazin than most other Sirius shareholders,” accuses one of my sources.

The bad blood won’t likely chase Stern away from satellite radio and with Sirius and XM merged, he doesn’t have many options aside from terrestrial radio (where he would once again be under the thumb of the FCC) or an Internet-only program which would have trouble attracting the drive-time listeners his show depends on.

Karmazin told investors that the company would ask for a summary judgement in the Stern lawsuit but that he didn’t expect it would be dismissed. If the case goes to trial, a lot of details about problems between the two men could be aired in public.

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