Stern Vows He’ll Rise Above FCC

Shock jock Howard Stern, whose raunchy antics have redefined talk radio while placing him at the center of a national debate on media indecency, told listeners Wednesday that he was abandoning traditional broadcasting for satellite radio -- a money-losing, unregulated, subscriber-only medium that reaches a fraction of his millions of listeners.

In an announcement heavy with his trademark immodesty, Stern, billing himself as “radio’s biggest star,” said his popular morning talk show would switch in January 2006, from Viacom Inc.’s Infinity Broadcasting to Sirius Satellite Radio, where the heavily fined broadcaster could at last escape Federal Communications Commission scrutiny.

With the new five-year deal, Stern, one of the nation’s top three radio talk show hosts, becomes by far the best-known broadcast personality to migrate to satellite radio -- and the first with the potential to catapult it to mainstream popularity.

But the Sirius deal is fraught with risks for both sides. Stern, who has referred to himself as “the king of all media,” is trading his vaunted broadcasting perch for a role at a niche “satcaster” with just 600,000 subscribers. The host, who reportedly earns $20 million a year at Infinity, could wind up a forgotten and isolated figure if large numbers of his core fans fail to follow him to satellite.

Money-losing Sirius, which along with its larger archrival XM Satellite Radio has struggled for listeners and financial stability, is betting heavily that Stern will bring 1 million new subscribers -- nearly tripling its current audience. Sirius will pay $100 million annually for Stern’s show, which includes salaries for him and his crew as well as the costs of building a new studio and promoting the show.

Stern, 50, painted his move as an era-defining shift.

“I’m leaving radio -- this kind of radio -- and I’m going to the future of radio,” Stern told his listeners. “I think radio the way we’ve done it is becoming obliterated.”

The media landscape has been shifting beneath Stern’s feet lately. In addition to fighting the indecency battles, he is attracting a much smaller audience than he did in his mid-1990s heyday. Stern’s nationwide audience has slipped from an estimated 17.5 million in 1998 to 8.5 million this year, according to Talkers magazine, the trade journal of the talk radio industry.

Even so, his program is No. 1 in its time period in New York on Infinity’s WXRK-FM and No. 1 in Los Angeles among English- language stations on KLSX-FM (97.1), Infinity spokeswoman Karen Mateo said.

In a telephone interview, Stern said his current predicament made it necessary to take a big risk.

“I got into the medium to change things, to be different, to be funny. And increasingly what’s happened is that material I want to do on the air I can’t do.... The rules are changing so rapidly and are so restrictive, especially for me.”

Although Stern for some time has mused on-air about the allure of satellite radio, the timing of the deal took fans and industry observers by surprise, given that Stern still has more than 14 months left on his contract.

Signing a household name such as Stern could be a game changer for satellite radio, with the possibility of luring millions of new subscribers and boosting ad revenue. (Although the music channels on Sirius and XM are commercial-free, the talk, sports and news channels often are not.)

Sirius subscribers pay $12.95 a month for the service, which also requires a special receiver in the user’s car or home. The company has partnership deals that put the receivers in new vehicles manufactured by DaimlerChrysler, Ford Motor and BMW.

With the Stern deal, Sirius “went from ‘What’s that?’ to ‘I want that,’ ” said Perry Michael Simon, an editor at radio trade journal AllAccess.com. Listeners who knew nothing about subscription radio “will go to Best Buy or Circuit City and ask for the one with Howard Stern.”

Stern’s exit is just the latest challenge facing the “terrestrial” radio business. Analysts say owners of large station groups have diluted the value of advertising time by cluttering programming lineups with too many commercials, driving away listeners and angering advertisers that believe that their messages are getting drowned out. Meanwhile, new technologies such as digital music players are threatening to erode listenership even further.

At the same time, satellite executives are snapping up marquee talent from across the spectrum; Bob Edwards, former host of National Public Radio’s “Morning Edition,” and shock jocks Opie & Anthony recently signed deals with XM.

“It’s not a good picture” for conventional radio, said Richard Greenfield, an analyst at Fulcrum Global Partners.

The Sirius deal opens a new chapter in the stormy career of Stern, whose ribald antics have reshaped talk radio since he burst on the scene in the 1980s.

Stern ranks third behind conservative hosts Rush Limbaugh (14.5 million listeners a week) and Sean Hannity (10 million). But Stern reaches his millions on far fewer stations, about 45, compared with the estimated 600 outlets carrying Limbaugh’s program nationwide.

Still, the indecency controversy made it plain that the shock jock’s show was unlikely to expand beyond New York, Los Angeles and the other mostly big-city markets where it is currently syndicated.

His next move had been the subject of speculation since February, when a risque Super Bowl halftime performance by Janet Jackson set off the latest skirmishes in the culture wars. The battle seemed to rejuvenate Stern, who has spent much of this year railing on-air against conservative critics and the FCC, and his ratings have been on an upswing.

The FCC has levied record fines against Stern. In 1995, Infinity agreed to pay the federal government $1.75 million to resolve more than 100 claims of indecency involving his show.

Under threat of fines and license revocations, station owner Clear Channel Communications dropped Stern’s show this year from six markets after the FCC cited the show for “repeated, graphic and explicit sexual descriptions that were pandering, titillating or used to shock the audience.” In June, Clear Channel agreed to a $1.75-million settlement with the FCC to resolve indecency complaints against Stern and others.

Against that backdrop, the normally ebullient Stern -- known for detailed discussions of bodily functions as well as his exploits with lesbian porn stars -- has increasingly devoted his morning show to bitter attacks on the Bush administration.

FCC Chairman Michael K. Powell, who has spent quite a bit of time policing Stern, suggested that his departure from the public airwaves might be a good thing.

“Satellite radio is one of the many technologies that the commission is strongly promoting to expand the diversity of choices for the American public,” Powell said in a statement. “It is not surprising that notable performers and journalists are turning to a medium that allows them to paint with a broader palette.”

Satellite might seem like a dream match for Stern. Sirius and XM offer uncensored channels with raw comedy routines and profanity-laden rap music, not to mention entire channels catering to fans of mambo and opera. Unlike traditional broadcasters, the satellite companies are not subject to content restrictions from the FCC.

But it’s far from clear how Stern’s act will fare in an uncut and uncensored version. One broadcast executive, who spoke on condition of anonymity, said Stern’s mass appeal depended on the suggestion of naughtiness -- on stopping just short of the line, rather than crossing it. “He’s a master of the theater of the mind,” the executive said.

But Stern said there were no worries that his satellite show would be overrun with profanities: “That’s not funny.... I’m trying to get back to the show I could air 10 years ago.”

Wall Street analysts said the exit was a blow to Infinity, which has been among the weakest divisions within Viacom for several years.

Stern said in an interview that Viacom executives had pressed him to renew his contract. That effort hit a setback, though, when Viacom President and Chief Operating Officer Mel Karmazin -- a fierce Stern supporter -- left the company after a falling-out with his boss, Chief Executive Sumner Redstone.

Viacom executives were subdued in their reaction.

“We at Infinity have enjoyed our years with Howard,” the company said in a statement. “We wish him well in his new foray into the world of pay subscription radio beginning in 2006.”

Despite the months of speculation, few expected a deal to come so quickly. Stern told listeners of his radio program Wednesday morning that Robin Quivers, his longtime on-air sidekick, did not even know of the deal until he announced it on the show, complete with a timpani drum roll.

Sirius Chief Executive Joseph P. Clayton said Stern “is capable of changing the face of satellite radio and generating huge numbers of subscribers for Sirius.”

News of Stern’s move sent Sirius’ stock jumping 15% to $3.87 on Nasdaq.

Both Sirius and XM have been growing rapidly but still lag far behind broadcast radio and have a long way to go before they recover a combined investment of $4 billion to get established. Sirius, which reported a loss of $226 million in 2003, said this year that it would need to sign up 2 million subscribers before it broke even.

But none of that worries Stern, who insists that his move will help turn satellite radio into a mass phenomenon. He was equally emphatic on the subject of the medium that made him rich and that he is now leaving with such fanfare.

As he put it: “I think FM radio is dead.”

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Times staff writers Sallie Hofmeister, Meg James, John O’Dell and Lynn Smith and correspondent Steve Carney contributed to this report.