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Analyst: Stern Pay, Break-Even Point Higher For Sirius
January 27, 2006 at 11:48 AM (PT)
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Influential BANC OF AMERICA SECURITIES analyst JONATHAN JACOBY has raised both his estimates of the true cost of HOWARD STERN to SIRIUS SATELLITE RADIO and the number of subscribers it will need to break even, and warns that the initial STERN-related subscription surge has fallen off. JACOBY now estimates that STERN's compensation package will cost SIRIUS about $675 million ($400 million cash) rather than $500 million, and that the company will need to add 2.4 million incremental subscriptions, up from his previous 1.5 million estimate.
JACOBY also said that his checks of the retail market show that sales of receivers are slowing despite continuing discounting, and that ad revenue for STERN's show will reach about $20 million this year. The analyst says that STERN will result in about 500,000 net subscribers added in 2005.

