RADIO ON: Who’s Laughing Now?

stern.jpgCNN MONEY: Satellite radio subscriber growth is flat, the likely victim of a slowing U.S. economy and waning interest in the once-novel medium. Meanwhile cash is running dry. Last month, citing heavy debt costs, a tightening credit market and sluggish car sales, Goldman Sachs analyst Mark Wienkes slashed his stock price targets for Sirius and XM, raising the prospects that there may be a financial black hole ahead for the combined company. If so, analysts expect Sirius-XM to take a hard look at programming costs, either by waiting until existing contracts expire or using the onset of a financial crisis to force everyone to the bargaining table sooner. The combined company’s market dominance, analysts say, will give it the necessary leverage to cut programming costs by as much as 30%.

One obvious target: Howard Stern’s $500 million package, which doesn’t include the roughly $200 million in Sirius stock he’s received for meeting subscriber targets. Depending on the health of the combined company, Stern and his agents may be in for a tough negotiation. “The question is, is there anyone out there who would pay him $701 million,” asks Scott Cleland, a Washington-based analysts with Precursor. “Good luck.” MORE

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