Yesterday on Howard Stern's show, Sirius CEO Mel Karmazin talked about the future for a merged satellite radio company. While he didn't say Opie's and Anthony's names directly, he might as well have. The topic of conversation turned to satellite radio programs that are on both regular radio and satellite radio. And the only show to make that move from satellite back to free radio is Opie and Anthony. It wasn't really all that cryptic a conversation. Karmazin went on to say that he did not understand the need or benefit of having satellite talent shared with the competition at free radio.
So what does that mean for Opie and Anthony and their future in a merged satellite world?
First and foremost, it appears that if Karmazin has his way, the deal between Opie and Anthony and CBS will not be renewed. Karmazin has always been in lock-step with Howard Stern, and it is readily apparent from the Stern soundbites yesterday that Stern wants Opie and Anthony off of free radio completely. Certainly if the deal is good enough, Karmazin (a historically brilliant businessman) will find a way to follow the money, even if it means striking a deal with CBS.
Let's assume that he doesn't renew the deal with CBS. Does this mean awful things for Opie and Anthony? Not necessarily. If Karmazin turns down a deal with CBS, that means that he will be counting on being able to monetize Opie and Anthony's channel to a greater extent than the fees that CBS is paying to have them do three hours in the morning every day.
Let me try and paint a picture of what I think the future should be. And this assumes that the combined company can overcome the technical hurdles that they face going forward in combining services.
Opie and Anthony should keep their channel, and Howard Stern should keep both of his. Nothing else has to change. If Karmazin wants to pull Opie and Anthony off of free radio it will be his prerogative as the CEO of the new combined company. One thing that is certain, though, is that Opie and Anthony are one of the most valuable assets to XM today. There is no reason why they wouldn't be just as valuable as an asset to the combined company in the future. Mel and Howard may be buddies, and they may agree on a lot of things, but Mel also has to remain buddies with all the shareholders of the combined deal. That will include a large bloc of people who were shareholders of XM. Even Sirius shareholders will be looking to maximize value of the whole company. A strategy of maximizing the value of the company should never include alienating a large portion of the audience of one of the merging parts.
That should mean two things. Opie and Anthony will be able to do their show as they wish on their own channel handling their own programming. Opie and Anthony aren't as valuable an asset when they are handcuffed, but that doesn't meant that O&A aren't capable of seeing the big picture of a combined satellite future.
The quote from yesterday's Opie and Anthony show that is most instructive is from Greg "Opie" Hughes when he said,
"Mel knows if Howard leaves us alone, we leave him alone. Mel has always known that, but the problem was when Mel gave us the gag order, Howard was still able to say whatever the hell he wanted about us. That is where the real issue was."
This is as close to a concession as I have ever heard from Opie and Anthony. They obviously feel that they are somewhat backed into a corner, with the man who fired them previously, Mel Karmazin, at the helm of this new company. Their stance, when reduced to a single sentence, is "We have no problem respecting the new company and the new situation as long as we are shown the respect that we feel that we have earned."
I guess we will find out whether Karmazin feels that they have earned that respect if and when the merger is approved and as the consolidation begins. As one of the top assets on the XM platform, and after restarting their careers from ground zero, Opie and Anthony have done well to make the argument. The bottom line is that I don't think Mel Karmazin wants to find out just how many subscribers are tied directly to Opie and Anthony by counting them as they walk out the door, so expect a compromise of some kind. It is the best thing for the company and its shareholders.
And as funny as it may seem, as a beneficiary of stock success, it would be the best thing for Howard Stern.
(Disclosure: The author is an XM subscriber and a fan of Opie and Anthony, if you couldn't tell.)Powered by Sidelines