A Brand Purchase

Paper Summary:

The paper examines the effect Stern's move to Sirius Satellite Radio has on XM Satellite Radio, its most important competitor and the effect it is bound to have at Sirius itself. The paper reveals that acquiring Howard Stern caused a growth in Sirius' subscription. The paper also notes that Stern is a controversial figure and the company may have to face numerous critics and possible lawsuits for allowing different manifestations on the radio station. The paper relates that there was a negative impact on XM Satellite Radio, but concludes that the success of a company is not necessarily correlated with its brand acquisition campaign.

From the Paper:

"Before referring to the effect Stern's move will have on XM Satellite Radio, its most important competitor, we first of all need to exemplify and particularize with the effect it is bound to have at Sirius itself. First of all, we can relate to a brief cost vs. revenues analysis. As mentioned, the cost of bringing Howard Stern on the team revolved around $500 million per year, equivalent to $100 million a year. At an average yearly price of $142.45 (as of the offer ending July 31, 2006), this would mean that Howard Stern's 'purchase' would have to bring in an expected approximately 700,000 new subscribers every year for a breakeven point. Joseph Clayton, Sirius CEO, said this was easy to achieve and April Horace, analyst with Janco Partners, followed up noting that it was "a good move" ."

Sample of Sources Used:

• Crawford, Krysten. Howard Stern jumps to satellite. CNN Money. October 2004. On the Internet at http://money.cnn.com/2004/10/06/news/newsmakers/stern_sirius/
• Deitz, Corey. A Step by Step Comparison of XM and SIRIUS Satellite Radio Features. At the Internet at http://radio.about.com/od/satelliteradio/ss/blsatstepbystep_2.htm
• Fonda, Daren. Howard Stern: the $500 million man. Business and Technology - Time. December 2005. On the Internet at http://www.time.com/time/business/article/0,8599,1141769,00.html
• Shin, Annys. Setbacks Leave XM With 'Explaining to Do'. Washington Post. November 2005. On the Internet at http://www.washingtonpost.com/wp-dyn/content/article/2005/11/01/AR2005110101621.html
• McShane, Larry. Howard Stern Won't Return From Satellite. Associated Press. May 2006. On the Internet at http://biz.yahoo.com/ap/060510/stern_radio.html?.v=3

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