Big Mouth Negotiations: Howard Stern Vs. Sirius Radio

by drjim on February 12, 2010

What A Fantastic Way To Do Pre-Negotiation Positioning!

What A Fantastic Way To Do Pre-Negotiation Positioning!

The Background

That Howard Stern is famous, nobody can deny. That he is paid a lot of money is another indisputable fact. Where things get interesting (from a negotiating point of view) is what happens when his current contract runs out…

If you’ve ever listened to Howard for any length of time, he’s always talking about his relationship with the Sirius satellite radio network. He’s very grateful for everything that they’ve done for him and his team; however, he’s recently been saying on the air: “I don’t think that I’m going to be re-signing.”

Clearly pre-negotiating posturing is already well underway. Howard is no dummy and he’s got a great way to communicate his negotiating position to the other side of the table via his daily radio show.

Back when Sirius hired Howard away from traditional radio, satellite radio was a new kid on the block and more of a curiosity than a viable radio network However, by hiring Howard, Sirius was able to put themselves instantly into the press and brought themselves to the attention of both new subscribers as well as investors. Since he’s been on board, Sirius has been able to add millions of new subscribers.

Howard was richly rewarded for making the jump to satellite radio – the contract that he got gave him $500M in cash and stock over five years.

The Posturing

The CEO of Sirius radio, Mel Karmazin, has been quoted as saying “It is my strong desire that we keep Howard in satellite radio on terms that are in the best interest of our shareholders.” Clearly Mel is also skilled at the pre-negotiating posturing game also.

The world has changed since Sirius hired Howard five years ago – they don’t need Howard as much today as they did back then. Sirius has been able to add other well-known talent to their lineup included most recently Rosie O’Donnell.

Now that’s all good and well, but having Howard on board is a big plus for Sirius. If he were to leave, then Sirius would probably lose subscribers. What’s interesting is that the company has changed its focus from only growth to now being more focused on profitability.

The reason that anyone can even start to talk about Howard leaving is because it’s a real possibility. The cause is pretty simple — Howard’s paycheck represents a very large expense for the company.

The Possible Outcomes

So as students of sales negotiating, what does all of this show us? Well, we’ve got two parties doing their best to clearly communicate their starting positions to the other side of the table before negotiations even begin. There are a number of different ways that this could all end up.

Although unlikely, it is possible that Howard could once again land a job on traditional airwaves. He had originally left because of the public outrage over the content of his show; however, times have changed and this might not be such a big deal any more. The challenge of “saving” traditional radio might be more than Howard can resist.

What All Of This Means For You

There is much for us to watch and learn from here: Howard wants to work less and make more money, Sirius wants him to work more for less money.

When negotiating starts, it’s almost certain that we’ll see some very interesting posturing occurring by both sides. Due to the public nature of Howard’s job, we’ll be provided with a window into the negotiations and a running commentary on how he wants us to think that he feels about the process.

Turn your Sirius radios on and get ready for some lessons in high-stakes negotiations!

Do you think that Howard Stern will stay on the air at Sirius satellite radio after his contact runs out?

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What We’ll Be Talking About Next Time

As a new year gets underway, it might be a good time to have a talk about one of your most important types of negotiations: asking for a raise. Wait a minute: did I see you just grimace? Did you turn away? Why the reaction – it’s your paycheck after all, shouldn’t you be taking charge of how much you make?

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