• by Erik Sass  @eriksass1, December 9, 2009

After all the hype surrounding Howard Stern's move to Sirius in January 2006, the shock jock and the satcaster may end up parting ways in 2010, per The Wall Street Journal. The news comes as his contract is set to expire, with both Stern and Sirius XM CEO Mel Karmazin positioning themselves for a new round of negotiations. The newspaper quoted Stern on air last month claiming: "I don't think I'm going to be re-signing."

Stern left CBS Radio and signed with Sirius for a five-year, $500 million contract in late 2004, although he didn't join the network for another 15 months. The contract excited comment for being the largest on-air radio talent payout in history, prompting some to question Karmazin's judgment.

However, Karmazin justified the outlay as a necessary investment to boost Sirius' profile and build its subscription base -- something that Stern, with a devoted following among men ages 18-54, was uniquely suited to do. And it appeared to work: from 1.24 million subscribers at the end of 2004, the number increased almost five-fold to just over 6 million at the end of 2006.

But a lot has changed at Sirius since then. First, Stern served his purpose, bringing publicity and millions of new subscribers, but is unlikely to attract more beyond his original hardcore fan base. While some early subscribers may leave with Stern, this could be an acceptable loss in light of the savings, especially if Sirius-XM can retain the majority of the Stern followers, betting they have come to value other aspects of satellite radio.

Second, Stern was recruited during a period of fierce competition for subscribers between Sirius and then-rival XM, which ended with their merger in 2008. The end of competition between the satcasters promised to reduce the cost of acquisition per subscriber for the merged service -- and the premium price of high-profile talent like Stern is one of the main areas where cost reductions could be made.

Also, since Stern, other big names, like Oprah and Rosie O'Donnell have been signed.

For his part, Stern, who retains his fame and audience pull, could easily make the transition back to regular broadcast radio on very favorable terms. While such deals might not be quite as lucrative as the Sirius-XM gig, he would enjoy broader reach and cultural influence.