Howard's end...and beginning

Starting in January of 2006, Howard Stern will be leaving the traditional radio airwaves--and the constant treat of FCC indecency fines--for satellite radio, where he will be free to say anything he wants. Last year, Sirius Satellite Radio announced that it had signed Stern to a five-year multi-million dollar contract starting January 1, 2006.

For Viacom, owner's of Stern's current radio home, the financial impact is minimal. Stern brings in about $100 million in ad revenue a year, some speculate that Viacom will find it difficult to replace Stern and the ad sales he brought in. Viacom is looking to have as many as six hosts fill Stern's current time slots. Without Stenr's expensive contract, profits could get a boost, assuming the decline in ad revenues is not too steep and they wont have to worry about FCC fines.

Sirius could wind up seeing a large boost in subscribers and revenues. As of Sept. 15, Sirius had 2.1 million subscribers and the company has said it expects to have 3 million by the end of this year. Stern's presence on Sirius could even lead to subscriber gains against its rivals.

What does this deal mean for investors in Sirius and Viacom? What is the opportunity cost of Stern moving to Sirius? How does this effect the market? How is the demand for Sirius effected by this deal? How is the demand for Viacom's Infinity Broadcasting effected by this deal? Who do you think got the better deal?