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Bob Meyer

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Howard Stern�s Huge Stock Gain Reinforces Incredible Leverage Possibilities Of Barter

The ubiquitousness of radio�s �shock jock� Howard Stern the past week has been remarkable, even in this day of hype and media oversaturation.

In October 2004 Stern made the decision to leave terrestrial radio�s Infinity Broadcasting for Sirius Satellite Radio, when he signed a 5-year contract with them i.

Understandably, the story focused on the mind-boggling $500 million agreement, with little notice regarding the possibilities from being partly paid �in-kind� through the issuance of 34.4 million shares of stock. The 2.5% stake in the company made him one of the largest individual shareholders.

Although the stock had a market value of $110 million at the time of the agreement, critics questioned taking any payment other than cash from a struggling company that was losing money and in a street-fight with competitor XM Radio for subscribers.

However, Stern realized the incredible leveraging potential of bartering. His choice to do so not only validates a belief in himself but his wisdom to have an ownership position a company he will help build. Such actions also reinforce the value of barter as a unique business technique.

Incredibly, within 16 months from the agreement date the value of Stern�s stock holdings increased from $110 million to $219.8 million. The doubling is due in no small part to the story�s immense exposure, Howard Stern�s fame, and the personal selling efforts of Stern himself. But let�s not overlook the huge additional payoff that occurred because he chose to barter for partial payment by accepting stock, rather than going for an all-cash deal.