Howard Stern's Huge Stock Gain Reinforces Incredible Leverage Possiblities of Barter

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.