Talks with Howard Stern Getting Sirius (Nasdaq:SIRI)

Speculation is rampant over the battle between Sirius XM Radio(Nasdaq:SIRI) and Howard Stern over renewing his contract, which has been $500 million before.

The existing contract with Stern expires on December 31, 2010, but the last show of his will air on Sirius XM on either December 16 or 17.

With revenues for 2009 coming in at $2.47 billion, it's hard to believe Sirius could seriously consider paying Stern a package like they did before. It underscores the value of Stern to the company, but also a weak business model that relies so much on one personality. It makes for a very risky investment, even with the monopoly position they enjoy.

Revenue estimate for 2010 for Sirius XM are $2.83 billion, and for 2011, $3.10 billion.

Some believe if Stern leaves, it could dramatically change the performance metrics of Sirius, underlining again the need for Sirius to attract additional talent to the business model.

One thing Sirius could do is file what is called a CT ORDER with the SEC, which would effectively treat Stern's contract as confidential data. But that would seem to undermine the company and its integrity, as how would investors respond to the single most important element of Sirius being hidden from them. It makes no sense from an investment standpoint.

Operationally, Sirius has been doing other things right, as they'll grown their subscriber base while lowering their churn rate, while also pushing their costs down.

There is only about three weeks left for a decision to be made on Stern, and either way will probably be considered a negative on the company, depending on what a Stern deal would involve if he is resigned.

Sirius closed Wednesday at $1.32, down $0.04, or 3.31 percent.