Mel Karmazin Knows Howard Stern's Worth to Sirius/XM

| About: Sirius XM (SIRI)

The radio man finally understands and plays you something you can move to/You lay back, cut loose your drive power/Your girl leans over and says, "Daddy, can you turn that radio up any louder?" -Bruce Springsteen

Every once in a while the childhood I spent obsessed with radio pays off. Seeking Alpha contributor VFC Stock House, whose articles I generally tend to like, wrote a piece about Howard Stern's lawsuit against Sirius/XM (NASDAQ:SIRI). Unfortunately, VFC Stock House represents the masses who just don't "get it" when it comes to the theatre and showmanship that is well-done radio.

Regardless of their foray into satellite radio, both Stern and Karmazin remain terrestrial "radio guys." The term "radio guy" holds meaning to those who are in or have spent any time in radio. As a former program director of mine used to say, "He just gets it, buddy." Stern and Karmazin get it. They still believe in the power of radio as a means of communication, as a way to make a connection with an audience you cannot see. Like so few of the politicians, celebrities and callers-turned-hosts who become radio "personalities" overnight, thanks to a business full of short-sighted bean counters, individuals like Stern and Karmazin respect radio as a craft that very few can master. They see it and attempt to execute as theatre of the mind. Even though Mel holds the title of CEO, he's still a programmer, a radio guy always.

That said, even if they only know it on a subconscious level, this lawsuit is just a means to facilitate more theatre and a bit of publicity. For goodness sake, it's written more like a novella than a lawsuit. When the time is right, Stern will start talking about the lawsuit on the air. He might even attack Karmazin. While Stern has gotten past the days of wishing cancer on people, it could possibly be a pretty harsh assault. While I am not bullish on SIRI as a long-term investment, I would buy the shares if anything Stern says on-the-air prompts them to tank. I did likewise when he trashed the company's CFO David Frear. It was a profitable trade.

Stern will talk about the lawsuit at the opportune time. One of the things sharp radio guys get is timing. Amateurs shoot first and ask questions later on-the-air. While it may appear that this is how Stern does a show, this is a common and unfortunate misconception. Within a show, over the course of a series of shows, and over the course of a career, Stern remains the greatest radio personality ever, in virtually all areas, but timing at every level stands at the top of the list.

Speaking directly to the lawsuit, I venture that Mel Karmazin agrees with every word of it. In fact, I would not be shocked if he saw a copy of it before Stern and agent Don Buchwald approved it for filing. While I have absolutely no inside knowledge, I would not be surprised if Karmazin even offered ideas on how to spice it up. If you actually take the lawsuit at face value, don't read it multiple times like I have. Simply place your focus on what matters from the suit:

The news of Stern's signing attracted higher-than-expected numbers of subscribers to Sirius even before Stern's show aired on its platform.

Fueled by this growth, Sirius did something that would have been unthinkable before it signed Stern. Sirius acquired XM in a 2008 merger.

The amounts owed to One Twelve and Buchwald represent a fraction of the revenues that Stern enabled Sirius to achieve ...

Sirius never drew a distinction between merger-related and non-merger subscribers. That much is obvious. And, simply put, if it were not for Howard Stern, Sirius/XM would not exist today.

If you own the stock and are bullish, you have no reason to change your tune. In fact, when Stern steps into phase two of the publicity stunt and finally "breaks his silence" on-the-air because he "just couldn't take it anymore," and is "sick of not getting any respect from the very company he helped put on the map," load up on the pullback.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.