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Howard Stern will bring his colourful brand of entertainment to Sirius XM for another five years, extending a lucrative partnership between the controversial US radio personality and America’s dominant satellite radio company.

Mr Stern’s current five-year $500m contract was set to expire this month, and the speculation that he might not renew it sent Sirius XM shares down in recent weeks. Terms of the new deal were not released.

“Essentially it is a positive,” said Miller Tabak & Company analyst David Joyce. “Had he left, yes they would have saved an estimated $60m next year, but there would have been a big hit to [revenues].”

The deal is the latest good news for Sirius XM, which recently made a deal to broadcast National Football League games until 2016, and also has contracts with Oprah Winfrey, Martha Stewart and Major League Baseball.

With this emphasis on celebrities and sport, Sirius XM has managed to convince users to pay for a premium version of a service that is otherwise free. “On my first day in satellite radio Sirius had approximately 600,000 subscribers,” said Mr Stern. “Today, the two companies have 20m.”

Sirius XM nearly went bankrupt two years ago as costs rose in the midst of the financial crisis and plunging sales of new cars threatened sales of its in-car radios.

But Liberty Media, led by chairman John Malone, came in with a $530m offer for 40 per cent of the company. “Malone was there in the nick of time when the credit markets froze,” said Mr Joyce.

Since then shares in the company have rebounded from less than 10 cents a share to $1.40 today, making handsome returns for Mr Malone. Sirius XM has reported four consecutive quarters of profitability and continues to increase its subscriber base, largely through pre-installations in new cars sold in the US.

Mr Stern rose to infamy on the public airwaves, pushing the boundaries of decency with guests including pornographic film stars. In 2004, Clear Channel, which carried Mr Stern’s show, was fined $495,000 by the Federal Communications Commission for indecent content aired on his show. Following that, Clear Channel cancelled Mr Stern’s show permanently. He joined Sirius XM shortly thereafter.

“We are thrilled that he will continue to provoke, engage and entertain,” said Mel Karmazin, Sirius XM chief executive. “Howard forever changed radio.”

Since moving to satellite radio, Mr Stern has maintained a lower public profile, even as other radio personalities such as conservative hosts Rush Limbaugh and Glen Beck have thrived on the public airwaves.

“Since he’s not on public radio, he hasn’t had to be so visible,” said Mr Joyce, noting that, with his handsome contract, “he doesn’t need the incentive.”

Copyright The Financial Times Limited 2017. All rights reserved.

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