Sirius XM Radio Inc., (Nasdaq: SIRI) spiked as much as 9.5 percent in pre-market trading Wednesday when it was announced that Howard Stern had signed a new, five-year deal after months of tense negotiations.  Shares for SIRI have since come down a notch, hovering around $1.40, or 6.39 percent, on volume of 155,571,942, more than two-and-a-half times the company’s average daily volume of 58,679,200.

The news was first reported by Howard during his show this morning. “On my first day in satellite radio SIRIUS had approximately 600,000 subscribers. Today, the two companies have 20 million; and, in my view, we have just scratched the surface of how many people will get on board,” said Stern.  “I am especially excited that my show will now be heard through SIRIUS XM on mobile devices.  Access to my show on mobile devices will open up additional opportunities for my fans to hear me wherever they are.”

Sirius has struggled in recent years and was near bankruptcy early in 2009 when Liberty Media stepped in and invested $530 million. Stern joined Sirius XM in 2005 in a five-year deal valued at $100 million annually. Analysts suggest after covering costs for the show and salaries for his team, Stern himself was likely taking home over $40 million a year. Analyst Barton Crockett of Lazard Capital said Stern’s renewing with Sirius was “consistent with expectations.” Although the details of contract renewal were not immediately disclosed, it is estimated to be similar to the previous deal.

Mel Karmazin, Chief Executive Officer, SIRIUS XM stated “Howard is a great talent and we are thrilled that he will continue to provoke, engage and entertain on SIRIUS XM.  Our agreement is good news on all fronts — it is good for SIRIUS XM subscribers and good for SIRIUS XM stockholders.  Howard forever changed radio and was instrumental in putting SIRIUS on the map when he first launched on satellite radio.  He is one of the few ‘one-name’ entertainers in the country and our 20 million subscribers are lucky to have him.”

Stern had fueled rumors that he would leave Sirius, and used his show as platform for negotiations. It was widely rumored that Stern was in talks for a $600 million deal with Apple (Nasdaq: APPL) to broadcast his show via iTunes was on the works. Stern commented during his show this morning that the rumors were false.

In his Dec. 9 research note, Crockett maintained Sirius at a buy rating with a $1.65 price target as the risk of Stern’s contract renewal won’t exist for another five years. Analyst David Joyce of Miller Tabak, who currently rates Sirius as neutral with a price target of $1.60, believes that Sirius is paying the shock jock $60 million a year. Contrary to most analysts, Joyce said he would “not chase the stock” just because Stern is staying.