March 01, 2006
CBS Sues "Shock Jock" and Sirius For Breach of Contract
Of course shock jock Howard Stern's move from terrestrial to satellite radio could not be accomplished without a lawsuit. CBS Corp's radio division has sued Stern, Stern's agent and Sirius Satellite Radio Inc. in Supreme Court in New York, claiming that Stern breached his contract with CBS when he moved to Sirius. The lawsuit essentially alleges that Stern used radio time on CBS to hype up his move to Sirius and, in turn, his payday from the satellite radio company. This from the NY Times:
The lawsuit, which also names Sirius and Stern's agent as defendants, claims Stern improperly used CBS radio's air time to promote his new show with Sirius, which began last month. CBS also claims Stern discussed his plans with Sirius without disclosing them to CBS as required under his contract.
Apparently, this is what CBS wants from the suit:
CBS wants Stern, his agent, Don Buchwald, and Sirius to return any financial benefits they received from using CBS radio's air time to promote Sirius, including the value of a tranche of Sirius shares that Stern and Buchwald received early for exceeding a target for subscriber increases by the end of 2005.
That block of 34.4 million Sirius shares was originally worth $100 million at the time the deal was announced in 2004, but its value swelled to $200 million by the time Stern actually received the shares at the beginning of 2006, bringing the total value of his five-year deal to about $600 million.
At current prices, the shares are worth about $175 million. Stern's deal with Sirius specifies that costs for producing and marketing the show must be paid out of the compensation he receives.
Perhaps CBS also wanted this: Sirius shares fell 2.3% (12 cents) at the close of the market yesterday.
[Meredith R. Miller]
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