CBS Radio is looking for "payback"

CBS Radio is filing a lawsuit against Howard Stern, his agent, and Siruis Satellite Radio. They claim that Howard Stern was in breach of contract because he mentioned his move to Sirius while on the air at CBS. CBS claims that he used "millions of dollars worth of CBS broadcast time" to promote his move to Sirius. They say that his contract has a clause stating that he will have to discuss and "radio projects" before mentioning them on the air. CBS Radio also says that Howard Stern had a "secret" deal going with Sirius. Howard Stern had a quota of new subscribers that he needed to fill in order to get 34.4 million shares that currently would be valued at more than $200 million dollars. Mr. Stern was to receive the shares by 2010 unless he filled the quota early, which he did. The reports floating around are that he meet the quota and he got his shares, and according to CBS they did not know about this. I now have Sirius Satellite Radio in my car, but I do turn it off to listen to the regular radio when I want. On March 2nd, Howard was talking about this and he says that he mentioned this part of his contract with Sirius to Les Moonves, which is the CEO of CBS.

This lawsuit is being called a "personal vendetta" of Les Moonves by Howard Stern and others as well. I am going to to try and get a copy of the 43-page complaint being filed against Mr. Stern. Once I get it, I will post it if I am allowed to do so, in the mean time here are some excerpts that most news sources are reporting.

The 43-page complaint charges: (The Smoking Gun has scanned the case filing document for this case and is available for viewing.)

• Howard Stern repeatedly and willfully breached his written contract with CBS Radio over the last 22 months of that contract, misappropriated millions of dollars worth of CBS Radio airtime for his own financial benefit, and fraudulently concealed his interest in hundreds of millions of dollars of Sirius stock while promoting it on the air.



• That on or about January 9, 2006, Sirius paid over 34 million shares of stock, valued at approximately $220 million, to Stern and his agent because Sirius exceeded by the end of 2005 certain subscriber targets that were set in the Sirius-Stern contract. The complaint alleges that the Sirius-Stern contract provided that Stern was to receive this stock payment in 2010, but it had an acceleration provision that allowed Stern to receive the compensation as early as January 2006 if these subscriber targets were met. All of Stern's actions for which he received this expedited compensation occurred during the time that Stern was under exclusive contract with CBS Radio, when the Sirius payment terms to Stern were kept secret.



• This contract thus provided a compelling incentive for Stern to do all that he could to help Sirius reach the subscriber targets by the end of 2005 so that he could receive his Sirius stock payment as soon as possible while Sirius's stock was extremely valuable. Without the accelerated payment, Stern would risk the decline of the Sirius stock value. By taking action on CBS Radio's airtime in 2004 and 2005, Stern assured himself of immediate access to $200 million in assets that could be readily converted to cash.



• By engaging in continuous promotion of Sirius on CBS Radio airtime without any payment by Sirius to CBS for these advertisements and by pocketing over $200 million dollars for his personal benefit, Stern misappropriated millions of dollars worth of CBS Radio airtime for his own financial benefit and the financial benefit of Don Buchwald, his agent, and Sirius in contravention of repeated directives by CBS Radio.



• That Stern also breached his contractual obligation to inform CBS Radio of plans that might have a bearing on his future. Under the Agreement, Stern had the obligation to give CBS Radio the first opportunity to discuss participation in radio projects that are conceived during the term of the Agreement, even if the concept or project was launched or implemented after the term. Stern ignored that responsibility, and negotiated and concluded his agreement with Sirius in secret.



• To this day, Stern continues to breach his contract by refusing to return property that belongs to CBS Radio -- the recordings of his CBS radio program that, under his Agreement with CBS Radio, belong to the company.

Howard Stern has a lot of people in his corner on this, even some that do not normally support him. Jack Thompson is an advocate for "decency", and even he can see that this is a personal strike against Howard Stern. He will agree that if CBS did not like what Stern was doing when he mentioned Sirius they could have stopped him. I will admit that I listened to Howard Stern more often after I heard about his move to Sirius. Mr. Thompson and others agree that CBS used Stern's boost in listeners after his announcement in order to make more money in advertising revenue. CBS Radio could have stopped him and they did not except for one day where he was suspended. CBS Radio wants to have their cake and eat it too. After a while his listeners would refer to Sirius by saying, "ugh, ugh ugh". At first I did not know why they would do that but it became apparent afetr a while that they would say that instead of saying "Sirius".

"The Howard Stern Show" was syndicated throughout the country while he was on regular radio. The radio stations that would broadcast the show to other parts of the country would pay to be able to do so. Some of these stations would censor their broadcast of the show to prevent their listeners from hearing about Sirius. If they could do this, why didn't CBS Radio if they did not like it. I myself bought Sirius for two reasons. I don't really listen to music very much, and I like talk radio. I have more choices for my preferences on Sirius. I do tune into regular radio when I want to in any case. I will keep you posted on the situation.

UPDATE - CBS has reached a settlement with Howard Stern, but it has been reported that the settlement has not been signed yet. The only details that I was able to obtain were the following. Sirius will pay $2 million dollars to CBS for the use of Howard Stern's old braodcasts. Further details remain confidential according to the media. Howard Stern has said that the tapes from his old shows are about 23,000 hours worth of radio broadcasts. He also says that the old shows are now going to be used in an uncensored format. Currently he is organizing the methods by which he will use these tapes.

Source: Stern Support From Unlikely Source
Source Date: March 1, 2006

Source: Stern Gets Old Tapes, CBS Gets $2M
Source Date: May 25, 2006

Source: CBS Suing Shock Jock Howard Stern
Source Date: February 28, 2006

You are visitor number: 472

Please forward all questions and/or comments via the contact page.