CBS sues Howard Stern for mega bucks
Howard Stern got more than 600 million bucks by moving from Infinity Radio (now CBS Radio) to Sirius Satellite Radio, but now CBS is claiming that it deserves a big chunk of that cash. It's sued Stern and his agent, Don Buchwald, in a New York state court, claiming multiple breaches of contract, fraud, unjust enrichment and misappropriation of CBS Radio's broadcast time. The announcement of the lawsuit by CBS didn't set a specific amount being sought, but a report in the New York Post said Stern's former employer wants a half billion bucks. Even before the lawsuit was filed, Stern called a press conference to fire the first volley at CBS. He disputed CBS' purported claim that he reached a "secret agreement" with Sirius Satellite Radio, since he disclosed it to CBS/Infinity executives and on the air. He also denied that he cost his former employer money by discussing satellite radio on his terrestrial radio show, insisting that it was a legitimate story - - and besides, it helped boost ratings. The CBS lawsuit claims the "secret" part was the more than 34 million shares of Sirius stock that Stern and Buchwald received last month (1/6/05 RBR #4) because Sirius exceeded a certain subscriber target in 2005. All of those subscriber gains came while Stern was still a CBS/Infinity employee and CBS claims he misappropriated its airtime to promote Sirius.
According to CBS, the 43-page complaint charges:
* 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.
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