Howard Stern's old boss, CBS, has filed suit in the New York State Supreme Court against the Sirius Shock jock, his agent, and Sirius, for "multiple breaches of contract, misappropriation and unjust enrichment."
Among the allegations are that Stern promoted Sirius on CBS's air in order to collect on a $220 million dollar stock deal triggered by the number of new subs he generated for the satellite radio company. CBS says Stern did not reveal that the stock deal could trigger as early as January 2006.
CBS also says Sirius induced Stern to breach his contract and that Stern breached his contract by negotiating to move to Sirius in the first place. It even says Stern has property that belongs to CBS: recordings of his CBS show.
"This [Sirius] contract," said CBS in the suit, "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."
CBS says that Stern's use of their airwaves to promote Sirius amounted to misappropriation of millions of dollars worth of airtime. A call to Sirius for comment had not been returnd at press time.
Stern was benched from his CBS radio show in November for a day for excessive promotion of his move to Sirius. He also used CBS' David Letterman show Nov. 17 to promote the move.
According to Reuters, Stern talked about the suit on his radio show Tuesday, calling it a vendetta and saying it was motivated by CBS Radio's flagging ratings fortunes since he left.
Following are the suit highlights as excerpted by CBS:
·•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.
