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War Between Sirius CEO Mel Karmazin and Howard Stern, Who Were Once Close. Says Stern’s Agent: ‘Karmazin has said that if he had been CEO at the time, he would have given Stern much less…but then Sirius would not have gotten Stern’

Jun 29, 2011  •  Post A Comment

The Mel Karmazin/Howard Stern lovefest began decades ago, when Karmazin became a big booster of the shockjock after NBC radio fired him in 1985.

But now it’s war between Karmazin and Stern, reports Deadline.com.

According to the article, "[I]t’s getting personal in Round Two of the legal war between Howard Stern and his satellite radio boss Mel Karmazin according to affidavits filed today [June 28, 2011] by Stern and his longtime agent Don Buchwald."

The battle, of course, is about money. Says Deadline, "In the affidavits, Buchwald reveals that in early 2010, he contacted Sirius about why the performance-based compensation that Sirius then owed Stern for 2008 and 2009 wasn’t paid. ‘Sirius claimed that no compensation was due,’ writes Buchwald. He then had Stern’s lawyer write to Sirius’s General Counsel asking for an explanation. The company again refused to pay. ‘Sirius’s lawyer claimed that the subscribers on the XM platform did not count toward the total number of Sirius subscribers and pointed out that we had already received the ‘merger bonus’,’ writes Buchwald."

The story adds these quotes from Buchwald’s affidavit: "Sirius’s CEO, Mel Karmazin, was not at Sirius when I negotiated the Agreement with the company. The CEO at the time was Joseph Clayton. Scott Greenstein [President and Chief Content Officer of Sirius XM Radio] has told me a number of times that Karmazin is unhappy with the size of the Agreement that was negotiated and agreed to by his predecessor, and that Karmazin has said that if he had been CEO at the time, he would have given Stern much less and not given into our demands. He might have tried to do that, but in this case, as I told Scott Greenstein more than once, Sirius would not have gotten Stern."

The story also quotes from an affidavit filed by Stern: "Our Agreement is clear — the stock awards are based upon the total number of subscribers that the company has at the end of any given year. When we were negotiating the agreement, Don raised with Sirius the possibility that Sirius and XM might combine. Sirius never said that, if that happened, it would not count the new subscribers for purposes of the stock awards.”

The article also gives some background to the legal dispute: "[E]ven as Stern was inking [his] new 5-year pact [with Sirius XM], the two men [Stern and Karmazin] were already clashing over Karmazin’s refusal to acknowledge that the company owed Stern additional performance-based stock awards because he exceeded the subscriber targets set in his original agreement with Sirius. Three months later, Stern and Buchwald sued the merged Sirius XM."

Stern’s initial 5-year contract with Sirius was reportedly worth $500 million. When he renewed for another 5-years in December 2010, the new deal was worth reportedly $400 million. The current lawsuit against Sirius was filed in March, 2011.

One Comment

  1. Sirius was losing the battle with XM and Howard Stern’s hiring changed everything. Whether you like Stern or not, he has an Oprah-like, devoted following, and that group moved to Sirius. It not only saved the company, but caused it to quickly pass XM and eventually force the merger. Arguing with Stern over these stock issues is foolish on Karmazin’s part and really hurts his reputation and a radio genius. Which, by the way, Stern has been one of the leading promters of Mel as a genius.

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