CBS Radio has made good Howard Stern’s prediction by filing a lawsuit seeking compensatory and punitive damages from Mr. Stern; his company One Twelve; his agent Don Buchwald; his agent’s firm, Don Buchwald & Associates; and Sirius Satellite Radio, which Mr. Stern joined after signing off at CBS Radio late last year.
Mr. 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.
The lawsuit, filed in Manhattan with the New York Supreme Court, alleges multiple breaches of contract, fraud, unjust enrichment and misappropriation of CBS Radio’s broadcast time. It also seeks damages from Sirius for unfair competition and interference with Mr. Stern’s CBS contract.
In a press release distributed Tuesday, CBS said its 43-page complaint charges that:
On or about Jan. 9, 2006, Sirius paid more than 34 million shares of stock, valued at about $220 million, to Mr. Stern and his agent because by the end of 2005 Sirius exceeded certain subscriber targets that were set in its contract with Mr. Stern. The lawsuit alleges that Mr. Stern was to receive this stock payment in 2010, but an acceleration provision allowed him to receive the compensation as early as January 2006 if the subscriber targets were met. All of Mr. Stern’s actions for which he received this expedited compensation occurred during the time that he was under exclusive contract with CBS Radio, when the Sirius payment terms to Mr. Stern were kept secret.
The contract offered compelling incentive for Mr. Stern to do all that he could to help Sirius reach the subscriber targets by the end of 2005 so he could receive his Sirius stock payment as soon as possible while Sirius’s stock was extremely valuable. 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 more than $200 million for his personal benefit, Mr. Stern misappropriated millions of dollars worth of CBS Radio airtime for his own financial benefit and the financial benefit of Mr. Buchwald and Sirius in contravention of repeated directives by CBS Radio.
Mr. Stern breached his contractual obligation to inform CBS Radio of plans that might have a bearing on his future. The suit charges that Mr. Stern ignored that responsibility and negotiated and concluded his agreement with Sirius in secret.
Mr. Stern continues to breach his contract by refusing to return property that belongs to CBS Radio-recordings of his CBS radio program that, under his contract with CBS Radio, belong to the company.
The suit further charges that Sirius concealed Mr. Stern’s stock interest from CBS Radio and intentionally induced Mr. Stern to breach contractual provisions by offering to accelerate the payment of stock options in exchange for his promoting Sirius on CBS airwaves.