Sirius XM seeks dismissal of Stern lawsuit

By on May, 31 2011 with Comments 0

Sirius XM has asked a New York court to throw out the lawsuit that Howard Stern and his agent filed seeking more money under the five-year contract through last year which had already paid him over $600 million. Not surprisingly, Sirius XM claims Stern has already been paid all he is due.

After Sirius XM CEO Mel Karmazin announced at the company’s shareholders meeting last week that the company was filing the dismissal motion that day, writer Spencer Osborne at the Siriusbuzz.com website dug out the documents from the court. His story revealed some new information about the court battle.

In our view, the most interesting thing is that even as it hired Stern in late 2004 Sirius Satellite Radio was looking at the possibility of a merger with then-rival XM Satellite Radio. The letter agreement setting out the terms of Stern’s employment by Sirius states, “In the event Sirius merges with XM Satellite Radio, Sirius shall pay you a fee of [redacted], whereupon the HS [Howard Stern] Programs may be broadcast to all subscribers of the surviving company.

Although the amount of that payment was redacted in the copy made public in the court record, Sirius XM says the fee was paid to Stern after the merger and that’s all he is due because of the merger.

Stern’s lawsuit basically claims that he should be able to count all Sirius and XM subscribers post-merger toward the bonuses spelled out in the contract for helping Sirius exceed its subscriber estimates. For example, he was to receive a bonus if subscribers exceeded by more than six million the internal target of 12.1 million by the end of 2010. Sirius alone was well short of that, but including XM the subscriber count at the end of 2010 was just shy of 20.2 million.

But, the company filing noted, only XM subscribers who paid an additional $4.04 per month for the “Best of Sirius” package received Stern’s program (and other Sirius exclusives, including the NFL). Likewise, Sirius subscribers were offered a “Best of XM” package. “At most, the ‘Best of’ packages had only approximately 1 million Sirius subscribers and approximately 1 million XM subscribers,” Sirius XM stated in the court filing. In other words, it added, “At least 91% of XM subscribers did not receive the Howard Stern Show.”

There’s no indication when the court may rule on the motion for a summary judgment to dismiss the case.

RBR-TVBR observation: OK, it’s a lot like watching the NFL standoff between billionaire owners and millionaire players. Do any of them really need more money? But business is business and each side has its own view of what the contract means. So, Stern will help send the children of several lawyers to good colleges as he fights for more compensation. Plus, it gives him content for his show.

Filed Under Radio News

About The Author: RBR-TVBR has been reporting on the business of broadcasting for nearly three decades. Beholden to no one, it is independently owned.

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