Stern in Sirius Legal Trouble

Howard Stern claiming former terrestrial radio boss CBS Corp. is "bullying" him and threatening legal action over satellite deal

By Gina Serpe Feb 28, 2006 9:20 PMTags

What goes around, comes around for Howard Stern.

The shock jock, who spent the better part of two years blasting his now ex-bosses at CBS Radio (formerly Infinity Broadcasting) before moving to Sirius Satellite Radio in January, has gotten a unexpected parting gift from CBS in the form of a $200 million-plus lawsuit.

The 43-page complaint, filed Tuesday in New York State Supreme Court, seeks damages from Stern, his agent, Don Buchwald, and Sirius for a litany of transgressions, including breach of contract, fraud, unjust enrichment, misappropriation of radio time, unfair competition and interference with Stern's CBS contract.

Don't let the door hit you on the way out.

At a hastily called preemptive press conference in New York a few hours before the lawsuit was filed, Stern said that CBS, his radio home of nearly two decades, was "bullying" him in a shakedown attempt.

The self-proclaimed King of All Media was clutching a copy of the New York Post, which first reported that CBS honcho Les Moonves was preparing to file the suit. (Stern and Moonves have an antagonistic history; according to the Post, three years ago, Stern lashed out at Moonves, calling him "a snake in the grass and a guy you can't trust" and mocking Moonves' "fake capped teeth and the phony hairdo and everything else.")

The CBS suit claims 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."

Stern and Buchwald received more than 34 million shares of Sirius stock, worth an estimated $220 million, after Sirius hit the 3.3 million subscriber mark. (Fans pay $12.95 a month--or $142.45 a year--for the service.) That made the value of Stern's five-year contract worth upward of $600 million, about $100 million more than initially reported. CBS alleges that Stern kept the details of the stock deal mum all the while talking up his jump to Sirius to boost the value of the shares.

By touting his move from terrestrial radio, the suit contends, Stern essentially gave Sirius free ad time on his CBS syndicated show--this, despite being on orders from CBS suits to tone down the Sirius plugs. (Last November, a month before he signed off from CBS Radio, his bosses there suspended Stern for one day for overtly hyping Sirius.)

Finally, the suit accuses Stern of failing to turn over master recordings of his old show to CBS, which claims to own them.

At his news conference, Stern labeled CBS' claims of the so-called "secret agreement" between him and Sirius completely bogus. Stern said he not only disclosed details of his new contract with CBS, but openly discussed its terms on air.

"I showed them a way to make money," Stern said on his Sirius show Monday. "I syndicated the show...I set record high profits for them. I did everything in this world that they never could have accomplished on their own...But me they obsess on. And me they go after.

"So when somebody tells you that it's not personal, it's personal. All hell is breaking loose over there," he said.

The dig is an apparent reference to the preliminary Arbitron radio ratings Monday, which indicated that Stern's key morning drive-time replacements--David Lee Roth in major East Coast markets, Adam Carolla on the West Coast and Rover in the Midwest--had suffered huge ratings declines since taking over in January.

Roth pulled a 1.8 rating for listeners 12 and older in New York in January, compared to Stern's 7.9 rating in December; Carolla was down to 0.7 in the demo in Los Angeles from Stern's 2.9; and Rover barely registered with a 0.4 rating in Chicago, down from Stern's 2.4. The final Arbitron numbers aren't due until next month.

Stern jumped terrestrial ship after years of being slapped with record-breaking indecency fines by the Federal Communications Commission over his show's content. There are no such restrictions on the satellite airwaves.