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CBS Sues Stern

This should give Howard plenty to shout about. (Earlier in the day, he held his own pre-emptive press conference.)

Text of the CBS release below:

"CBS Radio today announced that it has filed suit against Howard Stern, his company One Twelve, Inc, his agent Don Buchwald, his agent’s firm Don Buchwald & Associates, Inc. and Sirius Satellite Radio, In

The lawsuit is for compensatory and punitive damages for multiple breaches of contract, fraud, unjust enrichment, and misappropriation of CBS Radio’s broadcast time. It further seeks damages from Sirius Satellite Radio, Inc. for unfair competition and tortious interference with Stern’s CBS contract."

The 43-page complaint charges:  

·        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.

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21 Comments

  • ed said:

    Not a big surprise, is it. However, did CBS put anything in writing to Howard and his reps about possible ramifications if he continued to mention his new gig? Did they not have a "button guy" to knock off anything they didn't want said? Stern is probably guilty of many things but CBS just looks like a jilted ex here. I'm sure Howard can afford a representitive legal team.
    March 1, 2006 2:16 AM
  • Radio fan said:

    This suit is more about getting embarassing stuff on the other side through discovery and leaking it than about trying to win a judgment. As a reader notes above, CBS had one of its employee with his hand on a censor button AND kept putting him on the air -- the plaintiff has a duty to mitigate its damages and CBS failed to do so. However, two aspects could have merit. Did CBS have future and intellectual property rights to everything aired on his program or did Stern? And was going to satellite radio a new concept or project or a new employer? Because these issues must be resolved, discovery will begin and the mud-slinging will become quite thick
    March 1, 2006 11:37 AM
  • some schmuck said:

    What did CBS do to mitigate daMAGE?
    March 1, 2006 4:28 PM
  • nils said:

    Schmuck, if I read Radio fan right the plaintiff (CBS) had an obligation to mitigate (ie, to reduce) damage to themselves by having the employee manning the censor button actually use the button. But he didn't, he let Howard spout the stuff they're now suing him for. If you have an opportunity to reduce the damage being done to you when it's happening, but don't take that oppportunity, then you won't get far complaining about it afterwards.
    March 1, 2006 5:37 PM
  • some schmuck said:

    Nils, I was just asking. You are correct, there is a duty to mitgate. Did CBS notify Stern to stop, send him something in writing. I am sure there is a paper trail which they laid in anticipation of the suit. If they did nothing then they have a problem with their case. It is much more then a guy on the 7 second delay button. Who is he to make those decisions, and in 7 seconds. Rather, the issue is what reasonable attempts did CBS make to communicate to Howard Sterrn that he was forbidden from talking about certain subject matters on the air.
    March 1, 2006 7:17 PM
  • N. said:

    Before you attempt to sound like lawyers and impart your wisdom and your legalistic-wannabe questions, it would serve you better to be aware of the actual evolution of his radio show towards the end. That may answer your questions. Stern was warned NOT to mention any of his plans on air, nor mention Sirius by name but instead to focus on doing the show just like NORMAL. He strayed. Again and Again. It was too hard to resist. He was suspended for not shutting up and then there was a rumor that he was taken off the air for good because supposedly they were so po'd at him. After a week or so suspension, he came back on. SO CBS had in its power the easiest and safest way for them NOT to lose "free promotion" money by preemting him completely off the air and yet they didn't. Why oh why? Because it was too much money left on the table. They made tons of money towards the end, with advertisers actually ramping up their ads before his exit even as his shtick was getting tedious and the show was not the same anymore. He was starting to sound like a broken record, a bored and lifeless one. All you would hear about was about his impending move. There was so much veiled talk about Sirius without mentioning it by name since whe was forbidden to. Contrary to what was written above, there was much censoring and editing his referrences to the Sirius move and a lot of it was bleeped out. But it is pointless: you can bleep out all the words and sentences you want or can, if the whole talk for 3 or 4 hours is about Sirius, it is pretty hard to mask what it is about. And contrary to some references above, some outlets tried to bill him for his promotion of Sirius on the air (ex. $200k from Citadel, that he never paid) So there was an attempt to censor, edit and limit. There was an urgency to get compensated for the free promos. Yet they still never took him off the air completely, forfeiting their legal right to completely uhhh.. "mitigate" as some here like to say. But they were too busy cashing in. Now they want their cake and they want to eat it too. The E! channel knew better. This a childish desperate move by jilted CBS brass. Les knows there is going to be a plunge in radio billings and as a publicly-traded company they had to pre-empt any negative impact ont he stock price by replacing the certainty of income by the hope of a huge court payday. Lawsuits or threats of lawsuits are just another sleazy way to show bravado and tell the world you are "absolutely on strong footing and expect Justice to be served soon in [your] favor." Radio , music CD sales and newspapers are all facing more-or-less the same turmoils. This lawsuit is just another symptom, a knee-jerk reaction. Another way for an overly-ambitious and cocky Moonves trying to stick it to a more respected manager, an old colleague/boss, Mel Karmazin, going against his's most famous protege and his most astute seachanging move since he took the helm at Sirius. Mel is showing his genius in catalyzing a company formerly on the verge of collapse and putting it back on the map, riding a medium of the future and Les is peeved, crying on the deck of a sinking ship. I am waiting for what Redstone has to say. He has made himself 'les' noticeable lately. I bet not for long. The only question that nags me is: if Stern had it in his contract NOT to negotiate or enter into any other employment agreement while under CBS contract, why did he? Did he knowingly violate the clause or was he given an implicit ok to continue contacts? That seems to be either side's Achile's heel. If CBS truly didn't want him to entetain such possibilities, I am sure as an over-lawyered company they would have sent him proper notice or served him with a written warning. If they have, he will be found somewhat liable. If they didn't, they should go pound sand. No court will award them anywhere near $500 Mil, especially for Dan Rather's not-so-popular home with any conservative on any bench. Even any liberal judge would instinctively and quietly root for Howard's brand of Free Speech, loved AND hated as he is. You go, Howard. Fight back! N.
    March 2, 2006 3:30 AM
  • some schmuck said:

    Hey N. You make my case. Thanks for the info. CBS is right. Thay had a con tract with howard. Why should thay cut him off before contract over. You make a case the Haoward kept violoating his contract even after being repeatedly warned. And the stock option part does not pass the smell test. This may settle out of court. But Howard and Sirius will be writing checks to CBS. BTW There is a reason i sound like a lawyer. And a reason why you do not. You like Stern and don't like CBS for whatever political or personal reasons. No problem But don't let it intefere with your analysis of the facts. Critical thinking baby, try it. you might like it.
    March 2, 2006 3:22 PM
  • N. said:

    This is funny. I love how this...-what's his nickname again?-... is trying to spin my post to his benefit. If you are inferring you are indeed a lawyer, we 'kinda' figured that out from your tone and nickname; pretty synanomous. I relayed that Stern kept referring to Sirius despite CBS's displeasure BUT HOWEVER ANNOYING IT WAS TO THEM IT DID NOT OUTWEIGH THE INCOME THEY WANTED TO MILK ALL THE WAY TO DECEMBER. You are trying to establish that Stern knowingly established guilt by his actions and I am trying to say that CBS let it slide and is equally responsible and shouldn't a posteriori putting its hand out and crying its eyeballs out. Big diff. Was there a tacit ok by CBS brass in previous meetings between Howard and CBS hack that he openly said to them" I will continue to talk about the sunject even if I agree to not name the company by name anymore and if you don't like it, take me off the air" and did CBS keep him on the air after that threat. Somewhere, there should be some minutes of meetings between the parties and it should come out in depositions. Instead of recommending 'critical thinking' to me, you lack it desperately and here is one example to help your weak mind understand (God how many cocky unqualified stupid lawyers are out there overpaid and overconfident): If you have an employee that works for you and is always late for work by half an hour and you keep giving him warnings. One. Two. Then a desperate three. Do you keep giving him warnings indefinitely and KEEP HIM ON THE PAYROLL while you settle your dispute with him in some sort of labor mediation forum or you just terminate him if he doesn't listen? Most people who don't like tardiness would terminate even if he is a ok employee otherwise. Some people would keep him on because they don't want to lose some aspect he brings to the table. You be the judge! CBS should have put its money where its mouth is. It didn't and you are trying make excuses for them. Regarding my affinity for Stern or CBS, that has no bearing on my analysis and siding here. I don't dislike Howard nor am I a huge regular fan of his. I am aware of him and jog the dial up and down and don't mind listening to him once in a while. I am not piling on CBS out of bias since I defended it on other matters but it is wrong here. CBS as a network is full of talent that is way more qualified and honest than any jerk or bimbo out of local or national Fox news or the Weekly Standard, but as a public company with an arrogant Moonves, I am not sure I like how they do business.
    March 2, 2006 6:10 PM
  • N. said:

    Checkmate to ...-what's his nickname again??- This is an article from Reuters that echos EXACTLY what I laid out earlier. Have fun with it. It is pretty simple and straight forward, so ideal for someone with weak legal chops like the lawyer you pretend to be, showing you how to really approach the matter. http://www.investor.reuters.com/Article.aspx?docid=9113&src=cms&target=companyoftheday One free advice, please don't embarrass yourself again by saying you might be alwyer, unless you really have to. You are very under-qualified, obviously. Remember, TO ANALYZE any MATTER, all you need is two things, real no-nonsense appraoch with tons of common sense, and a great deal of integrity. You can stuff all the fancy degrees money can buy. They don't always mean anything. Any sh@@@k can sit through classes and get rewarded with a diploma for the time/money spent. It takes more. For more resources, please refer to: http://www.dimeadozenambulancechasers.con It's based in Massachusetts.
    March 2, 2006 7:58 PM
  • some schmuck said:

    Sorry L. Big difference then your habitual late employee. When the personal service is something unique, such as a radio show with a with a unique and extremely high listenership that delivers extremely high advertising revenues, for which you paid Howard a premium and made capital investment to support him. Unlike the employee in your example, who is a commodity, Howard is someone with a contractual obligation. Like Manny. Your example is used in labor arbitration cases all the time. It is why cops who beat the shit out of people get their guns back. But in a contract for a unique personal service. Like Howard (and Manny) Sorry L. I am afraid you are just wrong. And obnoxious. But more importantly, wrong. And a wind bag. But wrong. Real wrong. Rediculously wrong. and a wind bag. and obnoxious.
    March 2, 2006 9:22 PM
  • Felix said:

    Stern may be a lot of things,but he's also professional. If his lawyers(or those of CBS) told him he was at risk I think he would have paid attention. The guy hates being sued and doesn't like to bring actions either. The K.O.A.Media is a cautious guy in his personal life. I just don't believe he acted with disregard leaving himself open . I didn't go with him to Sirius but I'd root for him v.CBS.
    March 3, 2006 1:39 AM
  • N. said:

    You got to stop with all the funny posts, uhhh what's your nickname again??... It looks like I got to you and you are grasping for some ridiculous arguments... "Unlike the employee in your example, who is a commodity" What the heck is that? You can't be serious, are you? You do sound very dumb and weak for a someone who is clearly lying about being a lawyer. I won't go into it again. I will be content with the fact that my initial argument meshes exactly with that of a respected legal expert on a major world-class wire service. Bang your head as you will but keep those insults coming, they do make my day. 'Glad to see the last post from good ol' Felix echoing my stance as you continue spewing your subjective blind unreasoned venom. (I wish I could see the reactions on your face)
    March 3, 2006 2:42 AM
  • nils said:

    N. that Reuters link is a good one. Though Gerstein lays out the case pretty clearly he doesn't come to any conclusion about Stern's claim about the "estoppel" issue. Stern indeed says what you say, that CBS could have shut him up easily enough if they really wanted to by simply kicking him off the air. But Gerstein only says whether that has merit is a matter that "must be determined by the court, after much legal research and argument." He takes no stand one way or the other. Though it certainly seems like a valid argument, it remains to be seen how it will play out. Gerstein is careful to lay out the case, without taking sides. (I have my law degree from the Law and Order School of law by the way, so watch your insults. Though I admit I would never have made it without the string of the cute ADAs. Oh how I'd like to mitigate that Annie Parisse...)
    March 3, 2006 3:20 AM
  • some schmuck said:

    N hmmm, I like your argument? calling me rediculous. And nils did a nice job of pointing out exactly what you read on the wire service. Not what you think you read or wanted to read. It does not surprsie me that you question whetehr I am a lawyer or not. I neve said I was. But, I can tell you have not the slighhtest idea what a lawyer does, how one thinks, or how one looks at a problem or argument. All I did was point out thew counter argument to stern's defense. You took it personally. And then you congratulate yourself because you found a newspaper article that mentioned the same argument you have. It did not agree with you, just mentioned the defense existed in some cases. You decided to follow one line of thinking because it is easier than reasoning and you can find comfort in being part of some group. Real or imagined Your limited intellectual abilities and defense mechanism of lashing out shows your true self manifested in your sophmoric posts. I am just some schmuck but trust me N, you are a real putz. Oh and Felix made an observation of Howard as he knows him. Not a point of law, but a nice observation. That is not "echoing" your thoughts What a putz you are!
    March 3, 2006 3:07 PM
  • N. said:

    Beyond the pity that I feel for you for getting your panties twisted in a knot, it boggles my mind that some on public forums choose to make legalistic contortions to interpret matters the way they would like, in favor of their chosen side. There is a simple way of looking at this and I tried to sidestep all the contortions and inject more commonsense to it. Nils says that Gerstein didn't choose sides yet I did. Neither of us did. I'd like Howard to prevail but I said it isn't clear until more details come out, specifically what heppened in close-door meetings and in tacit agreeements between the parties building up to the exit. Without that, neither I nor anyone else can slice it this early. Only people with direct knowledge of contacts and correspondance. Why I linked to the article is because I liked how straight forward matter-of-fact analysis without piling on Howard like you did, 'schmuck.' As much as the Phoenix likes the clickthroughs generated with your foodfight, I won't dignify anymore your desperate attempts to save face when you made assumptions you shouldn't have about the case. You wouldn't amend, only insult so I will refrain from embarassing you any further, 'schmuck.' (How is your blood pressure??)
    March 3, 2006 5:38 PM
  • some schmuck said:

    Thanks for your report N. You ignore the legal and contractual factor that Howard's services were unique and not easily replaceable. (The Court looks at this) Unlike the habitually late secretary or David Lee Roth, there is only one Howard, like only one Manny, and he his paid accordingly. There are many people available out there to work as competent secretaries or low to average ratings radio personalities. So if CBS was forced to take Howard off air waves because he said things that harmed their business and they could not replace him with a show that made as much money for them than they are entitiled to get the differnce back from Howard. But should they be forced to cut him and lose that revenue? There is alot more to the decision making behind the scenes then "rusty the intern" manning a 7 second delay button Hmmm. You have to ask what the facts are specific to this case.What service did Howard contract to perform for CBS and when he did not perform accordingly? Was saying things prohibited by CBS a breach? what is the remedy? You seem to think Howard has no duty to CBS during the life of the contract. Putz
    March 3, 2006 8:17 PM
  • some schmuck said:

    N CBS had a legal right to recieve the benefit of the bargain. The benefits expected from the contract with Howard. Taking him off the air is not the remedy that gives them the full benefit of the contract. To which CBS, and Howard, is entitled. Ya Putz
    March 3, 2006 8:37 PM
  • N. said:

    Good luck chasing your tail! You keep puting words in my mouth, ignoring my reasoning and what I said and you keep missing the mark. Good luck! I just hope I am not the one you cut off on the highway with your middle finger raised. That seems the type of person you are, 'schmuck.' Just because you name yourself such a name, you think the whole world is also in your words, 'putz.' Pity....
    March 4, 2006 2:37 AM
  • a real lawyer said:

    I have readn with amusement the tiff between N and "some schmuck" regarding the law and CBS v. Howard Stern. N is half right and schmuck is right on by analyzing the law. However, N, you seem somewhat disturbed that schmuck pointed these things out. And you misreaD the point of the article you believe champions your point of view. Unfortunately your point of view is that of a Howard Stern fan and not someone using reason.Your ramblings and ad hominum attacks speak more of your strange pesonality, which my wife, a psychiatrist, would be better to address. But really N, grow up. Go Schmuck!
    March 4, 2006 2:07 PM
  • observer said:

    Hey N. your silence is deafening. This schmuck cleaned your clock.
    March 5, 2006 2:44 PM
  • some schmuck said:

    I win
    March 6, 2006 2:56 PM

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