CBS Radio Inc. Files Suit Against Howard Stern and Related Parties
For Multiple Breaches of Contract, Misappropriation and Unjust Enrichment
Tuesday February 28, 5:00 pm ET
NEW YORK, Feb. 28 /PRNewswire/ -- 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, Inc. 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.
The suit further charges that Sirius intentionally interfered with and procured Stern's breach of the Agreement. Sirius knew that Stern had a contractual obligation to maximize the prospects for the success of the CBS Radio program and to comply with his duty of good faith. Sirius intentionally induced and caused Stern to breach these contractual provisions by offering to accelerate Stern's payment of millions of dollars in stock options to promote Sirius on CBS airwaves and by concealing Stern's stock interest from CBS Radio.
The complaint in this lawsuit was filed in the Supreme Court of the State of New York, County of New York.
http://biz.yahoo.com/prnews/060228/nytu192.html?.v=25
