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Sunday, May 26, 2024 | Back issues
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Judge Tosses Suit Over Howard Stern’s Bonuses

(CN) - Radio personality Howard Stern cannot pursue a $330 million lawsuit against Sirius XM over unpaid bonuses, a New York judge ruled.

The lawsuit sprang after the 2008 merger of XM Satellite Radio and Sirius Satellite Radio. Stern moved to Sirius in 2004 in protest over Federal Communications Commission actions against his show in the traditional format.

Stern's team collected $82.5 million in common stock in January 2007 because Sirius met subscriber targets for 2006, with an additional two million subscribers above its internal estimates. But Sirius did not exceed its estimate by four million subscribers in 2007, so it did not pay common shares that year.

Stern's agent Don Buchwald and the company that distributes his show, One Twelve Inc., argued that they are entitled to factor XM's original subscribers into bonus calculations, which would generate an additional $300 million to One Twelve and $30 million to Buchwald.

Sirius XM argued that XM remained a separate, wholly owned subsidiary of Sirius under the merger, and that subscriptions to either service are not "one and the same."

At the end of 2008, there were approximately 9.1 million Sirius-only subscribers. Apart from the one million XM subscribers that subscribed to a "Best of" Sirius package, XM subscribers could not hear Stern's show, the radio giant said.

Judge Barbara Kapnick dismissed the suit with prejudice from New York County Supreme Court last week.

"It is clear that the only subscribers that the parties considered part of the 'total number of Sirius subscribers' for the purposes of calculating 'Performance Based Stock Compensation' were those individuals who subscribed to the Sirius radio system," Kapnick wrote. "Although plaintiffs argue that those subscribers acquired by merger with XM became 'Sirius subscribers' for these purposes, such an interpretation cannot be supported by reading the agreement as a whole."

Stern's agreement already contemplated how to classify subscribers acquired by merger in another section, according to the decision. It also spelled out specific bonus compensation and defined subscribers as "subscribers of the surviving company."

To rule for the plaintiffs would require the court to ignore this explicit and different treatment of subscribers acquired by the merger, Kapnick wrote.

In an April 17 filing with the Securities and Exchange Commission, Sirius XM said "the court found the agreement unambiguous and that we had complied with all our obligations under the agreement."

Earlier in the day, the Twitter feed for Stern's show alerted followers that "Howard is really bummed that a judge has dismissed his lawsuit against Sirius. He plans on appealing."

Follow @davejourno
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