Howard Stern Loses Appeal Against SiriusXM

Howard Stern lost a bid to revive his pay lawsuit against Sirius XM Radio Inc. after a New York state appeals court found the talk-show host wasn’t entitled to additional compensation.

Stern’s production company, One Twelve Inc., and his agent, Don Buchwald, sued Sirius XM Radio in 2011, claiming the company refused to pay $300 million in stock awards owed under an agreement that brought the radio personality to the company.

howard stern rolling stone interviewJustice Barbara Kapnick of state Supreme Court dismissed the suit last April, rejecting arguments that subscribers to XM Satellite Radio, which merged with Sirius in 2008, should be counted when calculating the compensation.

An appeals court in Manhattan today agreed with Kapnick, saying the plaintiffs aren’t entitled to additional performance- based compensation under the agreement with the company’s predecessor, Sirius Satellite Radio Inc.

“Looking solely to the plain language used by the parties within the four corners of the agreement, the disputed term ‘Sirius subscribers,’ by which plaintiffs’ performance-based compensation was measured, did not include subscribers to XM Radio, a wholly owned subsidiary which defendant acquired by merger, even though the merger had been anticipated within the agreement,” the appeals court said in the ruling.

Pandora Internet Radio vs SiriusXM

Its a crucial day for Pandora Internet Radio.

CEO Joseph Kennedy is pleading his case in favour of the Internet Radio Fairness Act today, a bill that was recently introduced in Congress that would cut the cost structure for music streaming websites.

Unlike SiriusXM Radio, which pays a small percentage of its revenue to music artists and labels, Pandora and other Internet radio stations like iHeartRadio have to pay a royalty for every song that is streamed online.

Pandora’s CEO Kennedy argues that they will pay out around $250 Million in royalties a year, and thats more than half of what they will collect in total revenue this year. Kennedy points out that SiriusXM is paying just 7.5% of its revenue.

However, Satellite radio also offers talk, sports, comedy, and specialty programming like the Howard Stern Show. Each of these channels costs SiriusXM a percentage of income as well, for instance Howard Stern’s channels Howard 100 and 101 cost SiriusXM approximation $100 Million a year to run. In the end its unlikely Internet Radio Fairness Act will pass but if it does Pandora and other Internet Radio stations would have more a lot more revenue to possibly invest into on air talents, thus giving options to future radio broadcasters.

Lawsuit update

In the words of his America’s Got Talent co-judge Howie Mandel, radio personality Howard Stern’s lawsuit against SiriusXM is a decisive “no deal.”

The host of the eponymous Howard Stern Show was seeking $300 million from his employer SiriusXM, claiming that subscribers he attracted to both the XM and Sirius divisions contributed to his performance-based stock awards, The Smoking Gun reports. Judge Barbara Kapnick, however, ruled that since Stern’s contract only included awards for Sirius subscribers, not those of XM, he fell short of the number of listeners the contract required him to bring in and therefore is not entitled to the stock awards.

Stern was seeking four stock awards valued at $75 million each, which dwarfs even the stock bonuses seen on Wall Street. Last year, JPMorgan Chase CEO Jamie Dimon took home $17 million worth of stock and other options, while his Goldman Sachs counterpart Lloyd Blankfein received $10.7 million in stock awards.

Still, Stern is one of many on-air personalities to sue their employer. Keith Olbermann is suing from his former employer Current TV for $70 million over breach of contract when he was fired in late March. The fledgling network is now countersuing Olbermann, claiming instead that he violated “values of respect…and loyalty to our viewers,” co-founders Al Gore and Joel Hyatt wrote in a statement.

Howard Stern was forced to sue

Howard Stern has claimed that he was left with no other choice but to sue his current employers SIRIUS XM Radio to recoup unpaid stock options.

While addressing his decision to sue the satellite radio company on The Howard Stern Show, Stern charged that SIRIUS XM put him in an unenviable and painful position.

“It’s true that I am suing Sirius,” he said. “I have never, ever gotten on the air and discussed my financial situation… I’m an honest guy who believes in fairness. I believe that I’ve been dealt with unfairly.”

Stern has famously battled the FCC and media conglomerate Infinity Broadcasting Corporation over the course of his lengthy career, but he insists that his grievance with SIRIUS XM marks a new low.

The radio host explained: “It causes me great pain to sue the company I work for… Nevertheless, I had to do it. Suffice it to say, there’s a dispute and I believe I haven’t been given what is mine.

“There’s obviously a disagreement here and it will be settled in a court… I have encountered things that are disturbing before [in my career], but never like this. It’s a business argument and that’s that.”

Howard makes Sirius XM $1.8 Billion

They don’t call him the King of all Media for nothing. As we noted here last week, shares of Sirius XM Radio (SIRI) have been on a tear lately with a gain of 9.35% so far this year.

While some of the gains can be attributed to the strong market, the main driver of the shares has been Howard Stern, who renewed his contract with the company on December 9th and announced that his radio show would finally be available on smartphones. Since then, shares of the company are up over 35%.

In terms of market cap, this translates into $1.8 billion dollars. While terms of the contract were undisclosed, so far Howard has been worth every penny of it

Sirius share price plummets

Shares of Sirius Satellite radio plummeted following their Q3 results, as the company did not answer questions regarding the future of “shock jock” Howard Stern. Net income was a penny a share or $67.6 million. Revenue came in at $722 million which was up 15% from a year ago, but what about Stern?

Stern’s five-year, $500 million contract is up at the end of the year and investors are asking will he be back? Analysts estimate that Stern has 1 million active subscribers but the numbers could be much higher. An analysts which asked not to be named said, that Stern “brings the oomph to Sirius.” Allan Edwards the CEO of The Markets Are Open said “Sirius has some attractive programming but Stern is the straw that stirs my drink.”

Sirius shares dropped 6.7%.