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Howard Stern Suing SiriusXM for Unpaid Bonus

4K views 27 replies 12 participants last post by  mrbean5411 
#1 ·
#3 ·
Regardless of what you may think about his attitude or arrogance, the fact remains that he is right. The main reason for Sirius' success is Howard Stern. His two channels are by far the most listened to on Sirius. There isn't even a close second. Subscriptions have increased due mostly to him. Absolute proof of that won't come until he retires.

Obviously you don't like him, but that doesn't mean that what he is saying and/or suing about isn't correct.
 
#4 ·
I guess half a billion just isn't enough!

It seems Stern has to grandstand on everything. Could they not have discussed this last year when they renewed his contract?
 
#7 ·
How much money Stern has already made isn't relevant Hugh. His side claims Sirius/XM isn't fulfilling their contractual obligations.

After hearing lately about how badly Sirius/XM is treating their on air talent (when it comes to contract renewals) I almost hope Stern uses their breach of contract as an excuse to walk away. They need him a lot more than he needs them.
 
#5 ·
I listen to most of his show. He is the reason I got sirius. THe funny thing about his "grandstanding" is he never mentioned anything on the air concerning his dispute. Even in the last few days when callers would bring it up. he simply just says its a sad situation. Regardless of if he is right or wrong. He is not grandstanding.
 
#8 ·
His side claims Sirius/XM isn't fulfilling their contractual obligations.
and Sirius/XM said

The company said it was "surprised and disappointed" by the suit
I appreciate that Stern should be paid what he is owed but why did he and his handlers not deal with this at the negotiating table last November when they hammered out the deal?

Had they done this before the current deal, I could certainly sympathize.

Slapping a court case on them a month or two after the deal was negotiate suggests to me that Stern is and was not dealing in good faith.
 
#13 ·
and Sirius/XM said
I appreciate that Stern should be paid what he is owed but why did he and his handlers not deal with this at the negotiating table last November when they hammered out the deal?
I'm speculating but it seems obvious that Stern/Buchwald are pragmatic, and knew that if they made fulfillment of the 'old' contract a deal breaker in in their new contract, it's quite unlikely the new contract would have been executed. Fairly smart and sensible actually, and not really bad faith when you consider the two contracts are separate.

Slapping a court case on them a month or two after the deal was negotiate suggests to me that Stern is and was not dealing in good faith.
The good faith/bad faith issue is per contract.

They dealt in good faith on the old contract, and presumably on the new contract also. Clearly, once the new one was inked they quickly took action regarding the grievance on the old one.

But perhaps the most legally sound reason is that the 'old' contract had specific dates and deadlines, and technically it hadn't been fully breached until after Dec 31, 2010. So in good faith they couldn't act until Jan 1 2011.

Just because party B says "I intend not to pay your bonus by Dec 31" you really don't have cause for action until Dec 31 comes and goes and they have indeed failed to pay it.
 
#9 ·
Actually it suggests to me he IS dealing in good faith. He's negotiated a deal and letting the courts deal with the breach of contract matter instead of making a big issue about it and refusing to negotiate with Sirius until the matter is settled.

It wasn't exactly bad for Sirius XM either, considering their stock jumped 6% the day the announcement of the deal was made.
 
#10 ·
I'd have to assume Stern & Co. didn't think that negotiation was necessary. They just felt entitled to the bonus terms laid out in the previous contract.

However, now that I read about the actual dispute I can see why it needs to head to court:

In the suit filed Tuesday in the Supreme Court of the State of New York, Stern's production company, One Twelve Inc., and his agent Don Buchwald said that Sirius made an initial bonus stock award after Stern started in January 2006 but failed to do so over the subsequent four years.

The suit claims that Stern helped Sirius exceed its subscriber targets by at least 2 million subscribers in each year of the contract, triggering a new stock award each time.

It also said Stern put Sirius in a position to complete its 2008 acquisition of XM Satellite Radio Inc., which had also courted Stern years earlier.

Sirius had around 230,000 subscribers to XM's 1.3 million at the end of 2003. As of the end of December, the combined company had 20.2 million.

Buchwald and Stern were told last year by Sirius XM's general counsel, Richard Basch, that later bonus stock awards were not granted because the company did not include XM's subscriber base toward the total number of Sirius subscribers.

"When Sirius needed Stern, it promised him a share in any success that the company achieved," the suit said. "But now that Sirius has conquered its chief competitor and acquired more than 20 million subscribers, it has reneged on its commitment to Stern, unilaterally deciding that it has paid him enough."
That's a tricky issue to decide.
 
#14 ·
You're right, but not for the right reasons.

The contract is the contract, and certainly we are only seeing the complainant's filing here.

But if what's contained in the filing is accurate, this is a very winnable case.

The contract supposedly agreed to pay a bonus for every interval of 2 million customers that:
a) were trackably 'Howard Stern generated'
or
b) were above Sirius' projected total customer count

Apparently the amount of trackable Howard Stern generated customers was not worth mentioning in the suit, because it focuses instead on the total customers count test.

Sirius' forecast and actual customer numbers show they have more customers than forecast during Stern's contract.

The event that caused this was adding 10 million XM customers by acquisition. We could debate forever if the decision to buy the XM customer pool was thanks to Howard Stern or whether he was really that significant or not.

But it's a bit irrelevant since the bottom line appears to be that for whatever reason and by whatever means, the customer counts did reach the levels required by the bonus criteria.

Sirius can't claim they didn't anticipate this merger, since the XM merger possibility was covered by the contract clause that allowed them to put Howard Stern onto XM. And it wasn't just intended but actual, as they did broadcast him to XM customers on their Best of Sirius package.

The issue at hand is should the 10 million XM customers they acquired be counted as Sirius customers towards the total customer count?

It appears that yes, they should be.

If Sirius wanted to exempt customers gained by mergers or any other means, they didn't seem to state that in the Howard Stern bonus calculation.

They should have thought of that possibility and built it into their cost of acquiring XM.

Stern is lucky because it appears his biggest splash early on only boosted them by 2 million customers, earning him 1 bonus unit. The 10 million customer acquisition really amount to 5 bonus units.

And the big jump to 12 million was hardly his doing but a customer acquisition. Still, Sirius chose to buy those customers, and did so knowing they had made an earlier promise to give Howard Stern a bonus driven by total customer count.

Taking the XM acquisition out of the equation, Howard wouldn't be earning of those bonuses. Perhaps a few XM customers would have flipped organically, so perhaps 1 unit of bonus at most, but 5? Per year? Doubtful.

Of course it will be interesting to see what Sirius raises as a defense.

Did he earn so much bonus? Not likely. But does the contract say he should get it? Looks like it does.
 
#15 ·
Mrbean, my opinion had nothing to do with how I feel about Howard, I just feel that he's trying to take more credit than what he deserves. There are other Sirius promotions, one major source are through GM, or Sirius ready vehicles.

A perfect example, is a new car owner recieves a one year sub, and decides to keep it whether or not Howard's stations Infuenced his or her decision. They probably never considered Satellite rado before it too.

I read through all eighty numbered story lines, they bash Sirius and states promises made such as paying even a consulting firm an addition 10% of 1/12's 'Bonus'. Statements such as being especially popular with men ages 18-49, point proven on a huge range? Bet he wouldn't state if it was 16-49, if it were more correct, because that wouldn't make him sound better.

I laughed at the thought of someone crying over a 'bonus', figured the courts took it a little more seriously after seeing the extra effort added in the complaint.

Also; I feel that XM subs have nothing to do with this 'bonus', because they weren't acquired directly through Sirius. Otherwise, they should have had a second contract signed over it. Was there even a first or any contract?
 
#16 ·
Also; I feel that XM subs have nothing to do with this 'bonus', because they weren't acquired directly through Sirius. Otherwise, they should have had a second contract signed over it. Was there even a first or any contract?
Did read the lawsuit? Yes there's a contract, that's what the lawsuit is for, breach of contract! The contract was for 5 years 2005 to 2010. It said Sirius would pay Howard Stern for every unit of 2 million extra customers they could trace back to him directly or every unit of 2 million customers above their own projections. The contract also agrees to pay the agent/management 10%.

Statements such as being especially popular with men ages 18-49, point proven on a huge range? Bet he wouldn't state if it was 16-49, if it were more correct, because that wouldn't make him sound better.
Media such as radio have ratings based on demographics, so it would be trivial to show popularity in that range. But why bother, it's irrelevant to the breach of contract claim.

A perfect example, is a new car owner recieves a one year sub, and decides to keep it whether or not Howard's stations Infuenced his or her decision.
I don't think one year subs with a new car are common, 30 to 90 days is more like it. But what does any of that have to do with the topic here, which is the lawsuit?
 
#17 ·
Many people on hear just don't like Howard Stern. As a result they are too close-minded to admit that he is the primary reason for the success of Sirius satellite radio. The timeline and subscription numbers prove he is right.

Morally speaking - I do, however, believe that the millions of subscribers that were added due to the merger shouldn't count towards subscriptions as a result of Howard Stern.

Just because you didn't get Sirius for Howard Stern doesn't mean that thousands and thousands did.
 
#20 ·
Morally speaking - I do, however, believe that the millions of subscribers that were added due to the merger shouldn't count towards subscriptions as a result of Howard Stern.
What's your "moral" rationale for excluding the merged customers from the total?

The arguments against are:

* Stern is popular, attracting a lot of initial customers and interest. It was no coincidence that during his tenure Sirius moved from a distant 2nd place to a position where they could actually execute a merger/takeover of XM.

* The contract included provisions allowing Sirius to broadcast Howard Stern on any merged networks

* Sirius did in fact broadcast Howard Stern to XM customers through their 'Best of Sirius' package

"Morally", they used him to attract Sirius customers, and to retain merged XM customers., or "morally", shouldn't they pay for that usage, in accordance with the contract?
 
#18 ·
It would seem on the Stern side there were provisions written in for the inclusion of merger based subscriptions to be counted towards yearly subscription targets.

Presumably Sirius agreed to this for reasons already stated i) They would have said and done anything to have exclusive rights to the Howard Stern Show ii) In the event the clause was triggered they would have the revenue to pay Stern.

It's an age old situation Party A needs Party B and so makes a deal they later regret when Party B has seemingly no further use.


One thing I can assure you, I have lots of free & bad legal advice to dispense.
 
#21 ·
It would seem on the Stern side there were provisions written in for the inclusion of merger based subscriptions to be counted towards yearly subscription targets.
I think it's actually the fact that there was no provision to EXCLUDE these subscriptions, not that there was explicit provision to include them.

However any defense that they couldn't have possibly anticipated a merger is reduced by the fact they seemed to be aware of the merger possibility and did include provision allowing them to use Howard Stern's programming in such an event. So they knew it was possible and did nothing to exclude it. Tough luck I'd say.
 
#19 ·
good old sirius/xm still nickel and diming there talent just like there customers. it is no wonder bubba left when they asked him to take a 90% pay cut (i think it was 90% or close to it).

and if it wasn't for Howard coming to Sirius Sirius would have been out of business by now. i used to work as a call agent for Sirius Canada and 50% of the calls in November and December were for people canceling or suspending there accounts because they didn't know what Howard was going to do. He is the only reason i stay with Sirius too because i got bored of all the music stations long ago. the decade stations sound more like the DJ's just have 1 CD they play on shuffle every day and don't get me started on Hits 1 and the rock stations
 
#22 ·
As former agent can you explain the annoying tactics of the company? Do they actually coach you to play dumb about sales and promotions? How many customers just happily pay the maximum price and are totally satisfied with nonsense charges like 'activation'?
 
#23 ·
What I meant by morally, was that Howard was definitely responsible for the millions of Sirius subscribers and deserves to be rewarded for that. However, XM already had a substantial subscription base, and did not likely increase their numbers because of Howard. So even though he may be legally entitled to the bonus, I don't feel he is morally entitled to it. Furthermore, I don't know for sure, but I bet only a very small percentage of XM subscribers actually subscribe to the "Best of Sirius" package.

P.S. I am a huge Howard Stern fan and hope he gets what he deserves.
 
#26 ·
Nobody ever said that the law had anything to do with morals. I was just "putting it out there". Legally speaking, I am sure that Howard is entitled to what he is suing for - I am just saying that "morally speaking" he probably shouldn't be seeking it. He is going by the "letter of the law" rather than the "spirit of the law", which he is entitled to do. I just do not think it is very nice or necessary.
 
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