April 17 (Bloomberg) -- Howard Stern’s lawsuit against Sirius XM Radio Inc., in which the radio personality sought to recover $300 million in unpaid stock awards that he claimed he was owed, was dismissed by a New York judge.
Justice Barbara Kapnick of state Supreme Court rejected arguments by Stern’s production company that subscribers to XM Satellite Radio, which merged with Sirius, should be counted when calculating performance-based compensation.
“The plain language of the agreement is inconsistent with any reading that the parties intended subscribers acquired by merger with XM to be considered,” Kapnick wrote in an order dated yesterday.
One Twelve Inc., Stern’s production company, and his agent, Don Buchwald, sued Sirius XM Radio last year, claiming the company refused to pay stock awards owed under an agreement that brought Stern to Sirius.
“Howard is really bummed that a judge has dismissed his lawsuit against Sirius,” Stern’s show said in a statement posted on its Twitter feed. “He plans on appealing.”
An attorney for One Twelve, Seth Rothman, didn’t respond to a phone message seeking comment.
Stern, known for his raunchy shows and penchant for profanity, moved to subscription radio to dodge indecency rules that bind traditional broadcasters. He left CBS Corp.’s radio unit, where he had 12 million listeners, in December 2005, citing pressure from the U.S. Federal Communications Commission, which fined him for the sexual and scatological humor.
Stern’s show began running on satellite radio in January 2006. Sirius purchased its competitor, XM Satellite Radio Holdings Inc., for $2.76 billion in July 2008 and changed its name to reflect the merger. Stern signed a new five-year deal with Sirius XM in December 2010 and his production company sued the company three months later.
Stern’s original agreement called for One Twelve to receive five bonuses of $75 million in stock -- along with a 10 percent bonus to Buchwald -- if the number of Sirius subscribers exceeded company estimates by certain amounts, according to Kapnick’s decision.
Lawyers for One Twelve said that the production company was owed another $300 million in stock plus a 10 percent bonus for Buchwald because of the additional subscribers brought in by the purchase of XM.
The defendants argued that the contract only required them to pay the bonuses if the number of Sirius subscribers -- not including the 9 million customers who subscribed to XM at the time of the merger -- exceeded internal estimates.
Sirius paid the first $75 million in January 2007 after the number of subscribers exceeded its own estimates by more than 2 million, Kapnick wrote. The company paid One Twelve $25 million and Buchwald $2.5 million after the merger as provided for in the agreement, and isn’t required to pay the other bonuses because the additional XM subscribers weren’t considered as part of the original deal, the judge wrote.
“While it may be true that Stern and Buchwald hoped and expected to reap the benefits from any significant growth that Sirius experienced after they entered into the agreement, that subjective expectation cannot suffice to override the clear, unambiguous language of the agreement,” Kapnick wrote.
The case is One Twelve Inc. v. Sirius XM Radio Inc., 650762-2011, New York State Supreme Court (Manhattan).
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