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CBS sues Howard Stern for breach of contract

Radio star calls lawsuit ‘personal vendetta’ against him by CEO Moonves
/ Source: The Associated Press

CBS Corp.’s radio division sued Howard Stern Tuesday, claiming its former star shock jock breached his contract with them when he moved to Sirius Satellite Radio Inc.

The lawsuit, which also names Sirius and Stern’s agent as defendants, claims Stern improperly used CBS radio’s air time to promote his new show with Sirius, which began last month. CBS also claims Stern discussed his plans with Sirius without disclosing them to CBS as required under his contract.

Even before the lawsuit was filed in New York State Supreme Court, Stern tried to upstage the action with a hastily arranged news conference in Manhattan Tuesday to strike first at his former employer.

Stern said the lawsuit was meritless, and said CBS was trying to “bully” him. He called the lawsuit a “personal vendetta” against him by CBS Chief Executive Officer Leslie Moonves, whom Stern said held a grudge against him.

Stern said CBS officials knew of his plans to leave for Sirius and also condoned his references to satellite radio on the air and did nothing to stop him when he spoke about it on his show.

CBS Radio had formerly been known as Infinity Broadcasting, part of the Viacom Inc. conglomerate before CBS split up with Viacom at the beginning of this year.

Stern called the news conference after The New York Post’s widely read gossip column Page Six published an item Tuesday saying CBS was on the verge of filing a lawsuit against him.

Stern moved his popular and bawdy morning show to satellite radio last month after years of railing against decency restrictions imposed on terrestrial radio by the Federal Communications Commission.

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CBS wants Stern, his agent, Don Buchwald, and Sirius to return any financial benefits they received from using CBS radio’s air time to promote Sirius, including the value of a tranche of Sirius shares that Stern and Buchwald received early for exceeding a target for subscriber increases by the end of 2005.

That block of 34.4 million Sirius shares was originally worth $100 million at the time the deal was announced in 2004, but its value swelled to $200 million by the time Stern actually received the shares at the beginning of 2006, bringing the total value of his five-year deal to about $600 million.

At current prices, the shares are worth about $175 million. Stern’s deal with Sirius specifies that costs for producing and marketing the show must be paid out of the compensation he receives.

Sirius spokesman Patrick Reilly said the company didn’t have a comment yet because its lawyers had not reviewed the suit.

Sirius shares fell 12 cents or 2.3 percent to close at $5.11 in regular trading on the Nasdaq Stock Market Tuesday, and they fell another 6 cents to $5.05 in after-hours trading.