CBS Radio filed suit today against Howard Stern for $500 million for breach of contract and fraud. CBS is claiming that Stern used on-air time at CBS to enrich himself via a Sirius stock deal if he reached certain subscriber numbers. In essence, CBS accuses the Stern and Sirius guys of a conspiracy to use his CBS radio job as a free advertisement.
CBS will lose this lawsuit for these reasons:
1. CBS heard Stern discuss Sirius but did not fire him. If it was so damaging to give this free advertising to Sirius CBS should have demonstrated this by a dismissal of Stern. Claiming damage months later is obviously sour grapes.
2. Stern was invited on two CBS franchise shows, 60 Minutes and David Letterman which focused on his move from CBS to Sirius. So CBS thought of Stern’s move as both news … and entertainment fodder. For CBS to win their suit they will have to convince the jury that Stern’s discussion of Sirius was not news worthy on his show, just their other ones. Hmm…
3. Additionally, when Stern announced his move to Sirius he received an onslaught of publicity from all forms of media including radio, the internet, cable and network TV, newspapers and magazines. This publicity continues to this day. Stern’s own talk of his Sirius move on his CBS radio show paled in comparison. CBS has a sirius credibility gap by asking $500 million in damages for free advertising when 99 percent of the publicity came from general press and entertainment coverage including their own!
4. CBS hinges most of their argument on their lack of knowledge that Howard could accelerate his stock compensation to January 2006 if subscriber targets were met. Unbelievably, Howard met these subscriber goals and did accept an early payment of stock valued at approximately $220 million. They claim that this led Howard to discuss and promote his move to Sirius on their air … and that is CBS’ legal dilemma. Everyone knows Howard would have discussed his move to Sirius regardless. It was big news … the audience wanted to hear about it. Howard Stern’s show has always been about what’s on Howard Stern’s mind and often that is a current event. Clearly CBS via Letterman and 60 Minutes agree that it was worth on-air time.
