NEW YORK — 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.
One can hardly blame CBS for filing suit; its pretty clear that Stern spent the last year or so of his radio contract talking about the move to Sirius and inducing his listeners to sign up for Sirius so he could listen to them there…..all the while getting paid millions of dollars by CBS for the remaining term of his contract.
What are the chances that Howard could be in real trouble ? Over at TCS Daily, Professor Stephen Bainbridge takes a look at the case, and it doesn’t look good for Howard.
As an agent, Stern was entitled to begin preparing to compete with CBS. The Restatement (Second) of Agency provides that an agent can make arrangements to compete with his principal even before the termination of the agency, but that he cannot properly use confidential information peculiar to his employer’s business and acquired therein.
(…)
Because promoting Sirius on the air and at his website almost certainly will be deemed an effort to solicit customers, Stern is in a clear breach of fiduciary duty.
Additionally, CBS makes the allegation that Stern violated his contract, and stole property from CBS, when he took the tapes of his show with him when he left despite the fact that his contract states that those tapes are the sole property of CBS.
Something tells me Howard is in trouble.
Update: Dale Franks looks at the case and points out that a civil suit by CBS Radio could be the least of Howard’s problems:
CBS, in essence, is saying that Mr. Stern appropriated millions of dollars in CBS Radio air time to promote the Little Doggie Company, in order to pump up the stock price, increase Sirius subscriptions, and profit from the stock options thereby. In this context, CBS’ lawsuit might be the least of Mr. Stern’s problems. An ancillary question is whether the Securities Exchange Commission knew about the stock option deal that included Mr. Stern, his agent, and Mel Karmazin. Considering Mr. Stern’s lack of friends in the Federal Government, he’d better hope the SEC doesn’t take an interest in this stock options deal. With the FCC, the government agency Mr. Stern is most used to dealing with, you can always argue against their rulings on artistic or First Amendment grounds. The SEC, on the other hand, doesn?t play the argument game. And the SEC is not known for their willingness to overlook minor stock market manipulations.
I’m sure Howie’s fans are waiting for tomorrow morning when they can tune in and hear Howard make Les Moonves jokes. Unless, of course, his lawyers have talked some sense into him and he keeps his mouth shut.
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