A Deeper Look At Sirius XM’s Request For Summary Judgement
This morning I attended the Sirius XM annual shareholder meeting. During the meeting Mel Karmazin announced that Sirius XM would be filing a Motion for Summary Judgement on the Howard Stern lawsuit. The court records, submitted later that day, show that there were many filings including the motion and supporting documentation.
One legal matter is the Sirius XM’s request to move the case to the Commercial Division. One interesting thing about this filing is that it states that Stern’s side is seeking “at least $75 million”. This is one of the first times investors are made aware of the financial scope of the matter.
Sirius XM contends that they do not owe Stern any bonuses above and beyond what they have already paid. The company is seeking Summary Judgement. The company offered up several documents including a statement of facts that outlined some interesting things. One of those items of interest is that only 9% of XM’s subscribers (about 1 million) subscribed to “The Best of Sirius”. The other 9 million had no access to the Howard Stern show.
One interesting exhibit in the court filings is a summary of the contact between Stern and Sirius. While many key elements are redacted there is plenty to read. Interestingly the subject of a merger was addressed in the contract and Stern was awarded a payment because of it. The paragraph stated, “In the event Sirius merges with XM Satellite Radio, Sirius shall pay you a fee of ******, whereupon the Howard Stern Program may be broadcast to all subscribers of the surviving company.” It is important to note that XM was the surviving company.
The bottom line is that Sirius XM’s stance appears to be strong given the documents they have elected to share. However, I can not imaging Stern and Buchwald chasing something that they do not feel strongly about, and it will be interesting to see their responses. Mel Karmazin himself stated that the request for summary Judgement would not likely be accepted, and that the matter would continue to move along. This is not to say that he feels that the motion does not have merit (he does think it has merit), but more along the lines of the Court wanting to give both sides their “day in court”.
Readers can view all filings in the matter via the court website .
Stay tuned to SiriusBuzz for continued coverage on this matter.
Position – Long Sirius XM Radio
Very Good Info – Thanks for the update Spence. Appreciate your going the extra mile and attending the Annual Meeting.
How does moving the case to the Commercial Division impact the way in which it might be heard . . . or is this move just an administrative issue?
So Sirius contends that only 9% of the XM subscribers subscribed to the Howard Stern show after the merger. But Howard makes a valid point when he says that the merger itself (which was really an aquisition) wouldn’t have happened in the first place it weren’t for him. He’s right. Sirius went from 600,000 to 8,000,000 or something like that, after he came aboard. If he was the main reason for the merger, why shouldn’t he be compensated based on the total rewards of it and not just a portion of it, i.e. the XM subscribers who are Stern fans?
It doesn’t matter if he is right. The only thing that matters is if Sirius XM is in any way contractually obligated to pay Howard for what he is claimed to owe. It is Howard’s side that must prove a contractual obligation exists.
Disclaimer – outside of BLaw 101, I know nothing about the law other than what Judge Wapner…………….
“It is important to note that XM was the surviving company.” Not so. This was a consolidation, not merger. The previous company names are gone. What is left? Both the former firms infrastructures and SBUs. Now, what SiriusXM has mentioned before is that they’d like to make XM the dominant platform since its easier to move the Sirius 40% to XMs 60%. That is the reason Sirius radios is slowly starting to disappear.
I disagree with you on the merits of the suit. I think its pure BS and Stern doesn’t have anything but a complaint that he wants more money, but is not promised anywhere any more money. Say it is payback for not giving him the full $100M/yr contract he had while having to accept the new $80M/yr contract (with reduced work schedule.)
Stern is being greedy. His initial stock options are worthless or maybe 25-50% of what they would have been had Siri stayed past $5/share. Therefore, he wants “new” stock options to capitalize on the run up. Well…. he’s a rich man. He should have bought for his own investment when SIRI was $0.50/share. Where was he when Sirius was on its death bed? Did he do anything spectacular to fix the finances. So he deserves nothing.
Been Sirius….
The record documents from the DOJ, SEC, and FCC all reflect that XM was the surviving entity. This fact could not be more clear. Sirius satellite Radio was put into Vernon Holdings, a wholly owned subsidiary of Sirius. Vernon holdings, which contained sirius satellite radio was merged with XM, with XM being the surviving entity. This could not be more clear.
Stern got some options, but most of his shares are via stock grants. That stock is far from worthless.