Howard Stern vs. SiriusXM: An Analysis

November 27, 2011 9:26 PM

The Scary Lawyer Guy blog has a detailed analysis of Howard Stern's lawsuit (or, more specifically, the lawsuit filed by his production company and agent) against his employer, Sirius XM.
posted by The Gooch (37 comments total)

Oh, hi. I just came in to count the "Baba Booey" 's.
posted by herbplarfegan at 10:07 PM on November 27, 2011 [5 favorites]

"The dirty little secret of the court system, both criminal and civil, is that it barely functions even though [between 90 and 95 percent] of all cases in both parts of the system settle before trial. This is because litigation is time consuming, labor intensive and, when cases do go to trial, completely take over a court’s docket from anywhere from a few hours to many months. In the civil context, there is a strong incentive to settle largely because cases are rarely so open and shut that you are confident enough in your position to take the matter to trial. What [parties] must measure is not only the strengths and weaknesses of their legal arguments, but the more amorphous “litigation risk” that lingers in the background of any case. Litigation risk could include fear of disclosure of embarrassing .. information, the costs associated with litigating a case, the tax on financial and human resources, the potential downside risk to an adverse judgment versus the cost of a reasonable settlement, .. the potential threat to share price, [and bad public relations for institutional shareholders]"
posted by jeffburdges at 10:08 PM on November 27, 2011 [4 favorites]

I think the case will likely settle as per the Scary Lawyer Guy's opinion, but it seems pretty clear to me that Stern's lawsuit is bullshit. It's nothing more than a shakedown.
posted by Justinian at 10:34 PM on November 27, 2011

I also think it sounds like a shakedown. It's pretty clear that any Sirius subscriber and any XM subscriber that paid for "Best of" should count for the purpose of Stern's contract, at least from what Scary Lawyer Guy has posted.
posted by wierdo at 11:02 PM on November 27, 2011

Having my card shut down today because I carelessly went over the limit after a year without paying myself due to business being very slow, I just wanted to boggle a bit about how tens, if not hundreds of millions, of dollars is not enough. I'm not saying Stern shouldn't get it if he's largely behind the company's success, but makes me wonder if subscription fees are wildly high.

It's like when you hear about ballplayers making tens of millions and owners making billions and yet going to a game costs a family $200 or more...couldn't they make hundreds of thousands and millions, respectively, and let a family attend a game for $20?
posted by maxwelton at 11:07 PM on November 27, 2011 [3 favorites]

Dunno about the shakedown. I read the article and, while initially I thought the suit was silly, by the end I felt Stern had a decent point. The contract was poorly worded, and Sirius wrote it such that it was up to interpretation whether the bonus due to their subscriber base increasing meant organically or through acquisition. Businesses pursue subscriber growth both ways, and it is a reasonable interpretation that Stern's presences on Sirius would enhance either path to growth.
posted by zippy at 11:39 PM on November 27, 2011 [3 favorites]

I have Sirius, have for many years (and oddly have not been getting a bill or paying for it for most of those, it just keeps working, *shrug*) and not once listened to his show. Mostly on NPR stations, or OutQ, the comedy ones, or a few of the music ones. Frankly, even if i was paying a decent amount, NPR would be worth it for not having to search for one that listenable when driving more than around town.
posted by usagizero at 1:53 AM on November 28, 2011

It's like when you hear about ballplayers making tens of millions and owners making billions and yet going to a game costs a family $200 or more...couldn't they make hundreds of thousands and millions, respectively, and let a family attend a game for $20?

A bit off-topic, but:

They could, but then it would be hard or impossible to get a ticket. Price is how supply and demand balance. There's only so many seats, and in essence they want to sell them to the highest bidders. This is what ticket scalpers do -- they live on the difference between the price set by the team, and what the market is actually willing to pay.

It's probable that most teams set the price to maximize their total revenue for the season, rather than filling all their seats. If they priced tickets to fill seats instead, the price would likely drop, but I doubt it would drop that far. If they sold tickets at $5/ea, you'd have a hell of a time buying one. You might get lucky, but you'd probably end up having to go to the scalpers to get a seat, and pay $200 anyway. Except now the scalpers are keeping all the profit, instead of the team.

Someone is going to make that money, because people are willing to pay that much for tickets, so the teams likely figure it might as well be them.
posted by Malor at 2:59 AM on November 28, 2011 [9 favorites]

If they sold tickets at $5/ea, you'd have a hell of a time buying one.

Not if you want to see the Nationals play!
posted by Mrs. Pterodactyl at 3:06 AM on November 28, 2011 [7 favorites]

On balance, and particularly because Stern and Buchwald carry the burden of proof in the case, I think it more likely than not that they would not prevail at trial.  I simply do not think, in light of the initial negotiation, the existence of the merger fee, the other financial enrichment Stern received under the contract (which is undisputed by either party) and the vagueness of the language regarding the performance-based compensation, that their interpretation of the contract meets the preponderance standard. 

Or even the preposterous standard.
posted by caddis at 3:55 AM on November 28, 2011

It strikes me as silly to count anyone who's on XM but who doesn't get the Howard Stern show. But XM has an offering where you can pay some extra money each month to bring over the 'best of' channels from the other service, and it seems to me that people who pay for that SHOULD count as subscribers.
posted by Malor at 4:13 AM on November 28, 2011

From article: But in arguing for its weakness, Sirius might move to strength by pointing out that when XM subscribers were offered an enhanced package of Sirius programming, only 9 percent of their listeners chose to purchase it.

Stern didn't attract these subscribers before the merger and didn't attract >92% these subscribers after the merger - Stern failed at his job and is pretending it's his employer's fault. Christ, etc.
posted by victors at 4:46 AM on November 28, 2011

Howard Stern should sue reality for making him irrelevant. Actually, maybe Howard Stern should sue Howard Stern.
posted by fuq at 4:58 AM on November 28, 2011

...let a family attend a game for $20?

They could, but then it would be hard or impossible to get a ticket.

Not if they lifted the ban on broadcasting the game locally. Which, in a truly free society, they wouldn't have been able to enact in the first place.
posted by DU at 5:17 AM on November 28, 2011 [3 favorites]

I haven't listened to Howard since he left regular radio, but if there's anything I remember, it's that he needs something to rail against. That's his shtick, along with porn stars.
posted by fungible at 5:34 AM on November 28, 2011

Wouldn't the inclusion of any mention of a merger seem to indicate by intent that the increase in subscribers and the addition of subscribers via the merger are two distinct and unrelated events? I read it that Sirius intended all along to make the possibility of merger a separate consideration in the contract.
posted by Gungho at 5:46 AM on November 28, 2011

It strikes me as silly to count anyone who's on XM but who doesn't get the Howard Stern show.

Why?

Maybe I'm reading it wrong, but it reads to me like the contract has two separate subscriber number-based types of triggers for bonuses: One is for "Howard Stern-generated subscribers", and the other is for "total subscribers". Obviously it's unlikely that any significant number of these people are "Stern-generated" except perhaps in a very loose sense, but why shouldn't these people count towards the subscriber total?

The only possible reason, it seems to me, is the one that Sirius argues (which, note, has nothing to do with Stern himself or his responsibility or lack thereof for getting these customers): They shouldn't count towards the subscriber total because they're Sirius the company subscribers, not Sirius the service subscribers.

But if that's what they meant, they should've put it in the contract, especially given that they explicitly made distinctions between Sirius the company and Sirius the service in other contracts, as Stern points out.
posted by Flunkie at 6:10 AM on November 28, 2011

Howard was fun when he was on WNBC and railing against his asshole bosses - I could get behind that, and empathize with the dude.

Now here he his, 20+ years later, still railing against his bosses, but he's the asshole now. Let's get some perspective - It's not like SiriusXM is taking food out of his kids' mouths here. I thing fungible really nailed it above.
posted by brand-gnu at 6:23 AM on November 28, 2011

It's like when you hear about ballplayers making tens of millions and owners making billions and yet going to a game costs a family $200 or more...couldn't they make hundreds of thousands and millions, respectively, and let a family attend a game for $20?


Major League baseball is a cultural hobby for men, like boy bands are for teenage girls. You're paying for a product that doesn't suit you, at a price point you're not compatible with.

Minor league games are a lot more family-friendly, in terms of money, venue and spectators, and baseball at any professional level is going to be a lot of fun to watch - those guys got some serious skills. This way your kids can root for the home team, you can fill out your scoring card, and everyone gets snacks and a small souvenir, all for the cost of a pair of nosebleed bleacher seats.

To bring it back on track, Howard Stern is also a cultural product for men. Send your money to NPR sponsors, or sponsor NPR with a membership, instead. There's no shame in producing a product people enjoy - entertainers and journalists are more entitled to their earnings than bankers and brokers, IMO.
posted by Slap*Happy at 6:45 AM on November 28, 2011

hey shouldn't count towards the subscriber total because they're Sirius the company subscribers, not Sirius the service subscribers.

Well, keep in mind that none of the XM subscribers even receive Howard Stern, unless they pay extra. So Howard is, in essence, demanding to be paid for listeners that can't even listen to him! And he already got a $25 million payout from the merger, so it strikes me that he's trying to dip into the till twice.

Counting the XM premium subscribers as listeners from that standpoint would be fair, but I think it's very silly for Stern to demand payment for people who can't even tune him in. If the Sirius corporation bought a radio station, could he demand payment for those listeners too, even though he was never played on that station?

I think the only reasonable interpretation is for Stern to get paid based on subscribers who have the option of tuning him in.
posted by Malor at 7:05 AM on November 28, 2011

Part of why this lawsuit is interesting to me is because there seems to be enough ambiguity and gray area in how the contract reads to make it difficult to point to any particular clause that makes one side clearly in the right.

From a layman's perspective, I agree that it seems silly for Stern to claim subscribers who came in after the XM merger as "Stern-generated subscribers" considering they intentionally signed up for a service Stern was not a part of (although, in fairness, many of them were likely subscribers who signed up for XM before there was a Stern option on satellite radio to begin with).

On the other hand, as was pointed out in the article, following the merger it was Sirius's decision to make Stern's show a premium add-on with an additional fee to XM subscribers over and above their regular monthly fee, creating a higher barrier for Stern to be able to gain these listeners, which is a possibility that also doesn't seem to have been planned for and dealt with clearly in the contract. Will be very interested to see how this all plays out (although I would be surprised if it isn't quietly settled).
posted by The Gooch at 7:18 AM on November 28, 2011

Well, keep in mind that none of the XM subscribers even receive Howard Stern, unless they pay extra.

Where does his contract require that someone receive Howard Stern for that person to count towards Sirius's "total subscribers"?

If the Sirius corporation bought a radio station, could he demand payment for those listeners too, even though he was never played on that station?

Is such a listener a Sirius subscriber? Does such a listener count towards Sirius's "total subscribers"?

From a layman's perspective, I agree that it seems silly for Stern to claim subscribers who came in after the XM merger as "Stern-generated subscribers" considering they intentionally signed up for a service Stern was not a part of

I don't think he is claiming that. Again, there are two separate types of triggers in the contract: (1) If Stern generates a certain number of subscribers; (2) If Sirius exceeds a certain number of total subscribers.

The fact that someone doesn't fall into the first category does not make the second category disappear from the contract.
posted by Flunkie at 7:32 AM on November 28, 2011 [1 favorite]

@zippy: "and it is a reasonable interpretation that Stern's presences on Sirius would enhance either path to growth."

It is indeed reasonable. However, Stern is claiming he should be paid for the subscribers added because of the XM merger.

You could torture some logic into confessing that Sirius' financial position was augmented by Stern's presence, thus making the financing of the XM merger possible, but I don't think even Stern's lawyers have the chutzpah to try that.

Long story short, neither side fully anticipated this to happen. You have to have very precise definitions in place for contracts, and the term "subscribers" is really too broad for the purpose of measuring performance bonuses.
posted by Xoebe at 8:00 AM on November 28, 2011

I can't see why Stern or Sirius/xm has any moral high ground here. They are both acting to maximize self interest. This is exactly how an employee has to act in the market today. The company is incapable of offering the tribal features which would create a greater obligation. Too often people trick themselves into a fake view that they are not co-workers; but instead are family. Don't confuse your work spouse and your work brother for your real brother and spouse.
posted by humanfont at 8:11 AM on November 28, 2011

Stern is already stealing a paycheck from Sirius. He's rarely on the air. Nice work if you can get it. Sirius sucks, and the "merger" accomplished nothing -- it just made a formally good sat-rad offering (XM) suck just as badly. That being said, I still hope they prevail over Stern and his god-awful excuse for radio.
posted by VicNebulous at 8:25 AM on November 28, 2011

Like many documents written by lawyers, Scary Lawyer Guy's commentary was about three times too long.
posted by monju_bosatsu at 8:49 AM on November 28, 2011

Like many documents written by lawyers, Scary Lawyer Guy's commentary was about three times too long.

I thought so too. Shorter version:

- There's a contract between Stern and Sirius
- Sirius negotiated it when they were a weak second to XM and desperately needed Stern's star power
- The contract includes a bonus tied to Sirius subscriber numbers absent how Sirius acquired them
- Sirius paid this in normal years
- Sirius acquired XM but kept it as a separate service at their discretion
- Sirius wants to say that it meant "organic growth" and "Subscribers of Sirius XM" not "Subscribers of any Satellite Radio Service owned by Sirius"
- Stern thinks these subscribers are part of Sirius
- The contract is open to interpretation on this
- Sirius has a lot to lose
- Stern doesn't have as much money for lawyers as Sirius
- Stern likes his privacy
- So to do former Sirius execs, and discovery is exhausting too
- They'll probably settle
posted by zippy at 9:04 AM on November 28, 2011 [1 favorite]

Oddly enough I'm a Sirius subscriber with a lifetime subscription. I was wondering about Howard Stern the other day. About 20 years ago, when he was syndicated in Florida, I'd listen occasionally. Sometimes he was funny, most of the times, not. Okay, you had to be there.

At any rate, on Sirius, with the cursing, pornographic discussions, etc, he's unlistenable. What made Howard Stern so compelling on broadcast radio was that he was constrained, and consequently it was exciting when he stepped over the line. Without a line, he's just vulgar and in this day and age, a bit dated.

Although I fall WAY outside of the demographic range, I now listen to Elvis Duran in the morning. I still get the camaraderie of the personalities in the morning, and I don’t feel like I need a shower after listening to it.

What’s really frustrating about the Sirius-XM merger is that I can’t use my Sirius subscription in my Honda (XM). Come on, it’s been 5 years already!
posted by Ruthless Bunny at 9:12 AM on November 28, 2011

It's probably contracts like Stern's that prompt the corporation to keep the two services logically separate.
posted by Malor at 9:18 AM on November 28, 2011

tl;dr - really rich guy wants more money
posted by drmanhattan at 9:36 AM on November 28, 2011

Both sides have sufficient resources to litigate this. The analysis of motivation for the motion for summary judgement seems tilted towards Stern. This isn't some pauper who will be bled dry. Stern's pockets maybe deeper here. This lawsuit is like to drag on for a long time.
posted by humanfont at 9:40 AM on November 28, 2011

tl;dr - really rich guy wants more money

tl;dr - really rich company wants more money
posted by inigo2 at 9:45 AM on November 28, 2011

I remember when Stern got that offer; i remember thinking it was obscenely high in favor of Stern; regardless, the most surprising thing about this is that Sirius lasted long enough to actually honor it.
posted by Uther Bentrazor at 10:41 AM on November 28, 2011

VicNebulous wrote: it just made a formally good sat-rad offering (XM) suck just as badly.

Heh, I always preferred Sirius to XM, but I only ever listen(ed) to either in rental cars that happened to have one or the other.
posted by wierdo at 11:16 AM on November 28, 2011

I have Sirius, have for many years (and oddly have not been getting a bill or paying for it for most of those, it just keeps working, *shrug*) and not once listened to his show. Mostly on NPR stations, or OutQ, the comedy ones, or a few of the music ones.

Having not listened to the Stern show since moving from the Philadelphia area 25 years ago, I can only say: Congratulations on your intellectual superiority.
posted by coolguymichael at 12:03 PM on November 28, 2011

I listened to Howard in NY in 87/88. At the time I thought he was sort of funny but that his ego got in his way more often than not, and his various insecurities were too often on display. I was very surprised when he broke nationally, and even more surprised that the show had become even less funny in that time. The rest of his career has been, for me, like a particularly stubborn tire fire that refuses to go out.
posted by doctor_negative at 3:08 PM on November 28, 2011

It's probably contracts like Stern's that prompt the corporation to keep the two services logically separate.

There's a lot of technology issues too. Both companies launched satellites that operate in significantly different ways - obviously, frequency, but also in the methods by which the radios work. And LOTS of legacy units out there that can be expected to last another 5-7 years.

When these satellites reach the end of their life, they'll probably put everything behind one system or another.

I have an XM radio and really wish Stern would DIAF. I'm certainly not paying extra for him, unless I end up paying for another rate increase because of a settlement. If it got to be much more I'd probably unsubscribe and just start putting the money toward more iTunes acquisitions.

I used to love XM but it's largely become just more corporate lowest common denominator radio. Shallow playlists and rarely any surprises.
posted by randomkeystrike at 12:28 PM on November 29, 2011