On April 11, 2013, New York’s First Judicial Department affirmed a trial court’s dismissal of an action brought by radio shock jock Howard Stern against Sirius XM Radio, Inc. Stern’s suit alleged that he was contractually owed $330 million in stock awards after Sirius merged with XM Satellite Radio in 2008. According to Stern, the contract he signed with Sirius entitled him to an equity bonus whenever new subscribers signed up to the satellite radio service. Stern asserted that, following the merger, the new audience members were technically new subscribers, triggering Sirius’ duty to pay him the equity bonus under the contract.
The court disagreed, noting, “Looking solely to the plain language used by the parties within the four corners of the agreement, the disputed term ‘Sirius subscribers,’ by which plaintiffs’ compensation was measured did not include subscribers to XM Radio, a wholly owned subsidiary which defendant acquired by merger, even though the merger had been anticipated within the agreement.”
Stern made the transition from traditional to satellite radio by signing on with Sirius for $500 million in 2006. He also received an additional $25 million (pursuant to the same, at-issue contract) after Sirius merged with XM, its only rival at the time.