CBS's whining helps Howard

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CBS Radio makes the case that Howard Stern had an undisclosed-and more than $200 million-financial incentive to use his old radio show to sell Sirius subscriptions before his satellite-radio contract started Jan. 1. So CBS is suing Mr. Stern and Sirius, but it's already lost the PR battle. And the publicity around the suit should help sell a few more Sirius subscriptions.

When Sirius Satellite Radio in October 2004 announced it had a contract with Mr. Stern, starting Jan. 1, 2006, to move his show from CBS Radio, Sirius disclosed the price tag: 1) about $100 million a year in "fixed obligations"; 2) "substantial stock-based incentive payments" based on subscription growth "during the term of the agreement."

Then early this year, Sirius revealed it had given Mr. Stern and his agent $225 million in stock-"fixed" pay moved up from a future year-because 2005 subscriptions "exceeded the target we agreed upon with Stern in October 2004." That makes it appear Mr. Stern had strong incentive to boost subs before his contract began. (Subscriptions quintupled from October '04 to year-end '05.) That could help explain Mr. Stern's incessant satellite plugs on his old show. Mr. Stern disputes all this. The courts will figure it out.

CBS says that if it knew then what it knows now, it surely would have canned Mr. Stern after he signed with Sirius. Yet for 15 months, CBS kept him on the air, putting up with chatter about satellites while it raked in the ad bucks.

CBS lost the PR battle even before it announced the lawsuit: Mr. Stern upstaged CBS with a press conference that made the suit look like a case of sour grapes. He got attention; CBS got news stories that noted how ratings slumped after the star decamped.

Mr. Stern presumably believes in satellite radio. Whether he believes in Sirius stock is another issue: A day after he got the stock, he filed to sell "all or a portion" of it. There's always a chance the tide will turn against him, but for now, CBS comes across as a sore loser unable to move on. Sirius at year-end had 3.3 million subscribers; Mr. Stern's old show had about 15 million listeners. Maybe Mr. Stern should thank CBS for the latest plug.
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