Hey Now! Sirius Jumps as Shock Jock Stern's Suit Fails (Update 1)
NEW YORK (TheStreet) -- Howard Stern may be the self-proclaimed "King of all Media," but there's at least one court he's not sitting at the head of today: The New York State Supreme Court.
Stern's lawsuit against employer Sirius XM(SIRI) was dismissed "with prejudice," according to Judge Barbara Kapnick, who heard arguments from both sides. Dismissed with prejudice means both Stern and his manager Don Buchwald cannot refile a suit with similar claims.
David Joyce, analyst at Miller Tabak, views the news as favorable for Sirius.
"It's a modest positive for the stock. It seems they had already worked out most of the issues beforehand, but now that's its been dismissed, the shares are reacting," said Joyce, who has a neutral rating on the stock with a $2.55 price target.
In her decision, Judge Kapnick noted that Stern's contract had "clear, unambiguous language" and as such, was not entitled to any further compensation. The decision came down yesterday.
Stern was suing his employer for $300 million in lost stock awards he claimed he was owed as part of a contract with Sirius when he signed on back in 2005. If Stern surpassed subscriber thresholds as result of him joining the nascent company, he would've been granted these options. His manager Buchwald and Stern felt that he had surpassed the expectations because of the merger with XM Satellite Radio in 2008.
In the contract, the shock jock was supposed to receive five stock awards worth $75 million each, in addition to a $25 million bonus he received when the merger happened. Mr. Stern only received the initial grant, but not the other four.
Maxim Group analyst John Tinker said he was surprised the lawsuit was not mentioned when Stern was renegotiating his contract in 2010. "A lot of this is just the nature of the relationship with high-paid talent," Tinker said over the phone. When asked what it meant for the stock, he replied, "It's all good." He rates Sirius "buy" with a $3.20 price target.
Sirius could not be immediately reached for comment in this case.
Shares of Sirius rose 3.23% in late afternoon trading to $2.24.
Interested in more on Sirius? See TheStreet Ratings' report card for this stock.
--Written by Chris Ciaccia in New York
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