• by Erik Sass  @eriksass1, May 29, 2006

The high-profile catfight between CBS Radio and shock jock Howard Stern ended anticlimactically Friday with the announcement that Sirius Satellite--Stern's current home--would settle the case out of court, with a payment of $2 million and other terms that remain undisclosed. CBS brought the lawsuit against Sirius and Stern at the end of February--charging that Stern had breached his contract by using CBS airtime in 2005 as a platform to promote his upcoming move to Sirius, which took place in January 2006.

Stern contended that his statements were made with the knowledge and permission of CBS executives--and in fact attracted larger audiences for his CBS show, as well as other shows like the "Late Show with David Letterman," where he appeared to discuss the move. Stern objected: "If I was hurting them, why did they keep me on the air for 14 months?"

The meager outcome for CBS seems to confirm the analysis of Banc of America analysts Jonathan Jacoby, Gunbir Sethi, and Joe Arns, who wrote that "our legal contacts inform us that it could be challenging for CBS Radio to win punitive damages from Sirius in this case given the relatively high standards for such awards under New York State law." According to Jacoby, legal analysts say punitive damages would depend on CBS proving the Sirius displayed "moral culpability [that] transcend[ed] simple carelessness" as well as "public interest harm" meaning harm to the public at large, not just CBS.

Catching Stern was undoubtedly a coup for Sirius Satellite, which outstripped rival XM in new subscriptions, adding 1,142,640 in the last quarter of 2005--the lead-up to Stern's debut. Meanwhile, losing Stern was a blow for CBS Radio, which saw a sharp decline in audience and a first-quarter revenue loss of 6 percent following his departure.