New York State Supreme Court Justice Barbara Kapnick in Manhattan said Stern and his agent Don Buchwald were bound by the language of the 2004 agreement that brought the now 58-year-old "shock jock" to what became Sirius XM from traditional radio.

"While it may be true that Stern and Buchwald hoped and expected to reap the benefits from any significant growth that Sirius experienced after they entered into the agreement, that subjective expectation cannot suffice to override the clear, unambiguous language of the agreement," Kapnick wrote.

Seth Rothman, a lawyer who represents Stern, did not immediately respond to requests for comment. Sirius spokesman Patrick Reilly had no immediate comment.

The case centered on whether to count subscribers of the former XM Satellite Radio Inc, which Sirius bought in 2008, to help determine performance-based awards for Stern's production company, One Twelve Inc, and fees for Buchwald.

Sirius ended 2011 with 21.9 million subscribers, up from 3.3 million at the end of 2005, when the company was known as Sirius Satellite Radio Inc.

Stern moved his radio show to Sirius on January 9, 2006. He renewed his contract for five years in December 2010, only to file his lawsuit three months later.

According to the lawsuit, Stern's presence helped New York-based Sirius exceed subscriber targets by at least 2 million in each of several years beginning in 2006, triggering a new stock award every time.

Sirius awarded $75 million to One Twelve and $7.5 million to Buchwald after the first year.

Kapnick wrote that had all the performance awards been triggered, Sirius could have owed One Twelve another $300 million and Buchwald another $30 million.

But Kapnick agreed with Sirius that XM subscribers did not count toward the subscriber base used to determine the awards.

She said the only contractual provision that even mentioned or referred to XM or a potential merger called for Sirius to pay $25 million to One Twelve and $2.5 million to Buchwald if the XM merger took place. These payments were made, she said.

Last month, Sirius asked the Federal Communications Commission to reject an application by John Malone's Liberty Media Corp for 'de facto' control of Sirius. Malone is Sirius' largest shareholder, with preferred stock convertible into a 40 percent stake, but does not exercise full control.

Sirius shares rose 2 cents to $2.19 in morning trading on the Nasdaq.

The case is One Twelve Inc et al v. Sirius XM Radio Inc, New York State Supreme Court, New York County, No. 650762/2011.

(Reporting by Karen Freifeld and Jonathan Stempel in New York; Additional reporting by Yinka Adegoke; Editing by Lisa Von Ahn and John Wallace)

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