Karl Stefanovic was touted as a possible replacement for Kyle Sandilands after the shock jock's "serious bullying" of long-time co-host Jackie O.
The Kyle and Jackie O Show, a longtime ratings juggernaut and thorn in the side of regulators, came to a fittingly dramatic conclusion when Sandilands accused his co-host of being “off with the fairies”.
The remark prompted Jackie "O" Henderson to announce she could no longer work with Sandilands, triggering a chain of events leading to them both being dumped from their decade-long $100 million contracts.
Henderson is suing her former employer ARN Media, the owner of KIIS FM, claiming she was unlawfully sacked and is owed the remainder of her contract, an estimated $85 million.
Her lawyer Vanja Bulut told the Federal Court on Friday that higher-ups canvassed the possibility of Henderson co-hosting a radio show with Karl Stefanovic.
At the time, Stefanovic worked for Nine’s Today Show but has since been axed.
Ms Bulut said her client wasn’t made aware of the suggested swap, which was abandoned for unknown reasons.
Instead, the 51-year-old was offered a role hosting an afternoon drive show for $2 million a year, a fifth of what she earned for the Kyle and Jackie O Show.
ARN argued Henderson should have accepted the offer or negotiated further, but Ms Bulut dismissed it as an unattractive deal she would never accept.
The on-air bust-up between Sandilands and Henderson sent shock waves through the radio network, according to emails between executives read out in court.
“What happened on air 15 minutes ago between Kyle and Jackie is not okay,” the chief people officer wrote as the broadcast was still live.
“There is serious bullying and harassment in the workplace.”
After Henderson’s manager reached out to discuss the segment, which she also considered bullying, the executives discussed how to respond.
“We need to be careful from a legal liability perspective,” one higher-up wrote before another suggested toning down a draft reply.
Henderson is expected to give evidence at trial about alleged damage she suffered to her mental health and wellbeing after a series of attacks from Sandilands.
But her former station contends her alleged pain, suffering, and distress were a result of a failure by her company Henderson Media to ensure her wellbeing, as required by her contract.
Henderson was the sole director and shareholder of Henderson Media.
The radio company previously argued in a defence to Henderson's claims of workplace bullying that any complaint she made was not in good faith.
Her failure to report any breaches to the workplace safety watchdog was an indication she was trying to leave her contract early, ARN alleges.
Henderson made a complaint about offensive comments made on air by her volatile co-host in September 2025 but dropped it three months later, according to court documents.
"She believed the issue had been resolved through her arranging for exorcists to clear Mr Sandilands' demons," ARN claimed in court documents.
"Her basis for telling ARN no further action was required was not a rational one."
Ms Bulut said the 51-year-old withdrew the complaint because she wanted to be loyal to Sandilands.
He settled his own case with ARN in June, receiving a $12 million payout.
The matter will be ventilated in a 10-day hearing in October.
