News
Entertainment & Sports
Jul. 26, 2002
Jury Says Disney Owes Agency $14.9 Million in Commissions
LOS ANGELES - The Walt Disney Co. owes nearly $15 million in additional commissions for the hit television show "Home Improvement," a Los Angeles jury found Wednesday.
"It was gratifying that the jury was able to see through Disney's smokescreen and reach the right result," said Joel Klevens of Santa Monica's Fogel Feldman Ostrov Ringler & Klevens, who, with lead counsel Larry Feldman, represented the Agency for the Performing Arts, the talent agent for the show's creator.
By an 11-1 vote, the jury decided that Disney had failed to adjust the agency's commissions to the rising cost and success of the show, the licensing fee for which was $3 million an episode by its final season on the air.
Disney had agreed to pay a commission to the agency based on the "base licensing fee" that ABC paid for the television show. For the length of the show, Disney calculated the agency's commissions from a licensing fee of $410,000 an episode - the price of the show before it became a hit.
After deliberating for two days, the jury agreed with the agency that the term "base license fee" referred not to the original agreed-upon license fee of $410,000 but to any adjusted license fee that the network paid Disney for the show during the course of the show's life.
Base license fees are any fee a network pays for a television show, excluding costs like bonuses for a show's stars, the agency argued.
Disney was represented by Peter Moll from Howrey Simon Arnold & White's Washington, D.C., headquarters and Charles Samel from the firm's Century City office, who referred calls to Disney's Burbank headquarters.
"We are disappointed by the verdict, particularly since we had prevailed on the majority of the claims in the case. We believe that we had satisfied our obligation to APA," said Disney spokeswoman Michelle Bergman. "However, the jury disagreed with our interpretation of the definition of base license fee."
The company expressed confidence that there were solid grounds for an appeal, but Bergman said she did not know if the company had chosen appellate counsel.
"Home Improvement" featured comedian Tim Allen as a befuddled tool expert and family man, and ran from 1991 to 1999. Disney's legal troubles with the show began in February 1997, when creator Matt Williams and his production company Wind Dancer sued Disney for giving ABC a sweetheart deal on license fees for two seasons of the show. Disney acquired ABC in 1996.
Disney settled the lawsuit, which claimed that the company offered ABC a lower price for the show because ABC had become a Disney subsidiary.
The agency sued Disney in 1997, claiming breach of contract as well as the same sweetheart deals for which Disney had settled with Wind Dancer. The trial court dismissed the agency's case, but in July 2001, the 2nd District Court of Appeal sent the parties back to court on the license fee issue, which resulted in Wednesday's verdict.
Los Angeles attorney Diana Greene Gordon, who represented the agency for much of the case, said the verdict did not mean television profit-sharing plaintiffs would start to come out of the woodwork because few shows last long enough to see their original license fees renegotiated.
"The issue usually comes up when you have a very successful television show like 'Home Improvement,' where the license fees get renegotiated," Gordon, a sole practitioner, said.
Disney only had one other show, "Boy Meets World," successful enough to undergo license fee renegotiations, according to Klevens. The William Morris Agency, which had a commission deal for "Boy Meets World" similar to the Agency for the Performing Arts', testified at the trial.
"Disney tried the same ploy with [the] William Morris Agency on that show, but ultimately agreed to pay commission on the full license fee increase," Klevens said.
Agency for the Performing Arts president James Josnell said the firm was "thrilled" with the verdict.
"I wasn't sure if the jury would understand what was involved in this case but they absolutely got it," Josnell said.
The agency, which represents television, film and music professionals like Fleetwood Mac and the writer of the last three James Bond movies, is ready to move on, Josnell said.
"We're just happy to put this behind us. Disney Company is a fine company, and this is something that took place a long time ago, and we're just ready to move on," Josnell said.
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Katherine Gaidos
Daily Journal Staff Writer
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