Smallville Creators Sue Warner Bros, Say They Never Got Fair Market Price For Their Work
from the invisible-hand dept
AdamR points us to this story about the Smallville creators suing Warner Brothers -- the creators claim that they were cheated out of the "fair-market price" for the show and are demanding additional compensation for the successful show, which was just renewed for its 10th season. The lawsuit alleges that since WB owns both the studio that creates the show and the networks that air it, the negotiated price for the show was not fair. Hollywood has had a long history of wrestling with matters of vertical integration, with the the 1948 anti-trust case United States v. Paramount Pictures taking down the classic "studio system" that prevailed during that era. So, to accommodate the anti-trust regulations, negotiations between studios and networks must be held at "arms length." In recent days, the producers from Home Improvement, Will & Grace and The X-Files have won settlements worth millions of dollars in similar suits. That said, it's ridiculous to claim that fair-market price was not negotiated -- the fair-market price was whatever the producers could get for it, at the time that the show was sold, before it proved to be a huge hit. The producers accepted and signed the deal when it was negotiated. If a show appreciates in value after the deal is already done, why should the original producer get a piece of that upside? The network assumed the risk in this case when they negotiated the deal. What the producers are seeking is akin to a baseball player trying to renegotiate a previous season's contract after having a great season -- it doesn't make sense. If this tactic were ok, then networks should try and recoup money from the producers of all of the shows that have failed. If the producers want more money, then they need to negotiate for it in future contracts, and that should be easier to do with a hit show under their belts.
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Filed Under: contracts, smallville
Companies: warner brothers
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Contingency
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Re: Contingency
Senator Franken has brought up the issues he lived through at SNL when the studios were allowed to own a larger percentage of the shows on television in regards to the Comcast/NBC merger. Previously, the networks were supposed to be the equivalent of dumb pipes. Then laws and regulations changed. Suddenly, creators were forced to sell their shows to the broadcasters. Otherwise they might be given bad timeslots or the show wouldn't be picked up.
In other words, unless you played by the monopoly's rules, you couldn't play at all.
And that's why these guys are winning settlements. If the studios were so risk averse, they wouldn't be forcing creators to let them own more and more of the show. Instead, the studios would be seeking to be dumb pipes and profit on that.
This is another case of a monopoly using it's power to guarantee revenue without much risk exposure.
And by the way, pro athletes should be able to adjust their contracts after a good season. Particularly in the NFL where few contracts are guaranteed and the team's routinely ask players to renegotiate down after a bad season.
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Re: Re: Contingency
Agreed the monopoly power is a bad thing - however I still think it is possible to get a bigger share of the upside if you believe in your product enough - although you probably have to take a smaller upfront payment.
Of course there is the possibility that the success of Smallville was either luck or smart promotion by the networks....
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Re: Re: Re: Contingency
Obviously, the execution matters, it isn't just someone says teenage superman who can't fly and there's a hit. And honestly, I don't know enough of the details to say who is responsible for the success.
My concern is this: You create the best TV series ever from top to bottom. You go to the networks, and every single one of them loves the show, and wants to back it and go primetime with it. One catch. Every single one of the networks wants 85% ownership of the show to give it a primetime slot.
So instead of an independent studios competing to work with you to create the show, you have to sell to the network studios to get it on the air.
And that's where the lawsuit comes from.
I agree that the spark of an idea didn't produce a successful show. But I still have a huge issue with networks expanding into monopolies.
The networks make more money owning 85% of a failing show than they do owning 15% of a successful show. Do you see the issue? It isn't about producing the best TV. Is that a problem for anyone else?
And again, I'd like to bring up that MLB players (I missed that it said baseball in the summary the first time) can't just be cut next season. The contracts are guaranteed. If they had an 5 year guaranteed contract, the creators have no complaint. That's two sports the analogy fails in.
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Re: Re: Re: Re: Contingency
Though that really only applies with baseball, though. Most sports contracts don't include guranteed money as the whole sum, only a partial, and even that can be taken back via litigation (i.e. Michael Vick).
That's why among avid sports fans you'll hear reference to two differentiating types of money: Football money vs. baseball money. Baseball money is always better than football money, for the reason you just gave...
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The no flight/no tights rules made sense when he was in high school. But they make no sense now.
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It's actually an excellent show, but only if you watch it under the exact right conditions. Here's what you do:
1. Turn the television to the WB, no matter how much your eye begins twitching at the prospect
2. Light several candles, open up a nice bottle of wine, put out a basket of chocolate covered strawberries
3. Listen to Remy Zero, the whole theme song, because it is an excellent reminder to complete the next step...
4. Which is to immediately jam your finger into the "Volume Down" button with enough force to draw blood
5. Once they've returned from whatever Noxema advertisement was playing, you will be treated to the stunning vision of an extremely hot, busty girl. It might might be one of the regular cast, or it might be a guest star, that's part of the fun!
6. Reach for the wine and gulp it as fast as you can in one breath, and then toss three of the strawberries in your mouth (raw oysters are an excellent substitute).
7. Begin furiously masturbating as violently as possible. You have only a few moments to do so before....
8. ARRGGHHH! Begin violently shouting nonsense words at the TV as one of the no-talent assclown male castmembers appears on the screen. If any strawberries or oysters remain, hurl them with righteous indignation at the screen.
9. As the camera continues to shift between characters, repeat steps 5-9 until satisfaction is attained.
10. Get up, look at the mess you've made, and then notice that your dog/cat/girlfriend is looking at you with the same expression the dead people had in "The Ring"
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You forgot that very important part.
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I'm guessing that somewhere there's a group of friends who play a drinking game to Smallville, where whenever there's female cleavage the guys drink and whenever there's a guy not wearing a shirt the girls drink. They'd be pretty drunk by the end, that's for sure.
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F*%& You Very Much
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Aaaaaannnnndddd enjoy...
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Makes sense
However my guess at the anti-trust argument is that because the "content creators" aka the studios are essentially the same as the "content distributors" aka the networks - there is no free market for getting at TV show you produce out there. Its not like you can just start up a TV network even if you had the money. There are spectrum issues for OTA, and the networks own/are the cable companies so they don't leave a level playing field.
The real question is - if the market was really at arms length - would a content producer be able to include a contract term that says they get a share of gross/net revenue the TV network brings in from its show. The answer is for many 'big name' shows (which arguably a superman show would count) would be able to.
Now did the Smallville creators ever ask WB for a revenue share. If they did was it not granted or was it just not "enough". If they didn't was it because they were desperate for any offer or was it because the show concept was too risky.
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Re: Makes sense
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Movie studios do this all the time. They set up a new company (which is owned by the studio and other producers), put the money in to make the film, and then buy or license it back. But they can't just buy it back for $1, even though they may own the majority of production company because there may be other people who have an interest in that company, even if it's only a tiny amount.
Imagine if you make a deal where you get 25% of any money from the sale of something, but you don't have any say in the act sale itself. And then your partner sells it to his brother for $1, way below what it's worth. And then the brother sells it for $10,000, and gives that money back to his brother. You'd probably be pretty pissed.
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It's just like...
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WOW little mikee controdicts himself again
Wait isn't this EXACTLY the opposite of what you claim that the music industry needs to do? I have seen you slam time and time again the contracts between the music studios and the musicians, but it's the studio that assumed the risk and even fronted money to the bands, so why should the artist deserve more just because the music become popular?
WOW, come on little mikee at least be consistantly pouty and whiney
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Re: WOW little mikee controdicts himself again
Look who's talking. So Mike, when do we get the option to filter troll comments?
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Re: WOW little mikee controdicts himself again
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Re: WOW little mikee controdicts himself again
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Re: Contingency
Most athletes DO try to renegotiate for better future contracts based on previous season's performances. That is pretty basic. And just as an athlete is not asked to REFUND the millions of dollars he got paid for sitting on the bench with an injury (it's all part of the risk), the producers should not be allowed to get this type of compensation unless it is proven they were forced somehow to take a bad contract. Which can be a little hard to prove, since they always have the option not to. But rather CHOSE to in order to make money...
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Other parts to the deal
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Fair Market Value
Smallville's Producers feel that WB is taking advantage of their distribution power to unfairly keep revenue through an accounting trick, that artificially lowers the agreed moneys WB would pay to Smallville's Producers.
Also it is time to End Smallville and the no tights no flight and start Metropolis in Flying in tights & a Cape.
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Misuse of words...
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Slight problem with your logic, Mike...
Paul
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Re: Slight problem with your logic, Mike...
Seems like a lot of replies mention that the writers had no choice because of monopolies...What a crock of shit. Here's a list of some U.S. networks: http://en.wikipedia.org/wiki/List_of_United_States_cable_and_satellite_television_networks
And nobody is stopping you from starting your own channel. Oh, you'd rather just write scripts than actually running a network with all the work and risk that entails? Then stop bitching about them not paying you whatever you damn well feel like after you agreed to terms. There may or may not be an issue with meeting the terms laid out in the existing contract, but all this antitrust crap is a bunch of B.S.
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Transfer Pricing
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Are you serious? I used to watch that show too, but then I eventually got bored of it. The writers still don't know how to come up with anything besides kryptonite in every episode.
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