Canadian Politics Today

Anybody ever watch the series "Bones"?  It was based on a series of books by Kathy Reich about a forensic anthropologist who helps an FBI agent solve murders.  It ran for 13 seasons from 2005 to 2017 and starred Emily Deschanel and David Boreanaz.    A legal battle over the show just cost Fox Television a $179 million settlement awarded by an arbitrator.

https://www.hollywoodreporter.com/thr-esq/fox-rocked-by-179-million-bones-ruling-lying-cheating-reprehensible-studio-fraud-1190346

The gist of the story is that Reich, Boreanaz, and Deschanel, along with producer Barry Josephson, were called "profit participants", meaning that their contracts with the show gave them a cut of profits from the show, including resale of broadcast rights, digital streaming rights, and so on.  But Fox sold the broadcast rights to, essentially, itself-- Fox Broadcasting, its foreign affiliates, and its digital streaming platform, Hulu-- at a price of pennies on the dollar. Essentially, Fox was building equity in Hulu and creating profits for other Fox-owned enterprises by giving away assets from Fox Television and ripping off Reich, Deschanel, Boreanaz, and Josephson in the process.

An ethically challenged person might suppose that Fox was being clever here, but the profit participants had language in their contracts to protect against exactly this possibility. If Fox Television sold the show to other Fox enterprises, the price had to be at a fair market value.  The arbitrator found that not only did Fox Television not get fair market value for the show, they didn't even attempt to find out what fair market value was:

In arbitration, Fox attempted to justify the low license fees that Fox Broadcasting, Hulu and Fox’s foreign affiliates were paying its studio division for rights to air the series.

“Bones was a middling show with middling ratings,” wrote Fox’s lawyers in an opening brief, adding that a higher fee from the $2 million per episode paid would have led to the show’s cancellation.

As Lichtman discovered in the course of the arbitration, though, Fox’s studio executives were never really interested in finding out the series’ fair market value.

“We were not allowed to get that information from the network,” testified Walden, who at the time ran the Fox studio but not Fox Broadcasting, when asked about the possibility of finding out what the network paid for similar shows in their middle seasons.

Given that the profit participants had self-dealing protection in their contracts that “deals must be as good as marketplace deals,” the arbitrator found Walden's lack of knowledge to be “either shocking if true, or disingenuous if false,” adding, “Interestingly, both Ms. Walden and Mr. Newman testified that they engaged in tough negotiations and fought for the [Profit] Participants. However, the evidence belies these assertions. How could they fight if they were not properly armed with the requisite information? What negotiations were there if the information mandated by the contract was not examined, called for or even investigated?”

There's more to the story, but that was the interesting part to me. And there's potentially more of this out there:

It's highly unlikely that Bones was the only series licensed to Hulu under possibly fishy economic auspices. The ruling amounts to the opening of a Pandora’s box for attorneys in the entertainment industry. It also raises the prospect that licensing content may suddenly become a whole lot more expensive for Hulu should other profit participants in Hollywood make their own challenges.

 -k