by Dennis Yang
Tue, Mar 30th 2010 4:29am
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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