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Disney, Celador Rest; ‘Millionaire’ Case Goes to Jury (updated)

The big question becomes: Can they wrap this thing up by the holiday weekend?

UPDATE

 

Don’t blame us – blame the William Morris Agency.

That’s what lawyers for Walt Disney told the jury in their closing statement Tuesday, sending the $270 million case, brought by “Who Wants to Be a Millionaire” creator Celador International, to the jury.

Disney’s lead lawyer Marty Katz declared to the nine jurors that “if Celador Productions is unhappy with the deal that got, they have the wrong defendant here.”

Katz told the jury that it’s the William Morris Agency, who negotiated the deal that saw “Millionaire” air on ABC for their client Celador, that the U.K. company should be suing. Celador knew, from the deal they signed with ABC, “they were never going to make money off the network run,” Katz told the jury. Which is why “the only secret deal is between Celador and WMA to put off any dispute between themselves” for after the company went after Disney.

“What you will decide is not who wins or loses, though you will certainly decide that,” Celador attorney Roman Silberfeld said earlier in the day, “but what the truth is in this case.”

The truth to Celador, which first filed its suit in 2004, is that Disney, ABC, Buena Vista Television and Valleycrest Production conducted a series of slippery deals and secret arrangements that saw the “Millionaire” creators left short hundreds of millions in expected revenues and profits from the hit game show when it came to America in 1999.

“This is a shell game,” Silberfeld said, “so that what ends up being shared is an empty pot.”

Such shell-game tactics and the money they denied the company are why Celador are seeking damages of around $279 million to  $395 million in fees and revenues, based on two different sets of accounting methodologies the company commissioned and the number of episodes of the show; and around $11 million in lost merchandising revenues. With such big figures floating in the air, the attorney earnestly told the noticeably weary jury that they must affirm “people and corporations should treat each other fairly.”

As he has before, Katz bluntly contended that Celador International are not acting as an agent for Celador Productions, that there is no foundation to their damages claims and that company founder Paul Smith simply wants more money that the millions he’d already made in Executive Producer fees off “Millionaire.”

Money that, according to Katz, Smith was determined to pursue through renegotiating the deal he’d signed. Money that, Katz contends, Smith would pursue through audits and the lawsuit if he didn’t get what he wanted there.

But there is truth and there is fact.

Judge Virginia Phillips called the case a “dispute about a contract” when the trial started almost a month ago In the process, however, the trial has become an investigation into the often shadowy world of Hollywood accounting.

Silberfeld made sure to emphasize that point in his final remarks, telling the jury that the realities of Hollywood accounting are that when it comes to addressing shareholders, “they try to make things look big” – and if they are accounting to IRS or profit participants, “they try to make things look really small … that’s what happened here.”

That may be, but the fact is the jury has two claims to consider – breach of contract and breach of the Implied Covenant of Good Faith and Fair Dealing. Out of either of these, Celador or Disney will come out the victor.

Silberfeldplayed the card of small Celador and hard-working founder Paul Smith against the big and mighty Mouse Empire. Silberfeld laid out how his client was bamboozled as ABC and BVT moved the rights to “Millionaire” back and forth in backdated agreements and side deals.

The only reason to move these rights around, Silberfeld claimed, was “to shield from Celador the profits and benefits of this contract that they were entitled to” by voiding any potential profit with rising production costs and declining fees. Katz accused the Celador lawyer of  “inflaming” the case with such language and accusations and that Paul Smith knew this was typical of “the way things are done in the industry.”

Silberfeld also made sure to bring up the profitable role the William Morris Agency, who have been the piñata for both sides for different reasons throughout the trial, had in putting together a package deal to bring “Millionaire” to America.

Noting the implied incentive that ABC VP of Alternative Programming Michael Davies offered to then- William Morris agent Ben Silverman if he could get the British game show for ABC, Silberfeld laid out for the jury his contention that the Agency was working more to serve itself and Disney rather than Celador – who actually were WMA’s client.

In terms of the sheer bulk of testimony, the jury has a smorgasbord to consider.

They heard from coming the top of the Hollywood hierarchy, with Disney CEO Robert Iger – who put on a personal power plant of a performance. The jury also heard, among experts and accountants, from Celador CEO Paul Smith, a videotaped deposition from Michael Davies – the man universally cited as the primary enthusiast behind bringing “Millionaire” to America – as well as former NBC/Universal co-chair Ben Silverman and twice from ICM VP Greg Lipstone.

Though he was on the witness list, former Disney CEO Michael Eisner, who was shown to be a great cheerleader for “Millionaire” and the success it could bring then third-place ABC back in 1999, did not take the stand as he was suddenly in Italy and therefore beyond the court’s reach.

So, Michael Eisner never showed but the “Millionaire” trial has gone to the jury … the question is, unlike Eisner, when will they be back and what will they have decided?

EARLIER:

The defense rests.

After four weeks of legal trench warfare, attorney Marty Katz announced just before noon on Tuesday that “we have no more witnesses, your Honor” and concluded the $270 million case that “Who Wants To Be a Millionaire” creators Celador International’s brought against Disney.

In many ways, the last hours of the evidence portion of the trial became, as the real core of the trial has always been, a study in corporate accounting – with a heavy sidebar in statistics. Last up on the stand was accountant Jeffrey Kinrich, a witness who has appeared in a number of Katz’s cases.

With terms like “econometrics,” “autocorrection shift” and “multicollinearity” being bandied about, the debate on how much Celador should and did make in license fees from “Millionaire” became heavily determined on whether it was number of episodes or years emphasized in reading the numbers.

Under cross examination from Celador attorney Roman Silberfeld, it also came down to slicing Kinrich’s credibility and methodology before the jury.

That slashing and blurring approach, for better or worse on both sides, has characterized much of the trial.

Celador, which first filed suit in 2004, alleges that Disney, ABC, Buena Vista Television and Valleycrest Production conducted a series of slippery deals and secret arrangements that saw the “Millionaire” creators left short hundreds of millions in expected revenues and profits from the hugely successful American version of the game show.

The plaintiff rested last week after bringing a number of Hollywood power players such as former NBC/Universal co-chair Ben Silverman and ICM VP Greg Lipstone, who were both at the William Morris Agency back in the late 1990s and were instrumental in crafting the package deal that eventually brought the U.K. hit show to ABC in 1999.

While former Disney CEO Michael Eisner did not end up on the stand, conveniently being out of the country and the court’s jurisdiction, current Disney boss Bob Iger did.  In emails of Eisner’s read out in the court and in Iger’s confident testimony, Celador’s attorneys were able to make it very clear that, originating from then ABC VP for Alternative Programming Michael Davies and right up to the top of the Mouse food chain, there was a lot of lucrative enthusiasm for “Millionaire” at Disney and the network.

After bringing Lipstone back to the stand, as well as a few other WMA luminaries, the defense sternly focused most of its time on the intricacies of accounting. Katz’s team brought experts to the stand to display to the jury how Celador not only sought revenues they weren’t entitled to under the deal the UK production company signed with Disney in 1999 but also how their accounting and audit of “Millionaire’s” worth was fundamentally flawed.

Whether or not that convinces the jury to side with Disney in what all sides contend is essentially “a dispute over a contract” — we will see when the verdict is delivered.

Closing arguments from both sides will begin Tuesday afternoon.