Golden Globes Trial: Inside One of TV's Messiest, Nastiest Battles
As the 2010 Golden Globe Awards kicked into high gear, members of the Hollywood Foreign Press Association had reason to smile. Despite persistent rain showers outside the Beverly Hilton, the red carpet at the HFPA's annual film and television awards show again was packed with international media and entertainment elite: The Blind Side star Sandra Bullock mingled with Avatar director James Cameron and the cast of Mad Men. The Globes telecast would draw 250 million viewers worldwide and become that week's highest-rated entertainment program on U.S. television, continuing a streak of stunning success for the event thrown by a ragtag group of foreign journalists.
But what the HFPA didn't know that chilly January night was that Dick Clark Productions, longtime producer of the Globes, was about to hatch a secret plan to wrest control of broadcast rights to the lucrative telecast even as its long-term deal was expiring. By October 2010, DCP chief executive Mark Shapiro would quietly seal a seven-year contract renewal with NBC without telling anyone at the HFPA, the show's owner, about the negotiations.
In fact, immediately after the show in January 2010, HFPA president Philip Berk, unaware, began preparing to haggle with Shapiro about whether DCP would be involved with the Globes at all. Berk sent DCP a letter in February 2010 stating that the producer was not authorized to "seek or agree to any subsequent broadcast licensing agreement with NBC (or anyone else)." Shapiro responded to the HFPA in writing that he "would never make a move on a network renewal or new home without your involvement." DCP lawyers later would say Shapiro did not mean that "involvement" is the same as requiring HFPA's ultimate approval.
Months of fruitless negotiations had begun in February 2010. The HFPA wanted the company to reduce its 50 percent take of Globes profits (after expenses), while DCP insisted on the same split as in the past. The HFPA also wanted DCP to open up bidding to all networks to maximize the license fee. By that summer, Shapiro was convinced the talks had stalled, so he simultaneously opened dealmaking with NBC's West Coast president of business operations, Marc Graboff. But he never told the HFPA that he had essentially given up on making a new deal with the organization.
So Berk and the 83-member HFPA were blindsided in October 2010 when they received two letters -- one announcing the new deal (what DCP called "great news") and another unilaterally exercising its option to produce the show based on contracts dating to 1993. The relationship between the longtime partners quickly exploded into litigation, with both sides lining up top-notch Hollywood lawyers to argue over the interpretation of a few short sentences in two key contracts signed in 1993 and 2001.
DCP says the contract language, which grants it rights to produce the Globes "for any extensions, renewals, substitutions or modifications of the NBC agreement," means it can work on the telecast as long as it remains on NBC. The company argues that it single-handedly built the Globes into the international showbiz event it has become, more than justifying its perpetual rights.
The HFPA, on the other hand, argues that its cherished awards show has been hijacked, potentially costing it millions in unrealized value. "No organization with a 50-year track record would ever agree to release all of its rights and control over its sole asset," the HFPA wrote in its legal filing, "especially if that asset is the basis for the organization's existence in the first place."
Much of the case will come down to the meaning and intent of a few ambiguous sentences in those contracts, plus amendments that have been added over the years. As the closely watched case heads toward a Sept. 6 trial date in U.S. District Court in Los Angeles, at stake is nothing less than control of a franchise worth hundreds of millions of dollars that serves as one of Hollywood's biggest awards shows and a key stop on the road to the Oscars.
As with most Hollywood fights, the battle for the Globes is a matter of equal parts pride and money. The $7.5 million that the HFPA receives annually from NBC for television rights is virtually its entire source of income, a bounty that supports the infrastructure of the Beverly Hills-based group and its philanthropic endeavors, which this year amounted to more than $1.5 million in gifts.
The HFPA believes -- correctly, some observers say -- that it could make up to twice as much as NBC is offering via a real auction of TV rights. Among the witnesses scheduled to testify at the trial is CBS Corp. president and CEO Leslie Moonves, who is expected to say that his network is offering at least $10 million more per year than the new NBC deal would pay. DCP squandered that value, the HFPA argues, by negotiating the secret deal with NBC in order to preserve its place as show producer.
Shapiro, on the other hand, argues that leaving the HFPA in the dark was part of a deliberate plan to secure a better deal from NBC. Shapiro used what he called in a deposition a "big brother, Wizard-of-Oz-behind-the-curtain strategy" to increase his negotiation leverage by telling NBC that any deal had to be approved by the tough-minded HFPA while keeping DCP's own arrangement with the group secret. After all, if NBC execs knew DCP needed the show to air on NBC, Shapiro testified, the network could have driven a harder bargain.
NBC executives have testified that they never asked the HFPA about the negotiations because the network had always spoken directly with DCP. The NBC execs were told by the company's WME agents that the producer needed to make the deal with NBC, but Shapiro assured the network that he would also require approval from the HFPA. Even with conflicting signals, NBC proceeded.
The big money at issue is almost secondary to the personal issues in play for the HFPA. For years, its credibility has been questioned. In the 1960s, the show was knocked off the air for a time amid an investigation by the FCC into its voting procedures. In the early 1980s, the Globes lost a TV deal with CBS after the group named Pia Zadora "newcomer of the year" amid accusations that her then-husband, billionaire Meshulam Riklis, offered favors for votes. As recently as 1999, Sharon Stone was nominated as best actress for The Muse after sending voters Coach watches (the HFPA told its members to return them).
The group has worked hard to establish rules to prevent those headlines. It wants the world to see the Globes as an important precursor to the Oscars, and it resents the notion that DCP, not the HFPA, made the Globes a success. Says Mark Litwak, an attorney familiar with the case but not involved, "Their reputation is on the line."
So although there is no scenario by which the Globes could be taken from the HFPA, it could lose control over the TV rights. For a group so sensitive about its image and reputation, that itself would be a powerful blow.
As big as the stakes seem for the HFPA, they are even greater for Dick Clark Productions.
The Globes' preshow and telecast fees, coupled with domestic and international licenses, represent nearly one-third of the company's $80 million in annual revenue and provide a major calling card for DCP, which also produces the American Music Awards, the Academy of Country Music Awards and, with another producer, So You Think You Can Dance on Fox.
"How important is this to Dick Clark? It's obviously important enough that they are going to spend a lot of money on lawyers fighting for these rights," notes Litwak.
After all, the relationship goes back to 1982, when the HFPA turned to TV legend Dick Clark in the wake of the Zadora scandal. Clark, known as the squeaky-clean host of American Bandstand and the head of the production company he founded in 1957, brought the group instant credibility.
During the next few years, Clark secured a new TV deal, first in syndication, then on cable with Turner Broadcasting and finally with NBC beginning in 1995. Ratings have risen steadily. The January 2011 telecast, hosted by comedian Ricky Gervais, drew 17 million U.S. viewers and was the highest-rated entertainment show on NBC in the 18-to-49 demo since the Globes in 2010.