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Olbermann vs. Current: How the Fired Anchor Can Win the $40 Mil Legal War

Al Gore vs. Keith Olbermann

The cable network formally cut ties with Keith Olbermann last week, citing "material, serial breach" of contract and "sabotage" and "disparagement"; now, the gloves are coming off.

This story first appeared in the April 13 issue of The Hollywood Reporter magazine.

That the short partnership between Keith Olbermann and Current TV has ended in a hail of insults and finger-pointing is hardly a surprise. But the looming legal battle will turn on which side can actually prove breach of contract.

In a formal termination letter sent to Olbermann's reps March 29, Current cited "material, serial breach" of contract for "unauthorized absences" as well as "sabotage" and "disparagement." But Olbermann, in a lawsuit set to be filed in California by showbiz litigator Patty Glaser, is demanding damages of $40 million (the remainder owed on the five-year, $50 million deal he signed in early 2011) plus additional compensation for "disparagement" in an alleged campaign to discredit the TV newsman.

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Current contends that Olbermann, 53, repeatedly shirked his duties at the liberal-leaning cable network founded by Al Gore and Joel Hyatt, including missing 19 of 41 workdays in January and February. The anchor also allegedly refused to promote other Current shows and at one point stopped speaking with his employer. "If he's not showing up for work, and I'm representing the company, I would argue that he's in default," says Adam Levin, an L.A. employment litigator who is representing ABC in fired Desperate Housewives actress Nicollette Sheridan's wrongful termination lawsuit.

But sources close to Olbermann contend he did not exceed his allotted vacation and personal time, and more recently, he was suffering from a throat infection. They also say Current's facilities are substandard -- "amateur hour," snipes one source -- and that the studio lights went out on multiple occasions. If true, these allegations could put Current in default on its obligations.

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Of course, this is not Olbermann's first contentious exit. He was famously dismissed in 2001 by Fox Sports ("I fired him. He's crazy," Rupert Murdoch later said), and it was his abrupt parting with MSNBC in January 2011 that landed him at Current in the first place. When Olbermann's Countdown premiered in June, it was competitive with CNN, regularly drawing more than 100,000 viewers in the 25-to-54 demographic; by the time Olbermann was ousted, however, that number had fallen to 30,000. Since its 2005 launch, Current has aired no ratings hits other than Olbermann (and new shows with Cenk Uygur and Jennifer Granholm have failed to take off). Eliot Spitzer, in his first night replacing Olbermann, generated just 10,000 viewers in the demo, a 67 percent drop.

People who know Olbermann say he is meticulous about the details in his deals, even keeping a copy of his contract in his desk. For instance, Olbermann's exit from MSNBC allowed him to continue to collect at least part of his $7 million annual salary while working at Current. "He knows his contract better than the lawyers," says one source.

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To that end, the case could hinge on whether e-mail correspondence shows the terms of his deal were violated. An exchange between Current TV president David Bohrman and Olbermann's manager Michael Price over Olbermann's request to take off March 5 -- the day before the GOP Super Tuesday primaries -- is typical of the back-and-forth. In a Feb. 28 e-mail, Bohrman asserted that the "night is too important for us to approve as a day off" and that the network would "likely pre-empt" Countdown if Spitzer were not available as a substitute. Price responded that Olbermann "has vacation days he is permitted to take under his Agreement. Your arbitrary assessment of 'this is too important for us' is not reasonable. Please indicate, with specificity, why Keith is essential to that day." Then Price added: "Your assertion that Spitzer is the only acceptable guest host is contrary to common sense. The Agreement does not give Current a right to pre-empt Countdown because it lacks the creativity to suggest a guest host."

Current has now hired crisis PR firm Fabiani & Lehane, which has handled the Clintons and Lance Armstrong, and insiders say a quick settlement of the feud is unlikely, with Current likely responding to a lawsuit with counterclaims.

In an April 2 e-mail to Current staffers obtained by THR, Hyatt, a former Democratic Party operative who launched Current with Gore, expressed confidence in the company's legal footing. He dismissed Olbermann's lengthy and venomous Twitter statements against his bosses, a diatribe that included an apology to "viewers … for the failure of Current TV" and a threat that "in due course, the truth of the ethics of Mr. Gore and Mr. Hyatt will come out."

Instead, Hyatt, a former lawyer, seemed to be reserving his arguments for an expected courtroom showdown. "We will be happy to engage on the law and the facts in the appropriate forum," he wrote to his staff. "Twitter is not that forum. And we will leave it to others to pound the table."