June 04, 2014 2:24pm PT by Alex Ben Block
Golden Globes Lawsuit Hits Appeals Court: HFPA Says Judge Made 'Significant Mistake'
The Hollywood Foreign Press Association faced off against Dick Clark Productions before a three-judge appeals court panel Wednesday over the future of the Golden Globe Awards on the NBC network.
In April 2012, a court ruled that contracts signed over a three-decade relationship give DCP the right to produce the annual Globes telecast as long as it remains on NBC. The HFPA has maintained that the contract language is vague, and that DCP violated the terms when it went around the HFPA's back to negotiate a new long-term deal with NBC without the group of journalists' knowledge.
First filed in 2010, the legal fracas has cast a negative light on one of Hollywood's premiere awards shows, one that has exploded in popularity over the past decade. The HFPA, DCP and NBC have been operating under a temporary arrangement to collaborate on the show while the litigation proceeds.
In the Pasadena courtroom of the Ninth Circuit Court of Appeals on Wednesday, HFPA lawyer Daniel Petrocelli made his case that contracts over the years do not grant DCP the right to produce the show beyond 2005, the end date of the previous contract. He further argued that DCP had no right to enter into new broadcast agreements with NBC without the approval of the HFPA, which owns the show.
"That is a significant mistake the court made," said Petrocelli. "The question is not where are the rights to authorize the Hollywood Foreign Press. The question is where is the language that authorizes Dick Clark Productions" to continue to produce the show and to negotiate new deals on its own.
DCP lawyer Martin Katz argued that during the two-week trial in U.S. District Court in Los Angeles, it was made clear that the wording of the contracts was not the only measure of whether or not DCP had the right to make a new deal with NBC on its own.
“In a case like this, there is 30 years of rich history,” said Katz, “as well as industry custom and practice. One of the most challenging things is to view [the Golden Globes] not as it exists today but to put them back in 1983 when the show was on the verge of extinction.”
He said that DCP and its founder Dick Clark took the nearly moribund show and revived it first on TBS and then on NBC, and the company actually lost money on the production and distribution of the show in the early years.
“You don’t invest your time and money for many years and then find yourself cut out of the deal when the brand -- as an extension of your work -- becomes far more valuable,” Katz told the panel.
Katz said that because of DCP's unique role in the success of the Globes, a seminal 2002 deal that gave NBC rights to the telecast for 10 years included language providing DCP a role in the long-term future of the show. DCP "didn’t want to be a victim of its own success," Katz said. "It didn’t want to take a brand, turn it into a crown jewel and then be cut out.”
Katz added that under its contract, DCP not only had the right to produce the show but also to distribute it, so it was free to negotiate any network deal it felt was worthwhile. “All Dick Clark had to do,” said Katz, “was give a copy of the licensing agreement [to the HFPA] for informational purposes.”
Katz argued that DCP did well by the HFPA, increasing license fees from “a couple hundred thousand dollars” in 1983 to $3.4 million a year in the first NBC contract and then to $10 million a year beginning in 2002, and $21 million a year under the latest contract.
Judge Mary Murguia, who heard the appeal with Judge Stephen Reinhardt (with judge John Noonan participating by an audio link), asked if DCP's contract could be construed as a “perpetual agreement,” which is frowned upon under California law.
Katz said the district court had weighed that question and found that it is not in perpetuity. “You have to look at what the purpose of an option was,” said Katz. “It was to make sure DCP would not get cut out of the equation so long as NBC wants it.”
Katz compared the situation to a movie company licensing the rights to a book that becomes the basis of a movie. The studio is not asking for rights for a limited time, but for the future because it will continue to sell and exploit that property forever.
Petrocelli, who had the last word, told the judges that it is wrong to equate a studio licensing a copyrighted work with the HFPA making a deal for a company to act as producer of a show it owns. Petrocelli said at trial, two experts testified “they had never seen” an extension clause in a TV contract that granted perpetual rights. "This is unprecedented,” he added. “This wasn’t a license to grant a copyright. We hired them to produce a show we owned.”
Petrocelli said that DCP had inserted a clause in the last contract that was one used by a talent agency to protect itself in case a client tries to cut the agency out after that person is successful. He used an example, saying it was as if Jerry Seinfeld was signed to do a show, and after it was a hit, agreed to an extension of the show but tried to cut out his agent. The clause would ensure the agency would still get its percentage.
Petrocelli said even if that logic applied, it would just mean the HFPA could not do a deal with NBC without compensating DCP. However, he insisted, that did not mean the HFPA should be barred forever from being able to shop the rights to a show it owns to other networks; or that DCP had the right to negotiate any new deals with NBC or others without the HFPA’s permission.
“I submit that is the essential flaw in the [district court] judge's ruling,” added Petrocelli. “It’s one thing to say they can retain their position with NBC. It’s another to say they can authorize an agreement without approval. That is unprecedented.”
The three appeals court judges now will consider the testimony, evidence and case files and will then render a decision sometime in the coming months.
In the meantime, the Golden Globes remain on NBC and are produced by DCP with the full cooperation of the HFPA, at least until there is a final judgment.
Dick Clark Productions and The Hollywood Reporter are both owned by affiliates of Guggenheim Partners.