For years, the relationship between Discovery Communications and LMNO Cable Group was a fruitful one, producing more than a dozen reality shows including The Little Couple, Killer Confessions, Unusual Suspects, Bipolar Mysteries, Insane Bathrooms, Surreal Estate and more. The separation between the two companies has become a nasty affair, with dueling claims of larceny and hostage-taking.
Producer LMNO, subject of an ongoing FBI investigation, blames its former accountant for allegedly cooking the books and attempting an extortion while also suing Discovery for exploiting its darkest hour with an attempt to seize ownership of the co-produced shows. In response, Discovery has filed counterclaims, claiming that after LMNO’s accountant — described as a “whistleblower” — revealed how Discovery was being systemically defrauded via inflated production costs for these shows, Discovery has every contractual right to take over ownership.
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Most of the Discovery-LMNO reality series were co-productions, but on Thursday, a California federal judge’s attention was directed toward 7 Little Johnstons, which even LMNO acknowledges in court papers was produced as a “commission.”
Discovery now has brought a fairly unusual motion for a writ of possession, the kind of legal maneuver that one might see when a producer and director are fighting over final cut and the director has squirreled away the footage, to the producer’s consternation and demands for a turnover.
In this instance, LMNO is holding on to season-two footage of 7 Little Johnstons, a TLC program about a family of achondroplasia dwarfs.
Discovery says it already has paid more than $2 million for second-season work and that, under the commission arrangement, it owns the intellectual property.
“Discovery lawfully terminated all of its contractual dealings with LMNO on June 17, 2016, and in what appears to be a retributive act for such lawful termination, LMNO is holding the Program Deliverables for 7 Little Johnstons hostage, demanding that Discovery pay it hundreds of thousands of dollars more before it will release these materials,” states a memorandum supporting the writ. “Discovery should not have to pay a ransom for materials it already owns and that LMNO is unlawfully retaining.”
In reaction to the move, LMNO tells THR that “Discovery failed to sign the negotiated contract for this season of the show and failed and refused to pay the agreed-upon price for these episodes. Now, Discovery wants to obtain the footage without paying for it; in the absence of a signed contract, they have no right to do so.”
As Magistrate Judge Steve Kim gets ready to hear arguments on whether or not to order LMNO to fork over footage of 7 Little Johnstons on Oct. 12, LMNO has separately brought a motion aimed at dismissing Discovery’s counterclaims of fraud and breach of contract.
Most notably, LMNO is arguing that a proposed budget for shooting a reality show can’t serve as the basis for a fraud claim.
“First, a ‘budget’ is not a representation about an existing fact — it is an authorization document in which parties negotiate about what will be spent in the future,” argues LMNO. “If a couple ‘budgets’ $2,000 for next year’s vacation, there cannot be a ‘fraud’ in that negotiation because nothing has happened yet — it is merely a discussion regarding how much they think it is reasonable to spend. At best, a budget might include an estimate of how much a particular thing will cost. But estimates of future costs are just opinions, not representations of existing facts.”
LMNO also argues that show budgets were negotiated and that Discovery was a sophisticated party. Here’s the full motion.
