3:46pm PT by Austin Siegemund-Broka, Matthew Belloni
'Bones' Stars File New Lawsuit for "Tens of Millions of Dollars" in Fox Profits (Exclusive)
The litigation over Bones profits is getting some star power.
Emily Deschanel and David Boreanaz, stars of the longest-running drama series in Fox history, along with author and executive producer Kathy Reichs, have filed their own lawsuit claiming they have been shortchanged "tens of millions of dollars" in profits by producer 20th Century Fox Television, the Fox network and affiliated companies. The trio's lawsuit claims they saw zero profits for years despite the success of the show. The suit follows a similar case filed Nov. 25 by Barry Josephson, one of the show’s executive producers, who also cried foul over Fox’s accounting for the series.
In the new complaint filed Monday in Los Angeles Superior Court and obtained by The Hollywood Reporter, the trio claim Fox has underpaid them through accounting tricks and “vertical integration,” in which a company’s production division licenses a show at an artificially discounted rate to the company’s affiliated distribution channel. They also claim Fox fraudulently accounted for revenue, employed strong-arm tactics to lower license fees to the point that the series never showed a profit, and withheld key documents that would help them better ascertain the extent to which they are owed money.
The complaint notes Fox's "leading role in the well-documented history of Hollywood accounting scandals," referencing past lawsuits over M*A*S*H*, The X-Files, NYPD Blue and Cops. A Fox spokesperson declined to comment on the new suit.
Read the complaint here.
Reichs, a forensic anthropologist who authored the Temperance Brennan novels that formed the basis for Bones, alleges she was promised a 5 percent share of profits. Deschanel and Boreanaz each were contractually entitled to 3 percent of profits, they claim. Those profits were to be calculated via a formula called MAGR (modified adjusted gross receipts), a common definition used in Hollywood talent contracts. Each participant was allowed periodic accounting statements but "as the series became more profitable for Fox over the years, these accounting statements issued by 20th TV counter-intuitively showed plaintiffs falling farther and farther away from achieving profits," the suit alleges. In 2009, accounting statements allegedly showed Reichs "was nearly $90 million away from receiving profits payments, and plaintiffs Boreanaz and Deschanel received statements showing they were nearly $100 million away from profits." Boreanaz and Deschanel allege they never even saw a copy of their initial profits definition. The show is in its 11th season on Fox.
After receiving nothing in profits despite contract renegotiations, the stars and Reich exercised audit rights and found they "were being cheated out of more than $100 million in gross revenues and being overcharged many additional millions of dollars in alleged expenses," they claim.
Similar to Josephson — who sued Nov. 25 claiming the network underreported or misclassified more than $20 million in revenue (reducing the payout to profit participants), made a “sweetheart deal” between 20th TV and the Fox network and "fraudulently threatened" him and other profit participants with cancelation if they would not accept reduced license fees for renewals — the Bones stars and Reichs claim Fox negotiated only with the threat of canceling the series until they accepted nonnegotiable changes to license fees. The audit also allegedly uncovered improper "packages" that "disproportionately allocate a greater share of the total fees" to less valuable shows, thus hurting Bones and its profit participants. (This is a claim often made in profits cases and was successful in Alan Ladd Jr.'s case against Warner Bros. in the mid 2000s.)
The Bones stars say they have uncovered "more than a dozen accounting errors, tricks, and deceitful acts that 20th TV has used to deprive plaintiffs of their entitlement to profits," the suit alleges. Just a few of those:
?Sweetheart deals between 20th TV and Fox and affiliated foreign networks, as well as its syndication deals with Fox's television stations
?Self-dealing in licenses to Hulu and Netflix
?Improper allocations of "package fees"
?Improper charging costs for a spinoff pilot, distribution fees, overhead and other corporate charges, foreign taxes and rebates from media buys, product placement and integration revenue
(Side note: Deschanel's loan-out company is called Snooker Doodle Productions, which just looks funny in a formal legal complaint. Boreanaz's company is called Bertha Blue, Inc.)
Profit participation claims like Frank Darabont’s and the Bones group’s are not uncommon in Hollywood due to the complexity of deals for creators and talent. Some allege vertical integration claims, like recent concluded lawsuits over Smallville and Home Improvement, while others take on home-video royalties and other features of Hollywood accounting.
The suit alleges causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent inducement, fraudulent concealment, inducing breach of contract, intentional interference with contract, accounting and declaratory relief.
Intriguingly, Josephson is represented by attorneys from Kinsella Weitzman Iser Kump & Aldisert, who similarly represent Darabont in the Walking Dead creator’s profit participation lawsuit against AMC for millions he believes the network owes him after his ouster from the hit zombie drama. In that case, AMC is represented by the Los Angeles outpost of New York's Kasowitz Benson Torres & Friedman, which is now taking the other side of a profits case and representing the Bones stars and Reichs against Fox. The filing attorneys are John Berlinski, Mansi Shah and Candace Frazier.