June 2 (Bloomberg) -- Walt Disney Co., the world’s largest media company, went on trial over claims it cheated the U.K. creator of the “Who Wants to Be a Millionaire” game show through self-dealing.
Celador International Ltd. sued Disney six years ago, alleging Disney’s Buena Vista Television unit broke an implied promise by failing to negotiate a higher license fee with Disney’s ABC television network after the show proved a hit. Celador says that prevented Buena Vista from making a bigger profit it would have had to share with the creators.
“They agreed that BVT would only be paid enough money to cover the cost of making the show and BVT would never make a profit,” Roman Silberfeld, a lawyer for Celador, said today during his opening statement in federal court in Riverside, California. “When they got through making their secret deal, the ad revenue was shielded, no one could ever get to it.”
The quiz show came on the air in the U.S. in 1999 and helped lift ABC to first place from third in audience ratings in 2000, prompting the network to run the program four times a week. “Millionaire” was first broadcast in the U.K. in 1998 and has been carried in 106 countries, including Australia, India, Japan, Germany and Russia, Celador said.
Share of Profit
Closely held Celador entered into an agreement with Buena Vista, a production and distribution unit of Disney, and ABC in 1998 that entitled the creators to a share of the profit from the show in North America, according to a 2006 amended complaint. Silberfeld said Buena Vista made an “implied promise” in the agreement to “act in good faith” to obtain the highest possible price for the show.
Instead, Celador said in its lawsuit, ABC paid below-market value for “Millionaire” because Buena Vista, at Disney’s behest, didn’t seek a higher fee after the show became a success. The creators also claim Disney, using an affiliated production company, inflated production costs.
The creators seek more than $200 million in damages for the network run of “Millionaire” as well as $16 million for merchandising, Silberfeld said today.
Disney’s lawyer Martin Katz responded in his opening statement that Buena Vista has shopped the show to other networks who weren’t interested.
“Buena Vista took the financial risk and there was no secret deal between Buena Vista and ABC,” Katz said. “The division of rights between ABC and BTV is just how one would expect division of rights to be,” Katz said.
Celador so far has received $19.2 million in production fees for the shows, $13 million for the network broadcasts, $6.2 million for syndicated shows, Katz said.
The case is Celador International Ltd. v. Walt Disney Co., 04-3541, U.S. District Court, Central District of California (Riverside.)
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