Disney Loses $269 Million Challenge to Hollywood Accounting on “Millionaire”

      LOS ANGELES (CN) – A $269 million verdict against Walt Disney Co. followed a critical ruling by Judge Virginia Phillips allowing the British company Celador International to proceed in an action over profits from the hit show “Who Want to be a Millionaire.” The action is also part of a long tradition of litigation over what is known as “Hollywood accounting” where hit shows mysteriously generate next to nothing in net profits, leaving anyone who shares a percentage of that amount with what the comedian Eddie Murphy once called “monkey points.”

     In 1999, ABC network, owned by Disney, entered into an agreement with Celador International Ltd. to air the “Millionaire” show and split the profit 50-50 between Disney and Celador.
     When the show turned into a hit, ABC and Buena Vista Television earned advertising revenue from the show while Celador received a mere $21 million in executive producer fees.
     Celador chairman Paul Smith pursued the matter for eight years — two trying to settle the matter six years in court.
     Celador and “Who Wants to be a Millionaire” are currently owned by the Dutch company 2waytraffic.
     According to the verdict form, the jurors answered yes to the question, “Did Celador Productions, Celador International, Ltd. and American Broadcasting Companies, Inc. enter into a contract [the Rights Agreement]?”
     The jurors also answered yes to the question that asked whether the Rights Agreement gave Celador the right to receive 50% of ABC and Buena Vista Television’s profit, and that because ABC and Buena Vista Television breached their contract, Celador was “harmed by that failure.”
     In a minute order before the trial in the matter, Judge Phillips denied Disney’s motion challenging Celador International’s standing to sue, based on the argument that it was not a Rights Agreement signatore.
     The judge said Celador “introduced sufficient evidence during its case in chief for a jury to conclude that Celador Productions was acting on behalf of Celador International when it executed the Rights Agreement.”
     In a prepared statement, Disney said, “We believe this verdict is fundamentally wrong and will aggressively seek to have it reversed.”

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