Firm Says Letterman’s Company Owes It

LOS ANGELES (CN) - David Letterman's production company Worldwide Pants broke a promise to pay a royalty collector its share of proceeds from cable and satellite transmission royalties for the "Late Show" and "Late Late Show," the collector claims in court.

Worldwide Subsidy Group LLC sued Worldwide Pants Inc. in Superior Court.

Worldwide Subsidy Group claims that under a 1999 agreement it collected royalties for Worldwide Pants in return for a 20 percent cut of distribution proceeds.

Worldwide Pants has produced "Late Show with David Letterman" for CBS since 1993 and "The Late Late Show with Craig Ferguson" since 2005.

Neither Letterman nor Ferguson are parties to the lawsuit.

Worldwide Pants, which says it deals with conflicting claims to royalties made to the U.S. Copyright Office and other government agencies worldwide, says that though Worldwide Pants ended the contract in 2002, the parties renewed the agreement in 2007. It claims that it continued to file secondary royalty claims for Letterman's company at the U.S. Copyright Office.

According to Worldwide Subsidy, it may take up to a decade to unravel claims and issue royalty payments. The company says it has so far collected $1.8 million in royalties for Worldwide Pants.

"WPI's [Worldwide Pants] entitlement to secondary rights royalties were preserved exclusively by WSG [Worldwide Subsidy Group]'s filings, and in the absence of WSG's filings, WPI's claims to secondary rights royalties would have been statutorily forfeited pursuant to the U.S. Copyright Act and the orders of other governing bodies," the complaint states. "To the extent necessary, WSG thereafter participated in negotiations with the various entities and rival claimants, and prosecuted the claims related to the WPI-owned programming."

The Library of Congress' Copyright Royalty Board gave notice of administrative proceedings for distribution of cable transmission and satellite royalties in August 2013, the complaint states.

But Worldwide Subsidy claims that when it approached Letterman's company for information on to its shows, the production company refused to cooperate.

Instead, Worldwide Pants wrote to the collector in March and told it that satellite royalties had already been collected by an unnamed third party, and that royalties for cable transmissions for the "Late Show" and the "Late Late Show" are not due.

"'Accordingly, there are no uncollected retransmission royalties, no claims to preserve and no basis for engaging your company," Worldwide Pants allegedly wrote in the letter. "'To the extent that third parties have reason to believe that our client has authorized your company to represent it in connection with such collections, please advise them to the contrary.'"

Worldwide Subsidy says it does not know without an accounting how much Worldwide Pants has collected during the contract's term.

The company seeks at least $500,000 in damages, alleging breach of contract, breach of covenant of good faith and fair dealing, and quantum meruit.

Letterman announced that he will retire from the "Late Show" in 2015. Stephen Colbert of Comedy Central's "The Colbert Report" will succeed him.

Worldwide Subsidy is represented by Brian Boydston with Pick & Boydston.

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