'Millionaire' Creator Sues Disney

The U.K. creators of the "Who Wants to Be a Millionaire" franchise are suing the Walt Disney Co. for allegedly licensing the hit television series to ABC at below-market prices and inflating productio

LOS ANGELES (Hollywood Reporter)--The U.K. creators of the "Who Wants to Be a Millionaire" franchise are suing the Walt Disney Co. for allegedly licensing the hit television series to ABC at below-market prices and inflating production costs so there would be no profits to share with the creators.

Series developer Celador International Ltd., company chairman Paul Smith and affiliated music production company Lusam Music Ltd. want unspecified monetary damages and an injunction barring defendants Disney or any of its affiliates from licensing the show without getting competitive bids on the open market. The plaintiffs also want a receiver appointed to ensure that no more alleged sweetheart deals are made among defendants Disney, ABC, Buena Vista Television and Valleycrest Productions Ltd.

"In essence, Disney sits on both sides of the bargaining table in any negotiation for the production and distribution rights to the series, thereby enabling it to manipulate negotiations in any way that serves its corporate interests," according to the complaint filed Wednesday in U.S. District Court in Los Angeles. "Because of Disney's vertical integration, Disney will keep most of those revenues within the Disney empire in the form of cost savings and increased profits to ABC, BVT and Valleycrest and thus to the Disney corporate bottom line (and) to the detriment of Celador."

Disney and ABC officials did not return calls seeking comment.

The case was filed by Alschuler Grossman Stein & Kahan partner Stanton "Larry" Stein, a pioneer in representing talent against alleged corporate self-dealing. He has previously sued Disney on behalf of the creators of "Home Improvement" and took on Fox Entertainment Group on behalf of "X-Files" star David Duchovny.

In the Celador case, Disney also is accused of improperly charging distribution fees and expenses against the series' merchandising revenue and wrongfully using the music developed by Lusam at Disney theme park attractions. In all, the plaintiffs claim breach of contract, breach of good faith and fair dealing, fraud and unfair competition.

The original 1998 licensing agreement between Celador and Disney called for the two companies to jointly own the series' North American rights. Celador agreed to take 50% of contingent compensation, as defined by Disney, while Smith would be an executive producer with creative consultation rights. For Celador, that worked out to a producer fee of $25,000 for a 30-minute program and $35,000 for a one-hour program, with those rates rising 5% each successive year.

Disney also agreed in principle that the show could air on any major network, implying that the licensing fee would be for fair market value, Celador claims in its suit.

A central allegation of the case is that ABC and Buena Vista Television had an oral agreement for ABC to license the show at a per-episode fee equal to Valleycrest's per-episode production costs, thus ensuring that it would never generate profits to be shared with Celador.

After the series' successful debut in August 1999, Disney allegedly failed to follow industry custom and renegotiate a higher license fee with ABC. Instead, it is alleged that the network continued to pay below-market rates while Valleycrest inflated the production budgets.

"Disney has pressured and caused ABC, BVT and Valleycrest to enter into negotiations and agreements with each other on an other than arm's-length basis and without establishing license fees that are priced fairly and reasonably for a television series as successful as ('Millionaire')," the lawsuit alleges.