Wednesday, July 07, 2010

Disney loses in "Who Wants to Be a Millionnaire" case

It's an often-told joke that no matter how much money a movie or TV show grosses, no one ever seems to make any money. According the the LA Times, Celador International, the creator of "Who Wants to Be a Millionnaire," filed suit against Disney in 2004, charging that Disney had struck a series of deals between Disney owned and controlled companies in order to make it appear that the show had made no money. (Disney actually claimed that the show has lost $73 million since it first went on the air.)

Celador asked for as much as $395 million in broadcast licensing fees, based on an expert's opinion of the fair market value of the show, plus another $10 million for Celador's share of royalties from sales of show-related merchandise. The jury returned a verdict awarding $260 million in licensing fees plus $9.2 million for merchandise royalties.

At the trial, Celador introduced evidence that Disney had received $515 million in revenue from license fees plus $70 million from merchandise sales. Kantar Media estimates that the show attracted nearly $1.8 billion dollars in advertising revenue over the life of its run. Yet, somehow, Disney calculates that it lost $73 million on the show.

For those of you who never saw the show, it consisted of two chairs, two computer displays, two people on stage, a bunch of spotlights on swivels and some foreboding music. I'd be amazed if it cost Disney $73 million to produce the show across its entire run.

This is an extreme but by no means unusual example of the problems of doing business with the "big media" companies. It's almost impossible to make money unless you've arranged fixed, unconditional payments.
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