The complaint was filed today in Los Angeles Superior Court. This really sounds like one of the worst cases of phony-baloney studio accounting, not to mention sheer arrogance, in Hollywood history. Geez, when is Big Media going to stop this larceny? For instance, according to the lawsuit, NBC Uni is claiming that, as of the end of fiscal year 2006, Quincy M.E. has accumulated over $66 million in net losses -- this after we all know that the 1976-1983 series is a classic shown all over the world even to this day. Through his Beverly Hills attorneys Johnson & Johnson [UPDATE: This firm and another are representing me in a class action lawsuit related to a personal matter. I forgot to disclose that when I wrote this post on a busy news day. I apologize for the omission.]
Klugman just gave this statement to me: "I don’t want their money. I want my money. I can’t believe they’ve collected over $250 million dollars and they say they are still in the hole. I have 28% of the net and they won’t even give me a copy of my contract. I worked for them for almost 8 years. I got up at 4 o’clock in the morning. I would rewrite. I did a ton of work. It’s on every day. I haven’t gotten a penny for years."
Worse, the lawsuit claims that when Klugman asked to see his paperwork with NBC Uni, the network and studio "have refused to give Plaintiffs a copy of the contract". So on June 21, 2007, Klugman’s attorney wrote a letter to NBC Uni requesting "a copy of any and all contracts pertaining to Klugman and Quincy M.E." On September 26, 2007, NBC Uni responded that it's “unable to comply with your request … because it is NBC Universal’s policy not to provide copies of talent contracts or other confidential documents.” The lawsuit notes that, under the terms of the NBC Uni contract, Klugman and his company Sweater Productions are entitled to a “Participant Share” of 25% of all “net profits” attributable to Quincy M.E. But NBC is required to "properly account" for the net profits to Sweater/Klugman which has a right to audit the records of NBC Uni if a dispute arises. On March 5, 2008, Klugman’s attorney gave notice to NBC Uni of Klugman’s intent to audit the TV series.
Same old story. It takes a lawsuit to see profits 100% of the time. And it will continue until someone actually sees it all the way through instead of settling the day before trial.
Comment by Anonymous — March 28, 2008 @ 3:07 pm
There’s a term I heard that fits the people who engage in such accounting skullduggery: A Shower of Bastards.
But I call the practise itself a “self-fulfilling idiocy.”
The studio cheats the star/writer/producer out of their fair share of royalties claiming mythical losses. Stars/writers/producers then start demanding more money up front.
Production costs go up, way beyond the rate of inflation, and suddenly the studio is looking at real losses.
So a stupid act of short term greed causes long term grief for the company because they’re pricing themselves out of business.
Comment by Furious D — March 28, 2008 @ 3:11 pm
Am I the only one who cracked up at reading that Jack Klugman’s law firm is Johnson & Johnson?
Comment by di — March 28, 2008 @ 3:28 pm
Welcome to the wonderful world of showbiz. This is how studios and recording companies have been screwing artists out of their fair share of the pie ever since performing began.
Comment by Humble Diseuse — March 28, 2008 @ 3:49 pm
they made a mistake here in that this entire issue is finally going to bite them in the ass. “creative accounting” might be age-old and rampant, but it is, at least in spirit, utterly unamerican, evil, and yes- illegal. its called fraud people. sooner or later, what was the old normal is today’s outlandish abuse. just ask the catholic church.
Comment by dexx — March 28, 2008 @ 3:53 pm
Another sobering example of what actors, writers, directors other creative types are increasingly up against in getting what is fairly owed them.
Thanks to vertical integration of the entertainment corporations, it becomes easier to hide profit and produce false evidence of profit loss. In addition, new profit models in the digital age necessitate new contract language and new form of accountability.
If Peter Jackson and Jack Klugman, with their resources and reputations, have this amount of difficulty, imagine what the rest of us are up against, as our work is digitized, streamed and downloaded on the web, VOD, cell phones, iTunes, xbox’s, etcetera, increasingly for “free” with new forms of profit bundled in.
Tracking and accounting for all this– in addition to getting our employers to come clean on it all– becomes increasingly difficult.
Comment by DM — March 28, 2008 @ 4:18 pm
and Hollywoods representative in DC, Rep. Howard Berman, who heads a congressional panel in charge of writing copyright legislation, lashed out at Internet pirates this week and defended his effort to add stiffer anticopying penalties to federal law. (cnet news)
Let’s be clear about who the real pirates are–the studios and the record companies
Comment by Kevin — March 28, 2008 @ 4:49 pm
Dear Quincy,
Unfortunately, your show is losing money at an exponential rate. By the year 2012, we will have to bill you to continue to air this program.
Sincerely,
“JZ”
Comment by Jamie — March 28, 2008 @ 4:49 pm
I saw this episode. At the end, it turns out the head of the studio was using the money to make self-aggrandizing interstitials. And he had to kill the former character actor to keep his lawsuit from ruining his plan.
Comment by lorne — March 28, 2008 @ 4:54 pm
They also still won’t tell him what Quincy’s first name was on the show.
Fuckers!
Comment by Seth — March 28, 2008 @ 4:56 pm
This is the exact same thing that James Garner went through with the Rockford Files. Garner was successful, and I hope Klugman will be as well. Moneygrubbing greedy bastards.
Comment by S — March 28, 2008 @ 5:08 pm
The scummiest part is that Jack Klugman isn’t getting any younger, while a lot of the corporate people are young twits tooling around in Porsches and sipping lattes paid for by his hard effort.
Scum.
Comment by Frederick — March 28, 2008 @ 5:42 pm
“Net profit” is a defined term in a participation agreement. As many already know, it doesn’t matter what the “real” profit is. If Klugman agreed to a participation with an awful definition of “net profit,” that’s the way it goes.
Of course, he needs to be able to see his contract in order to see how “net profit” is defined, but that makes me wonder why he or his attorney/agent/manager didn’t already have a copy of it. In films, all of the above and below line costs obviously count against “net profit.” So do all of the marketing costs (often around 50% - if not more - of the production budget). All of the print costs count against it - even if those costs only represent one segment of a distributor/studio paying another wholly owned segment. An overhead percentage is counted against. And so on. Those box office grosses that get reported on Sunday don’t mean anything when the issue is “net.”
When you have one segment of a distributor/studio charging costs to a project, that often isn’t an arm’s length transaction. So a project can actually be negative while the marketing and other auxillary supporting segments are making plenty of real money.
There isn’t anything particularly “creative” about Hollywood accounting. It’s all defined in the agreements and not particularly difficult to figure out.
Anyone who has a “net profit” agreement is just holding a sheet of paper. Nothing more.
If NBCU was foolish enough to charge costs in excess of the net profit definition, Klugman wins.
If not, Klugman loses - as most people with these bad deals do. It’s much easier to have supporting segments charge outrageous amounts for their services than cheat on the net profit definition. In that case, Klugman probably has a better case against the people who negotiated such a shitty deal on his behalf as opposed to NBCU.
Hollywood isn’t the only place where this happens. Most advances paid to authors by publishers are never fully earned because of the costs charged to producing and selling the book.
Comment by Harold — March 28, 2008 @ 5:58 pm
Gimme da money!
Comment by Oscar Madison — March 28, 2008 @ 6:12 pm
Simple Seth, “Doctor.” In any case, I believe the reason why the series is losing money is because it ran for 8 seasons. In Fact, if a series is losing money in its eighth season, it most likely was losing money in its first. It is either that, or Jeff Zucker is holding money that isn’t his.
Comment by Jessy S. — March 28, 2008 @ 7:28 pm
What’s doubly interesting about this lawsuit is that “Quincy” is the show that Universal used to hide the profits of “The Rockford Files” from James Garner when he sued them in 1989 with identical claims.
According to the Lew Wasserman bio “The Last Mogul” by Dennis McDougal (pp468-469), both series were sold as a package with the earnings for “Rockford” attributed to “Quincy” to hide them.
Garner walked away with over $14 Million. Hopefully, Jack Klugman can do the same.
When will these people realize it’s so much cheaper and easier to just be honest.
Comment by Jim Henshaw — March 28, 2008 @ 7:48 pm
Harold is correct about the net profits issue.
If Klugman’s deal was for net profits, he cannot prevail, as the language in his contract would prevent him from collecting. It also means that whoever negotiated such a terrible deal did a disservice to Klugman. It is a given in the industry that the only profits in which anyone can share are the gross proceeds. And anyone with any clout will have a deal that gets them first dollar gross, with a very specific definition that insures they will indeed share in the income.
I still remember the lawsuit filed against Warner Bros. in the early 90’s by producers of the 1989 BATMAN movie. They too had net profit participation in a film that made hundreds of millions of dollars. And they were told by the studio that the film had actually lost money in terms of net calculations. Their attorney famously commented about the then current production of BATMAN RETURNS, “Somebody better get over to Warner Bros and stop the bleeding”, as the studio was clearly investing in a losing proposition!
Comment by Kevin — March 28, 2008 @ 9:04 pm
Oscar, Oscar, Oscar!
[with apologies to the late great Tony Randall]
Jim Henshaw has the ace in the hole in a post above.
What sleazy tactics.
I hope Klugman gets what he was promised by a legal, binding contract.
And that his grandchildren enjoy the loot.
Comment by DW — March 28, 2008 @ 10:00 pm
Harold: couple probs with your comments.
- If NBCU had a copy of a contract that showed Klugman’s net profit agreement with an awful definition of net profit, they’d give it to him.
- You have to be on crack to think that Quincy is $66 million in the red after 25 years of syndication
- You’re wrong about Hollywood accounting not being creative. In every one of these cases that come to even the slightest light, the studios are always shown to have made millions and millions of dollars in outrageous and absurd charges against net profit
- Good thing James Garner didn’t listen to attorneys like you
Comment by Jamie — March 28, 2008 @ 10:15 pm
Can’t wait for the discovery process to begin. That’s where the real, sanctionable kind of the-dog-ate-the-contract, kind of behavior begins.
So the only question is how long will a judge tolerate that kind of hide-the-ball, behavior. In this day and age, not long.
Ask any of Qualcomm’s so called, top-tier attorneys.
http://www.law.com/jsp/article.jsp?id=1199700332309
Comment by Bonnie — March 28, 2008 @ 11:27 pm
I’ve seen Quincy, ME on TV in the Middle East (either MBC4 out of Beirut or OneTV out of Dubai) as recent as 2006. How could it not be making money yet today?
Comment by Paige — March 28, 2008 @ 11:36 pm
It is exactly for reasons like this that so many people feel no guilt and are completely justified in downloading movies and TV shows and generally ripping off Hollywood studios in any way we can.
Comment by DigitalBob — March 29, 2008 @ 8:09 am
The discovery process will never start. This case must be settled or the whole business will change. There’s a good chance that NBC had made ten times what Klugman and his people believe they eraned.
Comment by dras — March 29, 2008 @ 8:24 am
To NBC Universal,
GIVE THE MAN HIS FUCKING MONEY!!!
BASTARDS!
…that’s what you get for working with GE!
…geez, the consumers are not the only one’s getting screwed!
- Andrew, MALL727net -
Comment by Andrew — March 29, 2008 @ 9:08 am
Jamie,
My problem with your comments is that you’re just some random uninformed person commenting about things of which you haven’t a clue. If I say something in a contract is a “defined term,” you probably think I’m referring to a Webster’s dictionary. There should be some sort of vetting process to post comments.
“If NBCU had a copy of a contract that showed Klugman’s net profit agreement with an awful definition of net profit, they’d give it to him.”
When you agree to a contract, you get a copy. You’re supposed to keep it and safeguard it. After looking a little further, Klugman claims he lost his copy when his agent died. Oh, well. In addition, if you tell someone that you’re going to sue them, don’t expect for them to give you ANYTHING. If you’re truly entitled to a document, you can request it in discovery.
“You have to be on crack to think that Quincy is $66 million in the red after 25 years of syndication”
Thanks for the drug accusation, uninformed person. When they sell a show in syndication, it’s often packaged with something else. In the case of Garner’s suit over the Rockford Files, NBCU would allegedly sell Quincy for an X amount and toss in the Rockford Files for free. Garner’s attorneys claimed that all of this “sweethearting” to get stations to buy the less popular Quincy by providing the more popular Rockford Files for free with it artificially lowered the revenue for the Rockford Files. FYI, Garner never won his suit, but he settled out of court for 80% of what he was seeking. That’s far better than most people do.
“You’re wrong about Hollywood accounting not being creative. In every one of these cases that come to even the slightest light, the studios are always shown to have made millions and millions of dollars in outrageous and absurd charges against net profit”
All of the charges that will be against the gross are defined in the participation agreement. EVERY ONE. The only time that anyone is doing anything wrong is if they make charges against net profit that are not stated in the participation agreement. If the lot wants to charge $10 million dollars per second against the project for using one stage to tape and the participation agreement allows that, oh, well.
The audit that Klugman’s attorneys are requesting is going to look at the net profit definition and what was actually charged against net. It will likely not be a satisfying answer for Klugman.
“Good thing James Garner didn’t listen to attorneys like you”
The irony of you mentioning Garner was that his claim was that some of the revenue from Rockford Files was going to Quincy. In other words, if you believe Garner, Qunicy revenue is overstated, so the loss that NBCU is claiming should be even LARGER. LOL! Since NBCU never formally admitted to that allegation, they won’t use it against Klugman, but it’s ironic nonetheless.
There is no mystery here. NBCU either cheated on the definition or they didn’t. They either did some Rockford-type deals in syndication or they didn’t. Klugman is likely just another member of the shitty contract club. You can’t be compensated for having an agent/manager/attorney that negotiates a shitty deal for you unless you sue them.
Ask Sigourney Weaver about non-existance net. I think she is still waiting on her net from “Ghostbusters.”
Comment by Harold — March 29, 2008 @ 1:39 pm
Harold is mostly right on his diagnosis of the situation. Without seeing the contract, nobody knows whether NBCU is in default of the contract or not. The issue of “creative accounting” is NOT unique to Hollywood! Ever hear of Enron? That is an extreme example, but every major company in the U.S. uses “creative accounting” that best suits their needs. However, it is legal as long as it meets the very loose guidelines of GAAP (Generally Accepted Accounting Principles). As Harold stated, if the contract definition of “net profit” allows the studio to charge insane costs against the project, they will and it is legal (maybe not moral but yet still legal). FYI, “Net” profits = Revenue (the number always reported by media) - ALL COSTS charged to the project.
Comment by econ101 — March 29, 2008 @ 4:54 pm
How could NBC believe that the public will buy such a story.
“Quincy ME” was a money maker for the studio. My mother would watch it three times in one day.
Now, that was just in the states. Imagine what they make worldwide.
I believe that studios will not syndicate unless they can turn a profit.
The studio has made its profit.
Give the man his due.
Comment by neogejo — March 29, 2008 @ 5:09 pm
“Harold is mostly right on his diagnosis of the situation. Without seeing the contract, nobody knows whether NBCU is in default of the contract or not.”
Mmmm, that’s not what Harold said. You see, Harold doesn’t even have to see the contract! He already knows that “All of the charges that will be against the gross are defined in the participation agreement. EVERY ONE”
Of course, this is preposterous to say regarding an agreement that was made in the 1970s. As you say, quite simply we don’t know until anyone sees the contract.
Harold can’t quite decide whether he believes this is a pointless case or not. He says “Anyone who has a “net profit” agreement is just holding a sheet of paper. Nothing more” then backpedals and says “The only time that anyone is doing anything wrong is if they make charges against net profit that are not stated in the participation agreement.”
No shit, Harold. What do you think they’re suing about?
Harold, I was recently involved in a legal matter where an arrogant lawyer like yourself told me I would lose. And lose big. He spouted a lot of crap like you, acted as if his answers were the ONLY ANSWERS. PERIOD. And anyone who was a “random uninformed person” without the knowledge of Harold knew nothing.
Well, I won my case and thank goodness I didn’t listen to the lawyer who sounded EXACTLY like you! It’s just incredible…
Comment by Jamie — March 29, 2008 @ 6:55 pm
And I stand by comment about Garner being lucky not to have you as a lawyer. It’s obvious you’re not a fighter. You like to tell people what they did wrong. You would have lectured Garner on how he fucked up his contract.
A lot of good that does people. Apparently his lawyer fought and I’d say an 80 percent settlement is pretty darn good on what was a reportedly substantial sum of money.
Comment by Jamie — March 29, 2008 @ 7:01 pm
I’ve seen many TV syndication contracts, and I have yet to see one where a show is “thrown in” for free.
Comment by di — March 29, 2008 @ 8:49 pm
Where are Jonathan and Jennifer Hart, Thomas Magnum, and Isaac when you need them? I bet you Quincy’s Asian sidekick knows more than he’s admitting.
Comment by John — March 30, 2008 @ 2:38 am
Duchovny sued Fox on the grounds that they signed a revenue-sharing deal but then sold the X-Files shows cheaply overseas to affiliated companies. This meant that their overseas affilated companied had cheaper programming rather than Duchovny earning money had teh shows been sold at their full market value to unconnected companies. Doubtless there would have been some kind of bundling of shows to disguise this. Liek Garner and Jackson, Duchovny settled. I think he was suing for $25M. He’d signed up for something like $110,000 a show for the season before but his final deal was said to be for $30M i.e. he got all that he asked for.
Comment by Ben — March 30, 2008 @ 6:38 am
Jamie,
Was your lawsuit filed over net profits you were owed? Because I have yet to see even a single legal case where the plaintiff prevailed in such a case.
That’s why people don’t go for net profits, opting instead for the various definitions of gross proceeds. And the really powerful players go for first dollar gross, so that they get their money first.
Comment by Kevin — March 30, 2008 @ 8:12 am
J. Michael Straczynski had the same problem with Babylon 5.
Comment by Leper Messiah — March 30, 2008 @ 11:03 am
It is well known that all studios use creative accounting techniques to show a loss. It goes way behind individual contracts—-its all about taxes. When you show a loss there is no tax due!
Comment by Barry Black — March 30, 2008 @ 11:10 am
I’m sure the studio will do what Disney did to Peggy Lee - stall the case so long that, even if he does win, it’ll be a day or so before he dies of old age. Disgusting.
Comment by Francine Fishpaw — March 30, 2008 @ 11:20 am
“I’ve seen many TV syndication contracts, and I have yet to see one where a show is ‘thrown in’ for free.”
Di,
One of the central arguments that Garner’s attorneys made was that the Rockford Files was being packaged with other shows in syndication. The one that was specifically mentioned was Quincy. Garner’s claim was that all of the revenue for the package was being credited to Quincy and none to the Rockford Files. In essence, he was claiming that they were “throwing in” Rockford Files for free. They had a deposition from a Seattle station manager that supported their claim about the packaging.
What will be hilarious is when Klguman’s attorney’s probably make the same agrument. Only one or none is right.
Comment by Harold — March 30, 2008 @ 8:04 pm
I understand that a 20-year-old actor might have signed a horrible contract under duress, but Klugman was already a star when he signed the Quincy contract.
Who was the agent who handled that contract?
Is it possible that Klugman could win a malpractice suit against the agent’s estate, or the agent’s agency?
Comment by A spouse — March 31, 2008 @ 10:04 am
The last time I saw Quincy in the Charlotte market, it was still on network television. I can’t ever remember seeing it in reruns around here, or anywhere else I’ve ever visited. That being said, if it’s been making money, it hasn’t been doing it around here.
To me, it sounds like Jack Klugman might have gotten screwed. But it also sounds like he allowed it to happen to him. How in the world do you not have a copy of your contract? And I agree with another poster here, who said that NBCU wouldn’t dare give him a copy of that contract now that they’re being sued.
If Klugman is really due some money, I hope he gets it. I agree that too many folks have been screwed out of their just reward. But if Klugman signed a bum deal, that’s tough.
Comment by The Angry American — March 31, 2008 @ 1:36 pm
but this, THIS was not what the writers chose to strike about. because this corporate behavior just didn’t matter to them. transparency, honesty, a real sunshine law–none of that was part of the strike. so instead we all wasted 6 months so that nothing could be achieved, and creatives will still get screwed by corporations because no one has the balls (and the empathy to get beyond one’s own parochial interests) to take this on as the real overarching issue of hollywood. because these same corporations do pay us pretty well.
sigh. i could go on and on. but’s that why i have my own blog.
Comment by robert green — April 3, 2008 @ 10:52 am