Golden Globes trial reveals art of negotiations
When it comes to getting a television deal done, the rule is that there are no rules.
That was the takeaway from Day 3 of the legal battle over who controls the television rights to the Golden Globe Awards show. The Hollywood Foreign Press Assn. and Dick Clark Productions — partners on the Golden Globes for almost 30 years — are fighting in U.S. District Court in Los Angeles over a 2010 deal that Dick Clark Productions struck to keep the awards show on NBC through 2018. The HFPA sued Dick Clark Productions soon after it learned of the pact, charging that Dick Clark Productions didn't have the authority to renew with NBC because the association had not given it approval.
Throughout the trial, Dick Clark Productions — now owned by Red Zone Capital, a private equity firm headed by Washington Redskins owner Dan Snyder — has emphasized its belief that a 1993 amendment to the agreement with the HFPA gave the production company the TV rights to the Golden Globes as long as the show is on NBC. On top of that, the HFPA's approval was not necessary for any renewal of NBC's deal for the show, per Dick Clark Productions' understanding of their partnership.
But if telling NBC that HFPA approval was necessary before any new deal could be sealed would help drive up the price, then Dick Clark Productions Chief Executive Mark Shapiro had no problems with that. Under questioning by HFPA counsel Linda Smith of O'Melveny & Myers, Shapiro acknowledged misleading NBC's then-head of business affairs, Marc Graboff, with regards to the role he believed HFPA could play on approving a deal.
"You repeatedly told them you needed HFPA approval," Smith asked Shapiro of his negotiations with NBC in the fall of 2010.
"That is correct," Shapiro replied, adding that he used the HFPA as a "higher authority" because he thought it would give him leverage with Graboff. Shapiro avoided using the word "lie" when testifying about his dealings with NBC and Graboff, preferring the phrase "negotiating strategy."
He also noted that in January 2010, HFPA member and former president Judy Solomon had told Shapiro that the organization wanted at least $20 million a year from NBC for the Globes and his deal with NBC resulted in an average annual rights fee of $21.5 million.
The idea that executives sometimes bluff or mislead the people they are negotiating with to get a better deal is hardly an earth-shattering revelation, but it is rare that such behavior is explained in a court of law.
As Shapiro was conducting his negotiations with NBC and keeping the HFPA out of the loop, the HFPA was doing the same to him with CBS, which apparently was interested in stealing the Globes away from NBC.
The topic of CBS wanting the Golden Globes surfaced several times during Thursday's testimony. Smith asked Shapiro if he had ever talked with CBS Chief Executive Leslie Moonves about acquiring the TV rights for the Globes. Shapiro said that in early 2010 he and Moonves had a very informal discussion about the status of the rights for the Globes. Asked in court if he was aware that CBS was willing to offer between $25 million and $30 million a year for the show, Shapiro said, "of course not" and also added that the agreement Dick Clark Productions had with the HFPA precluded negotiating with anyone except NBC.
Martin Katz (of Sheppard, Mullin, Richter & Hampton LLP), who is representing Dick Clark Productions in the case, asked Shapiro about a lunch that Philip Berk, who was president of the HFPA in 2010, had that summer with Moonves. The lunch, Katz seemed to suggest, was part of an HFPA plan to get the show away from NBC and Dick Clark Productions to CBS.
Asked by Katz if Berk and HFPA were within their legal rights to pitch the show to CBS, Shapiro said he doubted that was the case. Katz then read from the agreement between Dick Clark Productions and HFPA that confirmed that the association was not authorized to discuss a TV deal with a third party.
Much of Thursday's testimony focused on the state of relations between the HFPA and Dick Clark Productions in 2010. The two sides were unsuccessfully trying to renegotiate the terms of their partnership. The HFPA wanted to gut the amendment that Dick Clark Productions claims gives the company control of the TV rights in perpetuity as long as the show remains on NBC and to lower the 50-50 split.
Shapiro said Dick Clark Productions was willing to alter the split and give up the perpetuity amendment if it got at least a 20-year deal from the HFPA to continue to produce the show and a host of other rights to the Golden Globes. Early in 2010 Berk emailed Shapiro saying the producer was not to "seek or agree to any subsequent broadcast licensing agreement with NBC." Shapiro said he would "never make a move on a network renewal."
However, as the year dragged on and the two sides could not come to an agreement on changes to the partnership, Dick Clark Productions started negotiating a renewal with NBC. It did so primarily because if NBC's window to renew the Globes lapsed — which would have happened shortly after the 2011 awards show — Dick Clark Productions' deal to produce the show would be gone too.
Shapiro said in court that his response to Berk was not "meant to represent any legal obligations" that he thought Dick Clark Productions had to the HFPA with regards to keeping it up to speed on any new deal with NBC.
In an email to William Morris Endeavor partner Ari Emanuel, whose agency works with Dick Clark Productions on the Golden Globes, Shapiro expressed frustration with the HFPA in relation to his efforts to renew a deal with NBC.
"Jeff knows these people are crazy," Shapiro wrote to Emanuel, referring to then-NBCUniversal Chief Executive Jeff Zucker.
The case resumes Friday with more questioning for Shapiro, who is a member of the Times' parent company Tribune Co.'s board of directors. Graboff is also expected to appear Friday, and next week CBS' Moonves could take the stand.
— Joe Flint
Photos: Top right: Mark Shapiro. Credit: ESPN. Bottom left: Leslie Moonves. Credit: Julie Jacobson / Associated Press.