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Federal jury awards $269.2 million in damages in "Who Wants to Be a Millionaire" suit

July 7, 2010 | 12:25 pm

In a legal setback for the the Walt Disney Co., a federal jury in Riverside awarded the creator of "Who Wants to Be a Millionaire" nearly $269.2 million in damages from the once-popular prime-time game show.

The decision strikes at the heart of the "vertical integration" argument that has buttressed the wave of consolidation that has swept Hollywood over the last 20 years, in which media giants contend that it is economically advantageous to control both the production and distribution of TV programming.

Creator Celador International sued The Walt Disney Co. in 2004, claiming that it had been denied its fair share of profits from the show, which aired on the entertainment giant's ABC network for three years beginning in the summer of 1999 and continues to appear on local TV stations. Celador argued that a series of "sweetheart deals" struck between a clutch of Disney-owned companies kept the show in the red, even as it became ABC's first No. 1 show in more than a decade.

Celador asked the jury to award damages of up to $395 million in broadcast licensing fees, based on what one expert said would be the fair market value of the show. The U.K.-based company also claimed that it was owed $10 million in revenue from the sale of "Millionaire"-inspired games and other merchandise.

The jury arrived at a figure that was slightly less -- $260 million in licensing fees and $9.2 million in money owed from the sale of merchandise. Disney issued a statement, saying it plans to challenge the award.

"We believe this verdict is fundamentally wrong and will aggressively seek to have it reversed," Disney said in the statement.

The case has been described as an illustration of "Hollywood accounting," in which TV shows that become major hits never turn a profit. Over the course of the four-week trial, Celador's attorneys introduced evidence that the show generated $515 million in revenue from license fees over the course of its three-year prime-time run through 2002, not including $70 million in merchandising revenue. 

"Millionaire" also attracted nearly $1.8 billion in advertising for ABC, according to research firm Kantar Media. 

But according to Disney's accounting, Millionaire has run a $73-million deficit.

[Update, 11:22 p.m.: For more, see the story on the ruling against Disney in the "Who Wants to Be a Millionnaire?" lawsuit in tomorrow's Times.]

-- Dawn C. Chmielewski

Photo of "Who Wants to be Millionaire?" by Virginia Sherwood / ABC