Case to test constraints of corporate vertical integration
Attorneys for the Walt Disney Co. have been ordered to turn over renewal negotiation documents to attorneys for “Home Improvement” producers who claim the studio made a low-ball “sweetheart deal” with Disney-owned ABC for the rights to air the successful TV series.
The case is considered especially significant as it will test the constraints of corporate vertical integration.
Last year, in its lawsuit, Wind Dancer Production Group claimed Disney sold the popular comedy for below-market prices.
Before Disney bought ABC, the lawsuit claimed, the studio “acted aggressively to obtain the best possible terms from ABC.” But after the conglom bought the Alphabet web, Disney refused to shop “Home Improvement” to other networks, the lawsuit claimed.
Suspecting it was being shortchanged, Wind Dancer tried to force Disney to shop the show to other networks to determine its value.
The documents requested during Monday’s discovery hearing will hopefully shed light on the negotiations.
After the ruling by L.A. Superior Court Judge Dzintra Janavs, Wind Dancer attorney Rita Haeusler, of Hughes, Hubbard & Reed, said, “It was quite a good victory.”
Industry legal eagles note that as more congloms own both the content and the means with which to distribute or market it, dealings with sister companies will give rise to claims of preferential treatment or below-market pacts.
The Wind Dancer suit claimed “Disney has secured for itself a seat on both sides of the bargaining table, (which) enables it to manipulate negotiations in any way that serves its own interests.”
The value of “Home Improvement” and any damages would have to be determined at trial, which is not yet scheduled.
Disney attorneys have countered that the lawsuit was a “subterfuge designed to gain the upper hand in contract discussions between plaintiffs and defendant Walt Disney Pictures and Television.”