Federal judge rules company had right to pact with NBC for kudos

Barring a settlement or appeal, a federal judge’s ruling on Monday means that the Hollywood Foreign Press Assn. is stuck with longtime Golden Globe producer Dick Clark Prods. as long as the show remains on NBC.

U.S. District Judge Howard Matz ruled in favor of Dick Clark Prods. and its interpretation of a 1993 “extensions clause” giving it options to produce the show as long as it remained on NBC, with or without the HFPA’s approval. The HFPA filed suit against DCP in 2010, shortly after DCP landed a new deal extending its rights to the show through 2018.

Matz sided with DCP’s contention that the contract meant what it said: The extensions clause gave it options to the Globes through 2005, and to any “extensions, renewals, substitutions or modifications of the NBC agreement.” He noted that nowhere did it say that DCP needed the HFPA’s approval.

The HFPA had sought to get out of the agreement, on the theory that it could sell the Globes directly to a network for a higher sum. During the trial, it was revealed that CBS’ Leslie Moonves was willing to offer $30 million per year for the show in 2010, far more than the $21.5 million deal that DCP landed with NBC.

Matz’s 89-page decision not only was definitive, but it pinned the blame on the HFPA for the way it did business.

Matz noted that it was “an overriding feature of the lengthy relationship between DCP and HFPA that helps explain how it came to pass that HFPA granted such sweeping rights to DCP. That feature is simply this: HFPA suffered from the absence of sound, business-like practices. It also lacked consistent leadership. It elected a President every year for a one year term, with a maximum of two consecutive terms. Some elections triggered bitter feelings. HFPA members have always been dedicated to the success of the Golden Globes Award Show. But they also succumbed to bouts of pronounced turmoil and personal feuds.”

He added, “In contrast, DCP acted in a consistently business-like fashion, and for almost all of the 27-year relationship it had with HFPA before this suit was filed DCP was represented by one experienced executive who was adept at dealing fairly and effectively with the often amateurish conduct of HFPA.” He was referring to Francis La Maina, who ran most of Clark’s operations until his retirement in 2007.

In fact, Matz called the conduct of the HFPA members at meetings “astounding,” and noted how members got sidetracked in arguments about things like whether to serve “soup or caviar” at the awards dinner. Matz seemed taken aback by what he called members’ “misplaced priorities,” and suggested that in that context he could understand the “inference” that in 1993 most of the HFPA members were far less interested in the terms of the contract than “with the heady prospect of being on NBC.”

“This is confirmed persuasively by the testimony of (then-HFPA president Mirjana) Van Blaricom, who has stressed that — referring to the fact that HFPA’s previous deal with CBS had been cancelled — the members biggest concern was ‘not to be cancelled; that we behave’,” Matz wrote.

One of the most colorful witnesses during the trial, Van Blaricom was later ousted from the org and started a rival press association. Nevertheless, Matz found at least parts of her testimony convincing.

The HFPA’s attorneys, led by Daniel Petrocelli, argued that at a Sept. 22, 1993 membership meeting, La Maina did not discuss the nature of “extensions” clause, either to conceal it or because he didn’t interpret it as giving DCP rights in perpetuity. But Van Blaricom testified that after he left that membership meeting, HFPA members had a 30-minute meeting among themselves, where its implications were discussed. Although no records exist of the 30-minute meeting, Matz said Van Blaricom’s account was “plausible.”

The HFPA’s suit stated that it “strains credulity” to think that it would give up control of such a valuable asset, but Matz wrote that the extensions clause was “an additional form of end-of-deal protection for DCP,” ensuring that it would not be shut out of the show after helping increase its value.

Matz wrote that, because of the passage of time, he wasn’t as swayed by the recollections of many witnesses, but he singled out La Maina, calling him the “most consistently credible witness.” After he testified early in the trial, La Maina stayed throughout.

The judge also was unswayed by the HFPA’s claim that DCP secured approval in 2001 for an extension of its agreement with NBC, something that would bolster the org’s contention that its producer interpreted the contract as meaning that it needed the HFPA’s approval. Although La Maina briefed the board that year on the new deal, Matz said that there was “no evidence to suggest that any such membership approval was sought by DCP.”

Matz’s ruling also leaves the org in the position of going forward with a producer with which it has sought to divorce. They have come together to produce the show twice since the suit was filed, in 2011 and again this year.

The HFPA had no immediate comment. Matz made clear that the ruling may not have precedential value, but it could cause consternation within the org, which gambled heavily that it could win a favorable ruling and perhaps sever its pact with DCP.

An HFPA source said that the costs of the legal battle has had a significant impact on its cash reserves, but that the org was looking forward to the next part of the case, over the accounting of returns from the ceremony by DCP parent Red Zone Capital and other issues. An appeal of Matz’s decision also is expected.

DCP said in a statement, “We are pleased the court affirmed our contract and look forward to working with the HFPA and NBC to nurture and expand the Golden Globes for years to come.”

Martin Katz, DCP’s lead counsel, said, “We are incredibly pleased that our clients’ position was vindicated. Judge Matz’s decision is very thorough and well thought out.”

During the trial, DCP’s CEO Mark Shapiro testified that in negotiating a new pact with NBC in 2010, he told executives that he could not make a deal without the HFPA’s approval, “flatly in conflict” with DCP’s legal arguments. Shapiro testified that this was part of a “negotiating strategy,” not because he believed the HFPA approval was necessary. “This prompted NBC’s Marc Graboff to criticize him for being untrustworthy,” Matz noted. “Although Shapiro may have forfeited any right to complain about such criticism, perhaps his negotiating tactics may boost his ‘street cred’ as a shrewd executive in the fabled world of Hollywood deal-making.”

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