The Gurneys say they will file a countersuit against ITV, accusing the firm of fabricating baseless claims in order to lower the value of the couple’s minority stake in Gurney Productions. The Gurneys are also prepared to claim that they — and not ITV — continue to have the legal right to run the company.
ITV bought 61.5% of the reality production company in 2012 for $40 million. The Gurneys retained the balance of the shares and stayed on as co-CEOs, producing dozens of shows for Discovery, HGTV, TLC, and other cable networks.
Last week, ITV announced that the Gurneys had been suspended pending an investigation into billing fraud, and installed an interim CEO. On Friday, ITV formally fired the Gurneys and sued them, accusing them of lying to the board of directors and falsely inflating the value of their shares in the company. The lawsuit also claimed that the Gurneys had failed to pay back $542,000 in personal expenses billed to the company, including mortgage payments, country club fees, and helicopter rides.
On Monday, the Gurneys’ attorney, Michael Weinsten, fired back.
“This is a blatant, desperate attempt at intimidation by ITV, a classic greedy corporate grab, solely for the purpose of enriching one shareholder at the expense of the founders who built this company into the highly valued, sustained financial success story that it is,” Weinsten said. “The claims against the Gurneys are completely baseless and fraught with contradictions, inconsistencies and outright falsehoods. My clients are considering all of their legal options and are preparing to respond accordingly.”
In its lawsuit, ITV alleged that the Gurneys secretly set up Snake River Productions, which acquired distribution rights to a Gurney Productions show, “Northern Territory,” for $3.6 million. ITV alleged that the Gurneys were using the secret company to inflate Gurney Productions’ EBITDA, which would increase the value of the Gurneys’ remaining stake the company. Under the agreement, ITV was expected to buy out the Gurneys’ shares in 2017 at a price based on the previous years’ EBITDA.
But the agreement also provided that the Gurneys’ shares would drop in value if they were fired for cause. The Gurneys are expected to allege in a countersuit that ITV fabricated a “cause” to fire them in order to cut the value of their shares.
The Gurneys will also maintain that Snake River does not improperly compete with Gurney Productions, because it is exploring several game-show ideas but is not involved in reality TV. The Gurneys also contend that ITV interfered with production of “Duck Dynasty” — and that the Gurneys, who remain on the board, have the right to control the company.