Ovitz returns fire in Tannenbaum lawsuit

Exec points out former ATG prexy's fiscal irresponsibilty

Eric Tannenbaum succeeded in getting five pilots picked up during his tenure as Artists Television Group’s prexy, but he also spent lavishly, hired executives at excessive salaries and had ungodly cost overruns on his shows. At least these were the charges hurled by Michael Ovitz on Wednesday.

In response to a lawsuit filed last month in L.A. Superior Court, Ovitz elaborated on Tannenbaum’s fiscal irresponsibility in court papers filed Wednesday.

Among other things, Ovitz alleges Tannenbaum spent $1 million on leased space that was never used; hired someone at 3½ times their appropriate salary; and entered into numerous ill-advised transactions. They included hiring three comedy executives who were ultimately terminated; entering into a seven-figure personal services contract that was supposed to be reimbursed by a major television network, but wasn’t; and running up significant production deficits, although Tannenbaum said there would be little or none. The cost of the ill-fated “The $treet,” Ovitz alleges, was so extraordinary at $2.4 million per episode that it drew widespread media derision. ATG’s spending was the subject of numerous articles, Ovitz notes. Stories pointed out that Tannenbaum’s spending was so high that it was driving up development costs for the entire industry.

“The issue,” said one source in the Ovitz camp, “is whether Eric’s contract required him to work once it wasn’t the lavish digs he started out in. Michael wanted to continue operating in a scaled-back way even after the third-party financing fell through and he was funding ATG himself, but Eric just said, ‘Pay me.’ ”

Responded Tannenbaum’s attorney Andrew White: “The company was gutted. There was nothing to supervise.”

Ovitz’s statement supports two motions that were filed to dismiss defamation and fraud claims filed by Tannenbaum. In his suit, Tannenbaum claimed Ovitz defamed him by making numerous statements that he was financially reckless. He also claimed Ovitz committed fraud by inducing him to leave his job as head of Columbia TriStar Television by claiming he had $1 billion in financing in place. Tannenbaum also claimed that Ovitz breached a personal guarantee of his contract. The breach-of-contract claim is not the subject of a motion.

Earlier this month, Tannenbaum teamed up to form a film and TV production company with Cathy Schulman, former prexy at Artists Production Group, a sister company to ATG; former Artisan CEO Mark Curcio; and former UPN Entertainment prexy Tom Nunan.

Ovitz shuttered ATG in August, less than halfway through Tannenbaum’s five-year deal. Ovitz attributes it to numerous factors ranging from the cancellation of all five of Tannenbaum’s shows to the soft advertising market and the bursting of the Internet bubble. Earlier this month, many of the assets of Artists Management Group, Ovitz’s management company, were sold to The Firm.

On the defamation motion, Ovitz has mounted several legal defenses, including the defense that any statements he may have made about Tannenbaum’s fiscal irresponsibility are true.

Tannenbaum’s lawyer White had not seen the motions, but said, “We believe the evidence will show that the business plan as well as every significant expenditure was approved by Michael Ovitz .”

On the fraud motion, Ovitz claims that Tannenbaum’s entire deal is the one negotiated for him by powerhouse lawyer Ernest Del, which, he claims, did not guarantee that Ovitz had obtained a billion-dollar line of credit or that he would personally finance ATG if necessary. To the contrary, the contract, which is attached to the motion, states that ATG is in the process of obtaining third-party financing and that if the funding does not become available, ATG will continue to try to develop product consistent with whatever level of funding was available. The only inducement to take the job in the contract is Ovitz’s personal guarantee. “Why would Michael have to do that if the financing were already in place?” asked one source.