×

Fox Ordered to Pay $179 Million to ‘Bones’ Profit Participants

An arbitrator has ordered Fox to pay $179 million to profit participants in the long-running drama series “Bones,” finding that top executives lowballed revenue from the show and gave false testimony.

In his ruling, arbitrator Peter Lichtman blasted several Fox executives by name, including Dana Walden, Gary Newman and Peter Rice, saying they gave “false testimony in an attempt to conceal their wrongful acts.” Lichtman held that Fox engaged “intentional acts of fraud and malice,” and showed a “cavalier attitude” toward the company’s wrongdoing.

The case is the latest in a long line of self-dealing lawsuits in which profit participants assert that the network did not pay market rates to license the show because it was produced by a corporate sibling, 20th Century Fox Television.

Lichtman awarded a whopping $128 million in punitive damages, finding the high amount “necessary to punish Fox for its reprehensible conduct and deter it from future wrongful conduct.”

In a statement, 21st Century Fox strongly denied the allegations leveled against its executives by Lichtman and said it would appeal the decision.

“The ruling by this private arbitrator is categorically wrong on the merits and exceeded his arbitration powers,” the company said. “Fox will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law.”

Rice and Walden are set to take on senior roles at Disney upon the consummation of the merger with Fox. In a statement in response to the ruling, Disney CEO Bob Iger said he still has “complete confidence” in the executives.

“Peter Rice and Dana Walden are highly respected leaders in this industry, and we have complete confidence in their character and integrity,” Iger said. “Disney had no involvement in the arbitration, and we understand the decision is being challenged and will leave it to the courts to decide the matter.”

If it is upheld, the damages award would rank among the largest judgments in favor of profit participants in Hollywood history. In 2012, Disney lost an appeal of a $319 million award to the producers of “Who Wants to Be a Millionaire.”

Bones” aired on Fox from 2005 through 2017. The stars of the show, Emily Deschanel and David Boreanaz, sued Fox in 2015. They were joined by Kathy Reichs, the author of the novels on which the show was based, and Barry Josephson, the executive producer. The plaintiffs alleged that the 20th Century Fox TV studio agreed to below-market rates in licensing the show to Fox and later to Hulu for reruns. The participants maintain they were cheated out of tens of millions of dollars in profit participation because of those lowball deals.

Fox moved to handle the case through private arbitration.

In his ruling, Lichtman also accuses Fox of handing a generous production deal to former Fox executive Peter Liguori shortly before the arbitration hearing in order to secure his favorable testimony.

“If one juxtaposes the First Look Agreement with Mr. Liguori’s testimony at the hearing… it seems coincidental that Mr. Liguori disappears for 9 years (from Fox’s radar) and then magically reappears with a First Look Agreement 7 months before he is to testify in these proceedings with a deal in hand that most producers in Hollywood have strived to have their entire entertainment career,” Lichtman wrote.

Sources close to FX described the claim as “outrageous” and false.

Liguori headed Fox at the time the series debuted in 2005. In 2009, he wrote a memo that may have outlined Fox’s efforts to avoid self-dealing liability as Fox considered giving “Bones” a three-season renewal in 2009. Quotations from what is described as the “Legal Action Plan” memo are heavily redacted in the arbitration filing. Liguori left his post as chairman of Fox Broadcasting in 2009, amid a shakeup in the TV division.

Lichtman also held that Fox executives were deceptive in testifying about the process of determining a license fee for “Bones.”

“The testimony of both Mr. Newman and Ms. Walden regarding ‘marketplace information’ is not only troubling but extremely disconcerting,” the arbitrator states. “The more these individuals testified the more incredulous their testimony appeared.”

Lichtman issued the ruling on Feb. 4. Attorneys for the profit participants filed a petition Wednesday to confirm the award.

Boreanaz released a statement, saying “I loved working on Bones with such an incredible cast and crew – and I will not allow this legal process to sour those wonderful memories. But as you look at the ruling, it’s clear that what we were saying all along was true: we were owed additional compensation for our work. Now I can only hope that Fox is made to settle its obligations to us without further delay.”

Deschanel also issued a statement: “We are so proud of the hard work we did on Bones for 12 seasons and only ever wanted Fox to live up to its promises and contractual obligations. I am grateful that such a well-respected arbitrator reviewed the facts so thoroughly before ruling the way he did. I look forward to the legal system continuing to hold Fox accountable so that we can all move forward.”

In addition to the $128 million in punitive damages, the arbitrator awarded $15.5 million in domestic profit participation, $7.1 million for international residuals, $10.1 million for Hulu residuals, $10 million in interest on the damages, and $7.4 million in attorneys’ fees.

(Cynthia Littleton contributed to this report.)

More Biz

  • Discovery CEO David Zaslav Sees 2018

    Discovery CEO David Zaslav Sees 2018 Compensation Soar to $129.4 Million

    Discovery Inc. president-CEO David Zaslav is once again making headlines for an enormous compensation package. Zaslav’s 2018 compensation soared to $129.44 million in 2018, fueled by stock options and grants awarded as the longtime Discovery chief signed a new employment contract last July that takes him through 2023 at the cable programming group. Zaslav received [...]

  • Jonathan Lamy RIAA

    Jonathan Lamy Stepping Down From RIAA

    Jonathan Lamy, the Recording Industry Association of America’s longtime executive VP of communications and marketing, is stepping down from his post after 17 years, he announced today. As he put it in an email to Variety, “I started back in 2002, which means it’s been 17+ years, four different RIAA CEOs, three format changes and [...]

  • Fox Layoffs

    Disney-21st Fox Layoffs: TV Divisions Brace for Deep Cuts

    A second day of layoffs has begun on the Fox lot in the wake of Disney completing its acquisition of 21st Century Fox on Wednesday. Longtime 20th Century Fox Television Distribution president Mark Kaner is among the senior executives who were formally notified with severance details on Friday morning. 21st Century Fox’s international TV sales [...]

  • anthony pellicano

    Hollywood Fixer Anthony Pellicano Released From Federal Prison

    Anthony Pellicano, the Hollywood private eye whose wiretapping case riveted the industry a decade ago, was released from a federal prison on Friday, a prison spokeswoman confirmed. Pellicano was sentenced in 2008 to 15 years, following his conviction on 78 charges of wiretapping, racketeering, conspiracy and wire fraud. He had been in custody since 2003, [...]

  • This image taken from the Twitter

    HBO’s Reaction to Trump’s ‘Game of Thrones’ Campaign

    Everyone wants a piece of the “Game of Thrones” lemon cake. From Bud Light to Red Bull the world of Westeros is open to a lot of brand partnerships, unless you’re using that iconic typeface to push a political agenda. In November of 2018 President Donald Trump unveiled a “Thrones” inspired poster with the words [...]

  • Leaving Neverland HBO

    'Leaving Neverland' Lawsuit Proves to Be a Judicial Hot Potato

    The Michael Jackson estate sued HBO last month for airing the documentary “Leaving Neverland,” which accuses the late King of Pop of serial child sexual abuse. Since then, the case has had a difficult time finding a judge to handle it. Three federal judges have recused themselves in the last week, citing potential financial conflicts [...]

  • Members of the public mourn at

    Guy Oseary’s New Zealand Fundraiser Nears $150,000, Continues Raising Money

    In the wake of the horrific shootings at New Zealand mosques last week that killed some 49 people, Maverick chief Guy Oseary launched a GoFundMe campaign to “support those affected by this tragedy at this very difficult time,” and began it with an $18,000 donation. Boosted by donations from many celebrities — including Amy Schumer, [...]

More From Our Brands

Access exclusive content