Warner Bros. Settles Vertical Integration Lawsuit Over ‘Smallville’

January 3, 2013  •  Post A Comment

Warner Bros. has settled the bulk of a $100 million lawsuit over “Smallville” that raised questions about the sensitive issue of vertical integration, according to The Hollywood Reporter.

The suit from Tollin/Robbins Productions sought more than $100 million in damages over WBTV’s financial dealings involving the Superman TV show. “Smallville’s” creators and executive producers alleged they were “cheated out of tens of millions of dollars through sweetheart license-fee deals that the studio made with its sister TV networks,” the piece reports.

“On Wednesday, Tollin/Robbins Productions submitted papers in Los Angeles Superior Court to dismiss its claims,” the story reports. “A Warner Bros. spokesperson confirms to The Hollywood Reporter that the dispute with the production company has been resolved. Part of the case from Killara Productions, run by Smallville co-developer Miles Millar and Leonardtown Productions and operated by Alfred Gough, continues.”

The Tollin/Robbins suit was filed in March 2010. About a year later, “Smallville” ended its successful 10-year run.

“The case touched upon a sensitive issue in Hollywood: so-called ‘vertical integration,’” the story reports. “The producers contended they were deprived of significant profits when WBTV allegedly undersold the series to affiliates [of] the WB Network and then The CW instead of licensing the series to outside companies.”

The case had been set to go to trial in June before the settlement was reached.

“In court papers, Warners argued that that it had absolute discretion to determine the terms of its license agreement,” THR reports. “The studio also attempted to convince the judge that damages were merely ‘speculative’ because Tollin/Robbins couldn’t establish that greater profits would have been earned if Smallville had been licensed to Fox or another network.

“But Judge Michael Johnson said there was enough in the pleadings to send it to a jury. In his ruling, he said the plaintiffs had demonstrated triable issues as to whether WBTV complied with obligations to conduct negotiations at various divisions in-house at arms-length and whether the producers’ contracts included profit definitions that necessitated that money be collected at ‘fair market rates consistent with licenses granted by Warner to non-affiliates.’"

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