Burrows sues for `Friends’ cut

Aug 20, 2001  •  Post A Comment

Emmy-award winning director James Burrows has filed a breach of contract lawsuit against Warner Bros. Television, charging that he has “not seen a dollar” from an alleged net profits deal to direct the 1994 pilot of its NBC hit comedy “Friends.”
The “Friends” suit, filed Aug. 13 in Los Angeles Superior Court, alleges that Mr. Burrows and his agent Robert Broder entered into an agreement with Warner Bros. Television to participate in 5 percent of the “net profits” derived from the show’s overall network license fees, domestic syndication and worldwide distribution revenue, and licensing revenue in exchange for directing the pilot episode. Mr. Broder is a principal of the Hollywood talent agency Broder Kurland Webb Uffner.
Mr. Burrows’ attorneys (the firm of Lavely & Singer) are claiming “in excess” of $5 million lost revenue and damages but also are seeking exemplary and punitive damages in calling for an open accounting that will ultimately allow the court to assess the potential award to Mr. Burrows. Overall, the suit seeks 10 causes of action, led by breach of contract, promissory fraud, breach of convenant, constructive fraud and a full and open accounting of WBTV’s books on “Friends”’ revenue.
During what the suit claims were “oral negotiations” between Mr. Broder and Ronni Mueller, who was then Warner Bros.’ senior vice president of business affairs, there was “never a request or representation” that the studio would seek to attach production costs, distribution expenses, distribution fees and other “third party” costs by deducting them from the adjusted gross participation in computing Mr. Burrow’s share of the remaining net profits. Ms. Mueller, who was not individually named in the suit, left Warner Bros. Television several months ago.
“[Mr.] Broder requested contingent compensation of the net profits (or, in Warner Bros.’ terminology, `Defined Proceeds’) whereby Warner Bros. would be permitted to deduct a distribution fee,” wrote Mr. Burrows’ attorney, Martin Singer, in the court filing. “In order to ensure that Burrows would receive 5 percent of all of the profits and that other participations would not be deducted in computing his share, Broder insisted that the deal provided that Burrows receive 5 percent of the Defined Proceeds [net profits]. Warner Bros. agreed to that demand and the deal was closed.
“Nowhere in the executed agreement is stated that such a deduction would be made,” added Mr. Singer’s filing, which noted, “If such a provision had been insisted upon by Warner Bros., then Burrows would not have entered into the agreement, because he and his representatives were well aware that the deduction of such third party participations from Burrows’ share would in all likelihood render his Defined Proceeds participation worthless.”
Whether Mr. Burrows and Mr. Broder are implying they have an oral agreement or a written contract defining his net or gross profit participation remains a bit clouded in the filing. Mr. Broder’s office declined comment. Calls to Mr. Singer’s office were not returned as of press time. “As a matter of policy, Warner Bros. does not comment on litigation,” a spokeswoman for the studio said.
However, in the filing the plaintiffs did attach a “true and correct” exhibit copy of Mr. Burrow’s contract with Warner Bros., which was not obtained by Electronic Media, defining what they claim is the terms of a net profits agreement.
Exactly what the court is able to determine from the agreement, said a leading syndication consultant, will “hinge on the terms of the negotiation.”
“It all depends on how it is worded and negotiated, because these cost deductions can be struck out on a line-item basis within a net profits or gross profits deal,” said the syndication consultant, who requested anonymity. “But there are all kinds of other spin the studio can put on a gross profits deal, where they can keep a much larger share of the producer or director’s gross participation. One thing I do know is that Bob Broder is a straight-up negotiator and smart guy who protects his clients’ interests. I don’t think he’d get hoodwinked.”
Mr. Burrows’ attorneys also face the daunting task of compelling the court to gain access to Warner Bros.’ ledgers on “Friends”’ overall revenues from the back-end syndication of the show. According to various syndication sources, “Friends” is set to earn just over $4.3 million per episode from cash license and barter ad revenue from its first-cycle back-end syndication, which broadcast TV stations started in fall 1998.
After the first four years of the TV stations deal, a second cable window opens for run on AOL Time Warner-owned Superstation TBS, which is estimated to be paying another $500,000 per episode for “Friends”’ back-end rights.
Also, as part of the original five-year back-end deal with TV stations, contracts are estimated to be extended another six to nine months each time NBC renews “Friends” for another season (including the coming 2001-02 season). It has been widely speculated that this coming eighth season for “Friends” could be its final one.
With a total delivery of up to 200 episodes of “Friends” by the end of this season, syndication sources estimate the overall domestic back-end run could gross more than $1 billion in revenue over the first cycle. That is where the bookkeeping on “Friends” becomes a closely-held accounting matter at Warner Bros., as with any of the major studios.
Given that the studios typically deficitfinance the front-end production of series, even the escalating production fee NBC pays for “Friends” could be negated by higher above-the-line talent costs on the series. Currently NBC is estimated to be paying about $5.8 million per episode for “Friends,” but each of the six cast players is estimated to be paid about $600,000 per episode, and that doesn’t include the writer, producer and director costs, which yields an estimated $150,000 per episode deficit.
“Typically, these front-end deals are deficited through most of the series’ network run, so these suits typically focus on back-end profits,” the syndication consultant added.
Indeed, if Mr. Burrows ended up signing a gross profits deal, it could be subject to cost deductions made by Warner Bros., but on a pre-deduction basis that share could translate to up to $50 million in a raw lump sum for Mr. Burrows’ share-before the sundry studio deductions are taken out. On a net profit basis, after the assumed deductions were taken out of the gross revenue figures, it becomes somewhat smaller, but it could also guarantee Mr. Burrows more revenue if most of the deductions are struck from the calculation of his share.
The lawsuit argues that Warner Bros. knew that striking a deal to have Mr. Burrows direct the pilot gave the show a much better chance of being picked up by a network, because the majority of pilots directed by Mr. Burrows get ordered. In his 34-year TV directing career, which started with CBS’s “The Mary Tyler Moore Show,” Mr. Burrows has helmed 18 pilots that have been picked up as series.
Mr. Burrows, who also directed the sitcom pilots for “Cheers,” “Frasier,” “Taxi” and “Will & Grace,” has received a record 21 Emmy nominations, winningfive trophies, and has garnered a record 17 Directors Guild of America nominations.