'Project Runway' Lawsuit Alleges 'Sham Negotiation'

Zucker Says Weinstein Promised, 'I Won't Embarrass You'

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NEW YORK (AdAge.com) -- So how is it that NBC Universal and its cable network Bravo allowed one of their top-rated shows to defect to rival Lifetime?

According to a lawsuit filed yesterday in New York State Supreme Court, Harvey Weinstein, one of the reality show's owners, was only going to let NBC and Bravo have "Project Runway" beyond this year if they agreed to pay for a bunch of other "second-tier" films they really didn't want. And despite Mr. Weinstein's promise to NBC Universal President-CEO Jeff Zucker that he would not embarrass him, it appears he has.
Harvey Weinstein
Harvey Weinstein Credit: AP

It also appears no amount of money will be sufficient to repair this relationship. NBC Universal's lawsuit states, "Money damages would be inadequate to protect the expectation interest of [NBC Universal] because such damages could not compensate for [NBC Universal's] inability to exhibit future cycles of ['Project Runway'] and any spin-off -- both unique properties -- on its network or channels. [NBC Universal] would lose immeasurable and valuable goodwill associated with exhibiting such a highly successful program and potentially successful spin-off on their networks or channels."

Plaintiffs called sore losers
Well-known media lawyer David Boies, who is serving as counsel to the Weinstein Co., the studio run by Harvey and Bob Weinstein, said yesterday in a statement: "We believe that this lawsuit is without merit. While good for the market for lawyers, it is always unfortunate when parties try to win in court what they have lost in the marketplace."

Media lawyer Steve Weinberg, a partner at Greenberg Glusker in Los Angeles, said he expects the "Runway" suit to play out in court during the next few months. "This is going to be one of those classic kinds of fights. It's not the kind of case that settles itself easily," he said. Mr. Weinberg, who is not party to the lawsuit, speculated that the Weinsteins' counsel, Mr. Boies, will make a motion to see if he can dismiss the case due to NBCU's failure to state a claim. "Based on that result, the case will either go forward or there wil be more attempts to get it settled."

The sheer volume of moving parts and financial components to such a deal could complicate the case not just legally, but for Bravo's overall ad sales. "Runway" had sponsorship deals with marketers such as Saturn, L'Oreal Paris and Tresemm´┐Ż Professional Hair Care, all of which could be put into play in the move to Lifetime. "There's an awful lot of people who have a lot of money that have been attached to this show," Mr. Weinberg added.

For more than a year, executives from the Weinstein Co., producers of "Project Runway" and NBC Universal were negotiating for Bravo to lock up the exclusive rights to broadcast the Heidi Klum and Tim Gunn-hosted hit beyond this summer's fifth cycle of the show, according to the lawsuit. The original license agreement, struck in November 2003, granted Bravo the right to one 10-episode run of the show, with the option of airing four additional runs. Bravo has aired four complete cycles of the show so far: Dec. 1, 2004-Feb. 23, 2005; Dec. 7, 2005-March 8, 2006; July 5, 2006-Oct. 18, 2006; and Nov. 14, 2007-March 5, 2008.

Disputes arise
Since November 2003, the agreement has been amended and updated, with the most recent additions coming in January 2007 and July 2007. This is where it appears the relationship between the two began to strain.

According to NBC Universal's lawsuit, in late 2006, during negotiations between Bravo and Weinstein Co. regarding future cycles of the program, disputes arose regarding the scope of NBC Universal's exclusivity rights and rights of first refusal. The parties met on Jan. 15, 2007, to discuss additional amendments to the agreement to resolve these disputes. The meeting took place at the Four Seasons Hotel in Beverly Hills, Calif., and was attended by Jeff Zucker, current president-CEO of NBC Universal; Marc Graboff, current co-chairman of NBC Entertainment and Universal Media Studios; and Harvey Weinstein.

At that meeting, the two sides reached an agreement that the lawsuit dubs "the January agreement." The two agreed that NBC Universal would have a right of first refusal to license future runs of "Project Runway" on any non-Bravo NBCU platform if Weinstein Co. sought to sell or license any new cycles. Mr. Weinstein insisted that his company would only permit future cycles of "Runway" to be shown on Bravo if NBCU agreed to a "package" deal, in which NBCU would also acquire TV rights to various films owned by Weinstein Co.

NBC Universal also agreed to air the fifth cycle of "Runway" earlier than Bravo wanted, in order to satisfy Weinstein Co., and that the "holdback period" would have an earlier end date than originally stated, allowing Weinstein to promote and exploit future runs of "Runway" (as long as NBCU did not exercise its right to first refusal). NBCU's suit says this left Bravo with a "substantially less optimal schedule for producing, airing and selling commercial time and product integrations on Cycle Five, as well as a much shorter interval between the airing of Cycles Four and Five than Bravo would normally have preserved, and that it believed was most advantageous for it."

Friendship at an end
The suit states that during that January meeting, Mr. Weinstein gave Mr. Zucker his word that Weinstein Co. would honor NBCU's right of first refusal in exchange for concessions it had made, saying, "You can only have in your life five true friends, and I consider you one of my five friends. And I'm telling you, I will not embarrass you."

In September 2007, the two sides began to negotiate once again. Mr. Weinstein's tactic, according to the lawsuit, was to once again insist that unless NBCU agreed to acquire a package of programming from Weinstein Co. "that included television rights to second-tier films," he was taking "Project Runway" to a competing network.

The lawsuit says that from September through April 2008, the two attempted to negotiate a "reasonable" proposal for a package deal. Mr. Weinstein, meanwhile, had begun to talk to Lifetime in January, and by Feb. 7, according to NBCU's lawsuit, had granted Lifetime the rights to "Project Runway," as well as the other properties he was trying to get NBC to agree to take. NBCU's lawsuit calls Mr. Weinstein's talks with them beyond Feb. 7 "sham negotiations," and says he concealed the talks and agreement with Lifetime from NBCU until he had received payment from Lifetime. NBCU learned of the Lifetime deal only last week, the suit states.

NBCU maintains it never relinquished its right to first refusal or to any spinoffs. It also states that Lifetime has been granted the rights to a spinoff, and that the Weinstein Co. has granted Lifetime the right to market and promote future episodes before the expiration of the "holdback period." NBC Universal is asking the court to prevent Weinstein Co. from granting rights to any person or entity other than NBCU for any future iterations of "Runway," without first honoring its right to first refusal and coming back and negotiating in good faith. Weinstein Co. has 20 days in which to answer the suit.

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