Bitter Dispute Ends in Publishing Chaos; Staff Given Severance Checks

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NEW YORK ( -- A defiant Rosie O'Donnell today announced she was severing her ties with the
Photo: AP
Rosie O'Donnell at the first anniversary of 'Rosie' magazine earlier this year.
Read The Internal Memo:
Charges Abandonment of Staff and Contract

magazine that bears her name.

An executive with her publishing partner, Gruner & Jahr USA Publishing, blasted Ms. O'Donnell for "abandoning" the joint venture and insiders say legal action will most likely be taken. G&J is also holding discussions as to whether to continue the magazine under a different name.

The move ends a bizarre few months at the title, in which disagreements flared between Ms. O'Donnell and G&J over creative control issues.

"I'm sorry to have to tell my readers and my staff that my involvement in the magazine is ending, but my integrity and name are at stake, and that price is too high," said Ms. O'Donnell at a press conference today.

$1 sale price
For its part, G&J was so eager to be free of the situation, it had been prepared to turn over the magazine to Ms. O'Donnell for $1, said someone familiar with the situation. Ms. O'Donnell's spokeswoman would only say "ongoing negotiations met an impasse," but pointed out that there would still be the issue of liability for the magazine's more than 3 million subscriptions -- which, according to individuals familiar with the situation, total more than $40 million.

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G&J is currently huddling over possible plans to transform Rosie -- itself a re-branding of McCall's -- into a new magazine aimed at Rosie's audience of 30- and 40-something women. But to do so would require consent of G&J's majority owner, Bertelsmann AG.

Other possible names
One possible name a rebranded Rosie could appear under is "Voice." In July G&J trademarked that name, and in its application said it was reserving it for use as a "general-interest women's magazine," and has learned that name was trademarked in part over concerns the venture with Ms. O'Donnell might implode. G&J also has trademarked the names "Tempo" and "Fridays" as potential women's magazine titles as well.

A G&J spokeswoman would only say "there are no further publishing plans at this point."

G&J Chief Marketing Officer Cindy Spengler in a statement said the publisher "has been very successful at attracting a vital audience for this type of magazine. There is a readership of over 17 million for Rosie. We are committed to serving this audience -- the 30- to 45-year-old woman seeking a contemporary magazine -- regardless of Ms. O'Donnell's decision."

Battles over editorial control
Regarding that decision, Mary Jo White, the former U.S. attorney who Ms. O'Donnell retained as legal counsel, said, "Rosie ended her participation in the joint venture because G&J, without Rosie's consent, has been exercising the editorial control and powers that belonged to Rosie under their contract. ... As a result, Rosie has the right to terminate her joint venture agreement with G&J."

Not surprisingly, that last point is hotly disputed by G&J. An internal e-mail sent out minutes before the press conference by Ms. Spengler said Ms. O'Donnell's move "destroys the value of the business we created and violates the conditions of our binding contract." Another individual familiar with the situation said a breach of contract lawsuit was pending shortly from G&J. According to Ms. Spengler's e-mail, G&J officials were notified early this morning of Ms. O'Donnell's decision.

It remained uncertain what would become of the magazine and its staffers. Its November issue has closed and December's is mostly finished, although that's now expected to be a farewell issue of sorts.

$10,000 checks
Earlier in the day, some staffers had received checks for $10,000 from Ms. O'Donnell's checking account and signed by her business manager. Along with the checks staffers received a page-long note from Ms. O'Donnell.

"I am writing with sad news today. I notified Dan Brewster [G&J USA Publishing's CEO] I have been forced to terminate my agreement to produce Rosie Magazine," the note says. Ms. O'Donnell went on to add that her role guiding the editorial and creative direction of the magazine "changed" during the summer. "Gruner + Jahr began to assume editorial and overall control of the magazine and at the same time said some very unpleasant things about me in the press."

High-pitched saga
The saga between Ms. O'Donnell and G&J reached an extraordinarily high pitch and was the subject of substantial press coverage. On Sept. 13 rumors of Rosie's potential pullout hit New York's tabloid dailies. While Ms. O'Donnell's spokeswoman dismissed the rumors, two individuals familiar with the matter confirmed the checks received by Rosie staffers were dated Sept. 12, indicating that Ms. O'Donnell's decision had been made earlier, and before those articles ran.

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