Their nasty, dueling lawsuits were seen to strengthen the hands of TV networks as they move to wrest control from producers in the battle over who will control advertiser relationships and brand integration into programs. Making peace is a first step toward damage control.
Mark Burnett Productions and Madison Road agreed to dismiss suits filed against each other in March over fees to integrate marketers into "The Apprentice." Under terms of the agreement, they will actually expand their working relationship by co-producing a new reality series. Madison Road will also work with Mark Burnett Productions to attract brands to at least two episodes of "The Apprentice 5" on a non-exclusive basis.
"We got to know one another and discovered it was in our best interests to keep working together," Mr. Burnett said in a statement. "Branded entertainment has become such a growth industry that it makes sense for us to be in business with Madison Road."
Madison Road CEO Jak Severson insisted, "We're very friendly. There wasn't a lot of attention paid to the facts early on, but the right step was taken. We went through our businesses and our mutual objectives and determined that there were a lot of goals that we share.
"Advertisers are clamoring for a way to be more relevant to audiences. ... When done correctly, there's an infinite amount of new value that can be created."
BACK AND FORTH
The settlement ends what had escalated into a contentious relationship between Mr. Burnett and Madison Road, one that threatened to alienate advertisers interested in spending more of their marketing dollars to integrate products in TV shows.
In Mr. Burnett's lawsuit, the producer claimed that Madison Road duped advertisers into overpaying for brand-integration deals in "The Apprentice" and fraudulently represented itself as the exclusive agent for brand-integration deals in the show. It also alleged that Madison Road charged advertisers up to 250% more for those deals than Burnett was asking, and then skimmed off the difference (AA, March, 7).
Madison Road had brokered deals to have tasks built around Levi Strauss, Procter & Gamble Co. and M&M/Mars products.
Madison Road hit back hard, claiming defamation damages of $20 million, and blasted the producer for making false accusations in an attempt to "quash the competition" in the branded-entertainment business. It accused Mr. Burnett of "sheer greed" and "arrogance" for "emulating the conniving, unethical and devious behavior that often leads to success for his reality show contestants." It claimed that Mr. Burnett's company tried to hike sponsorship fees to "as high as $5 million for a task."
The settlement still doesn't resolve all the issues the suits raised. Marketers are uncomfortable with the lack of clear pricing models for brand integration. And networks are demanding more of the integration fees producers are collecting.
"In the absence of clarity, people tend to get confused," Mr. Severson said.
The agreement to co-produce a reality show comes as Madison Road expands from a broker of branded-entertainment deals to a producer of programming. The company has several shows in development. The first to make it to air will be the reality series "Treasure Hunters" for NBC, a co-production with Ron Howard and Brian Grazer's Imagine Television and Magical Elves. That shows goes into production this summer.