The suit, filed in Los Angeles Superior Court, in Santa Monica, Calif., alleges that the agency, Madison Road Entertainment, pulled off a stunning double deception, misrepresenting itself to Burnett and his executives as the sole conduit to advertisers who wanted to buy integration deals in "The Apprentice," while fraudulently convincing the advertisers it was the exclusive agent for Burnett and his super-hot branded-entertainment property. If the Burnett Affiliates suit is to be believed, Madison Road made millions with this double-play.
Madison Road had not reviewed the suit when contacted by Advertising Age, but said it was "astounded" and "disappointed" by it and would "defend its integrity."
The marketers in question are unnamed in the suit, although Madison Road-founded in 2003 by Tom Mazza, former president of Columbia TriStar Television; marketing vet Jak Severson; and Rob Long, a former writer for "Cheers"-is known to have brokered "Apprentice" integration deals involving Levi-Strauss, Procter & Gamble Co. and Mars.
The suit follows a cease-and-desist letter sent Feb. 15 to Madison Road by Mr. Burnett's attorneys demanding that the firm immediately "stop representing itself as an agent of Mark Burnett Productions, or that it has any special relationship with the company." It quickly made the rounds to product-placement shops, media-buying firms and advertising agencies last week.
The suit claims Madison Road made "fraudulent attempts ... to usurp and extract unjustified and exorbitant fees from the real and potential relationships between the Burnett Affiliates and companies who wish to sponsor `Apprentice' tasks. MRE falsely represented to these sponsors, and to media and advertising agencies, that it was `hired' by Burnett Affiliates to find task sponsors, and/or that it owns exclusive right to branding opportunities on `The Apprentice."'
According to the suit, Madison Road persuaded Burnett Affiliates to steer clear of contact with the advertisers, by claiming it had longstanding relationships with those companies. "Had Burnett Affiliates known that in fact MRE had no more of an established relationship with these sponsors than they themselves did, they would never have agreed to refrain from approaching and dealing with the sponsors directly," says the suit.
Burnett Affiliates claims in the suit that it actually lost out by working through Madison Road on the deals: "First, because the fraudulently induced development agreements between Madison Road and the sponsors resulted in the Burnett affiliates receiving consideration sums that were significantly smaller than those the sponsors were actually willing to pay for participation in `The Apprentice,' with the difference flowing to Madison Road."
The suit continues: "Second, and more important in the long run, because Madison Road used its participation in these deals to bolster the impression, fraudulently cultivated through false statements both to other sponsors and to advertising and media agencies, that Madison Road had an authorized or exclusive relationship with Burnett Associates, giving it a privileged role."
Through Madison Road, Levi's, Crest and M&Ms were integrated into the second installment of "The Apprentice," with those brands paying millions of dollars in integration fees. But Mr. Burnett's attorneys are essentially arguing that Burnett Affiliates would have earned more money in integration fees from sponsors had it dealt directly with the advertisers.
In order to secure those brands and dollars, Mr. Burnett's company believed it had to sign two separate contracts with Madison Road, the suit says: a "production assistance agreement" for the sponsor to cover the start-up funds and development of the task to appear in the show, and a "production assistance consideration agreement," which gave Madison Road control of any payments from the sponsor to Mr. Burnett's company. Madison Road collected an undisclosed percentage of the integration fees for connecting advertisers with "The Apprentice" producers.
The timing of the suit comes as Mr. Burnett's company expands his internal team of staffers to shepherd the dealmaking and integration of brands into his stable of shows, including "The Apprentice," "Survivor," "The Contender" and Martha Stewart's upcoming version of "The Apprentice."
It also comes as Madison Road, an independent that claims it's brokered $15 million in integration deals for clients including Unilever and Pfizer for the 2004-2005 TV season, is expanding to develop and shop its own brand-backed reality and other unscripted shows. Principals Mazza, Severson, and Long have made several major hires recently, including former Fremantle Media VP Danica Krislovich, for its new venture. John Bronson and Jason Adelman, former executives at Pepsi-Cola Co. and CBS, respectively, are also employed by the company, as is Stuart Shlossman, who recently left Masterfoods USA.
"Madison Road has not had time to review this lawsuit," said a spokesman for the company. "Madison Road prides itself with its integrity and fair business practices, and is astounded by this suit and disappointed in Mark Burnett Productions," he said. "Madison Road strongly looks forward to defending the integrity of their company."