AOL files suit against Sears

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An $8.3 million lawsuit was filed by AOL Time Warner's Time Warner Entertainment and four sibling Turner Broadcasting System cable networks-CNN, TBS, TNT and Cartoon Network-against Sears, Roebuck & Co., seeking payment for advertising time bought in 1999 by a now-defunct ad agency acting on Sears' behalf.

Sears paid the agency, Focus Media, but the agency did not in turn pay the networks, according to the suit, which contends the "reasonable value" of the Sears advertising that was telecast is just over $7 million. That amount plus interest now totals more than $8.3 million, according to the court filing.

Industry custom and practice hold the advertiser ultimately responsible for TV time bought by an agency acting on its behalf, according to the complaint filed Nov. 30 in California Superior Court.

The plaintiffs contend that in April 2000, Sears promised in writing to "make good on the bills to the extent [Time Warner Entertainment] cannot recover from Focus the money Sears remitted to Focus for payment to Warner."

A Sears spokeswoman said the retailer was "in discussions" with the media company about resolving the lawsuit. A spokesman for the TBS cable networks that are party to the suit declined comment.

AOL Time Warner is the world's largest media company. Sears is the nation's 12th largest advertiser.

The suit is related to an earlier lawsuit, filed in March 2000 by Sears against Focus, the agency that acted for and then later was fired by Sears. In the earlier suit, Sears claimed Focus, which received a $500,000-per-month retainer, "abused the trust and confidence of Sears by failing to pay to the Media Outlets the sums that it held on Sears [sic] behalf for that specific purpose."

Focus ceased operations in summer 2000, but legal proceedings have continued against it and its former executives, who include Founder and Chairman Tom Rubin and Chief Financial Officer Tom Sullivan. In October 2000, General Electric Co.'s NBC, Walt Disney Co.'s ABC and Paxson Communications filed an involuntary bankruptcy petition against Focus.

Mr. Chunovic is a senior editor of Electronic Media.

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