An arbitrator ordered Fox to pay $178.7 million to former producers and stars of the show Bones, saying executives committed fraud in a dispute over profit participation.
Arbitrator Peter D. Lichtman ordered Fox to pay $50 million in damages and an additional $128 million in punitive damages, saying the executives withheld tens of millions of dollars that should have gone to the Bones team, including executive producer Barry Josephson as well as key stars David Boreanaz and Emily Deschanel, for themselves.
The arbitrator also suggested Fox was self-dealing when it sold the digital rights to Bones to streaming service Hulu, which Fox owns a 30 percent stake in, depriving the show’s producers and stars millions of dollars in fees.
The 66-page ruling was delivered Feb. 4, but wasn’t released publicly until Wednesday.
Litchman ruled that executives including 21st Century Fox President Peter Rice, and Fox TV Chairmen and CEOs Dana Walden and Gary Newman engaged in “reprehensible conduct” and gave unconvincing testimony.
“The more these individuals testified, the more incredulous their testimony appeared,” he said.
Fox’s lawyer said Bones was “a middling show with middling ratings” and that a licensing fee higher than the $2 million per episode it paid would have caused the show to be canceled.
In his ruling, Litchman said Fox’s studio executives had no interest in finding the fair market value of the series.
“There is no doubt that the Studio realized that it was not going to win the fight with its affiliate and therefore not only capitulated to the wishes of the Network but also became an accomplice to fraud with respect to the Network’s desire to limit both the Studio’s and Network’s exposure for its breach and failure to negotiate in accord with the operative contractual standards,” he wrote.
Fox is seeking to void the punitive damages of $128.5, saying the arbitrator was acting outside of his powers.
“The ruling by this private arbitrator is categorically wrong on the merits and exceeded his arbitration powers. Fox will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law,” the company said.
Rice and Walden are set to move into senior leadership roles at the Walt Disney Company in several weeks when the company completes its purchase of 21st Century Fox’s entertainment properties.
Disney CEO Robert A. Iger offered support to the incoming executives in response to the ruling.
“Peter Rice and Dana Walden are highly respected leaders in this industry, and we have complete confidence in their character and integrity,” Iger said. “Disney had no involvement in the arbitration, and we understand the decision is being challenged and will leave it to the courts to decide the matter.”