Given the lively discussion of what folks don’t want to see on The Beat, I couldn’t resist noting that an attorney representing Smallville co-creators Miles Millar and Alfred Gough in their dispute with Time Warner also represented the Kardashian sisters in the epic, never to be forgotten Kardashian Kard case. However, the Smallville dispute is also interesting for other reasons, not the least of which is its relevance to the fundamental fairness of the Siegel case.Movie news sites reported earlier today that Time Warner and Tollin/Robbins Productions have reached a settlement in their litigation regarding the profits from Smallville. Left unresolved are the claims by Millar’s Killara and Gough’s Leonardtown Productions, which are set to go to trial later this year.
The grounds of of this dispute: Time Warner’s vertical integration in transactions concerning the licensing and profit-distribution in the Smallville deal. Technically the deals were made by separate companies, but they were all related to Time Warner–DC licensed Superman material to Warner Brothers Television; WBTV made a deal with the affiliated CW network. This raised questions as to conflicts of interest in the pricing and the reduction of the plaintiffs’ percentage of the profits by the inclusion of DC in profit sharing.
If you’ve been following the Siegel case and all this sort of rings a bell, your memory is not playing tricks. Back in 2009, Judge Stephen Larson issued a ruling on conflict of interest issues in the valuation of the Superman movie and Smallville deals. Vertical integration was a key issue there as well–if Warner Brothers received a “‘sweetheart deal’” in these transactions, Jerry Siegel’s heirs would improperly receive less than fair market value for the pertinent Superman material that they co-own.
Like the judge in the Tollin/Robbins – Killara/Leonardtown case, Judge Larson determined that these transactions raised triable issues of fact. After a bench trial (i.e., no jury), Larson found that the transactions did not involve a less than fair market valuation. Included in this opinion was a specific mention of DC’s Smallville licensing fees and profit participation, which Larson concluded were consistent with “the ballpark of fair market value to those negotiated at arms length by unrelatedcorporate affiliates.”
As I noted at the time, there appears to have been more to Judge Larson’s ruling on this issue than the mere facts of each transaction. Indeed, Larson noted that the record contained far less on the Smallville transaction than the Superman movie rights, yet he did not ask for supplemental information and actually issued an arguably more definitive conclusion in regard to the Smallville deal’s fairness. It’s evident that this ruling was part of Larson’s push for a settlement agreement–the Siegels may have won half of the Superman copyright, but this could mean far less than they might hope.
I’ll leave it to legal beagles with too much free time to weigh in on whether Judge Larson’s federal court ruling should have any bearing on adjudicating the Millar/Gough claims that touch upon the Smallville valuation. It is worth noting, though, that if they don’t also reach a settlement and the trial goes in their favor, the result would be a deal found to be undervalued and corrupt as to the co-creators of Smallville but fair for the co-creator of Superman himself.