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Profit participation dispute destined for further litigation

20th Century Fox Television principals understandably expressed strong satisfaction with a Los Angeles County superior court ruling last week that reversed an earlier arbitration award of $128.5 million against the company.

An official Fox statement issued in the immediate wake of last Thursday’s ruling underscored the entertainment conglomerate’s vindication and its expectation that litigation that had long embroiled the company will now shortly conclude.

No chance, say spokespersons for multiple plaintiffs in the case, who vow to appeal the ruling against them in a state appellate court.

The dispute began in 2015, pitting Fox against actors and producers of the popular and long-running crime drama Bones. The spotlighted focus in the case was on the plaintiffs’ charge that Fox purposefully and systematically shortchanged them when inking licensing deals with third parties seeking to re-air the shows.

The plaintiffs were all entitled to profits from any licensing pacts. They accused Fox of licensing Bones episodes to related company entities at below-market rates to incur lower royalty payments to profit participants.

The arbitrator agreed with them, nailing Fox with $50 million in actual damages and slapping the company with an additional $128.5 million in punitives. In doing so, he termed the company’s behavior “reprehensible.”

The California judge taking the case on appeal didn’t see things in quite the same way. Although he upheld the actual damage amount, he relieved Fox from the punitive damage exaction.

As noted, the case seems far from over, with the plaintiffs stressing their resolve to appeal the reversal.

Industry insiders will be watching closely, given the recent trend of major entertainment companies creating streaming services that serve as ready repositories for parent company-owned programs.

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