PBS Ordered To Pay $47M to Nesmith
Feb. 03, 1999
LOS ANGELES (AP) _ The network of adorable Muppets and highbrow historical programs owes ex-Monkee Michael Nesmith nearly $47 million for wrecking his home video distribution company, a jury says.
In a decision announced Tuesday, a federal jury rejected a breach-of-contract lawsuit filed by the Public Broadcasting Service, which claimed Nesmith owed the nonprofit corporation millions of dollars.
The jury then upheld a counterclaim of fraud, breach of contract and contract interference, Nesmith's lawyers said.
``It's like catching your grandmother stealing your stereo,'' Nesmith said. ``On one hand, you're happy to get the stereo back. On the other, you're sad to find out your grandma's a thief.''
The panel decided Monday that PBS defrauded Nesmith and broke its contract with his now-defunct Pacific Arts Corp., which distributed a video library of the network's most popular programs.
``PBS firmly believes that the facts and the law in the case merited a ruling in our favor and we are frankly shocked at the verdict. We will vigorously contest the verdict,'' PBS spokesman Stu Cantor said.
Nesmith, 56, is best known as the knit cap- and sideburns-wearing member of The Monkees, a pop group created for a 1960s TV sitcom.
His company made a deal in 1990 to distribute the PBS Home Video Line. He licensed the PBS trademark and obtained home video rights to dozens of programs from their producers.
``Pacific Arts spent $8 million breaking the market, convincing stores to give up shelf space for this, putting up kiosks in Wal-Marts, things like that,'' said Bruce Van Dalsem, a Nesmith lawyer.
By 1993 the videos were selling well but Nesmith's company was losing money because of high costs. He decided to sell the rights to the accumulated video library, which could earn up to $15 million and allow him to pay off royalties and other business debts, the lawyer said.
PBS agreed in writing to help him recapitalize the business or, if that failed, cooperate in slowly winding it down to avoid disruption, Nesmith said.
However, while meeting with Nesmith and his staff to reassure them of the network's good faith, PBS officials were busy soliciting a dozen other potential distributors, Nesmith contended.
They also convinced producers of the shows to terminate distribution contracts with Pacific Arts en masse on Columbus Day 1993, a federal holiday, Nesmith said. The date was chosen because the courts were closed and Nesmith would be unable to file for Chapter 11 bankruptcy protection to save his company, attorney Bruce Van Dalsem said.
When the day came, ``it rained termination notices,'' he said.
PBS then obtained the video distribution rights, split them with Turner Home Entertainment, and now reaps $27 million per year from the business, Van Dalsem said.
Later, Nesmith was sued by PBS, public stations WNET-New York and WGBH-Boston and by Children' Television Workshop, which created ``Sesame Street.''
He countersued and the cases went to trial on Jan. 4.
On Monday, the jury ruled PBS must pay the other plaintiffs what Pacific Arts owed them. Overall, jurors awarded more than $14.6 million to Pacific Arts for the loss of the value of the video library and nearly $29.3 million in punitive damages. Another $3 million was awarded to Nesmith personally.