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PBS Ordered To Pay $47M to Nesmith

February 3, 1999

LOS ANGELES (AP) _ The Public Broadcasting Service must pay nearly $47 million to ex-Monkee Michael Nesmith and his defunct company for defrauding him in a home video deal that sank the firm.

A federal jury decided Monday that PBS went behind Nesmith’s back to steal the home video rights to such popular fare as ``Sesame Street″ and the Ken Burns documentary ``The Civil War″ while promising to keep his faltering firm afloat.

Jurors rejected PBS’ breach-of-contract lawsuit that claimed Nesmith owed the nonprofit corporation millions of dollars. They upheld a counterclaim of fraud, breach of contract and contract interference.

``It’s like catching your grandmother stealing your stereo,″ Nesmith said through a publicist. ``On one hand, you’re happy to get the stereo back. On the other, you’re sad to find out you’re grandma’s a thief.″

Stu Cantor, a PBS spokesman, said the association of public television stations will appeal.

``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,″ he said, reading a statement from PBS headquarters in Alexandria, Va.

The case is the latest controversy over PBS’ aggressive new moneymaking techniques. In the mid-1990s, as Congress threatened deep funding cutbacks, PBS turned to the marketplace, offering among other things expanded commercial spots to corporate donors.

Nesmith, 56, was the hat- and sideburns-wearing member of the Monkees, a 1960s music and TV sitcom sensation.

Nesmith’s company, Pacific Arts, 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 the 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 down the company to avoid disruption, Nesmith said.

While meeting with Nesmith and his staff to reassure them of their good faith, PBS officials were busy soliciting a dozen other potential distributors, Nesmith said. They also convinced the producers of the shows to terminate their distribution contracts with Pacific Arts en masse, Nesmith claimed.

PBS obtained the video distribution rights, split them with Turner Home Entertainment and now reaps $27 million per year from the business, Van Dalsem said.

Claiming he owed them millions, Nesmith was sued by PBS, Ken Burns’ company, 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 before a single jury on Jan. 4. The jury ruled PBS must pay the other plaintiffs what Pacific Arts owed them.

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.

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