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  1. #1

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    Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Before High School Musical and Hannah Montana became multimedia juggernauts, Disney enjoyed major success (and still does) with the Cheetah Girls. The multi-ethnic girl group spawned two Disney Channel movies (a third one is in production) and sold millions of CD's and DVD's, not to mention warehouses of merchandise.

    You'd think Deborah Gregory, the author of the books Disney built the franchise on, would be reaping the benefits of all this success.

    Think again.

    Since selling her first Cheetah Girls book to Disney's Hyperion Books in 1998, Gregory has pocketed only a few hundred thousand dollars, mostly from publishing advances and co-producer credits. It's a drop in the bucket compared to the mountain of cash Disney has made from her creation, and not a nickel of it is part of the 4% "net profits" her 2001 contract promised.

    Of course, as any creative accountant will tell you, net profits hardly ever materialize in Hollywood.

    As Josh Getlin with the L.A. Times reports:

    "This is an old, old story in Hollywood," said literary agent Nicholas Ellison, who has represented numerous clients in book-to-film negotiations. When studios are asked why an author has not received any net profits, he said, they often point to expenses that have grown larger than expected and contend that a hit picture has not, in fact, made money.

    It's called "Hollywood accounting," and in some cases studios may be on solid ground, citing legitimate costs such as promotion and development. But in other cases, contracts contain definitions of "net profits" that make it all but impossible for an author to collect money that once seemed tantalizingly at hand.
    Asked about Gregory's case, longtime industry observers offered differing takes: She was a first-time author who didn't know the ropes when she negotiated her deal. Her attorney had only limited leverage because she was an unknown author. Disney officials grabbed whatever advantage they could, just like any studio. And although it's easy to be bitter about monster profits in hindsight, few could have predicted that the Cheetah Girls would become such a marketing sensation.

    Others blame Disney: "What happened to Deborah was unconscionable," said an insider who is familiar with the Cheetah Girls project but asked not to be identified, citing business considerations. "At the very least, they should have cut her in on the revenue from the DVDs and CDs."
    "I never dreamed things would turn out the way they did," said Gregory, recalling the heady days when she had first written "The Cheetah Girls" and the Disney Channel expressed interest. "I really believed I would be able to share in everything that was created, that I was going to be a participant. Well, honey, that was a sham."
    Disney officials, asked to explain why Gregory has not received any net profits -- and to estimate the collective revenue that the Cheetah Girls has generated -- declined to respond. "Disney Channel doesn't comment on the terms of its contracts," spokeswoman Patti McTeague said in an e-mail.
    Full Story: Eaten alive in the studio jungle
    Last edited by disneytim; 02-16-2008 at 10:00 AM.

  2. #2

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    wow.

  3. #3

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Hollywood accounting is nothing new. Disney made the best deal they could for themselves and the Author probably got the best deal she could at the time as well.

    It's called "Hollywood accounting," and in some cases studios may be on solid ground, citing legitimate costs such as promotion and development. But in other cases, contracts contain definitions of "net profits" that make it all but impossible for an author to collect money that once seemed tantalizingly at hand.
    But at the time neither side knew how well the franchise would do and if she is upset at anyone it should be her lawyer, or herself for not getting a better agent or Lawyer.

    And it is not as if the LA area has not heard this type of story countless times over the last 70 years. Someone told the old joke at the Oscars a couple of years ago that the biggest news of the year in Hollywood was that Gone with the Wind had finally turned profitable.

    Net profit participation is known as Monkey Points for a reason.
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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    And how many millions have Disney Channel executives pocketed in bonuses...?

  5. #5

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    What on earth is the big deal?

    This is what happens to people who don't actually read before they sign something. Disney has EVERY right to make millions at other people's stupidity.


    Hopefully the creator learned a valuable lesson.

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by The Steven View Post
    What on earth is the big deal?

    This is what happens to people who don't actually read before they sign something. Disney has EVERY right to make millions at other people's stupidity.

    Hopefully the creator learned a valuable lesson.
    Obviously you've never created something worth buying...

    I think its sad that things like this happen. She created it and she deserves credit and payment. I guess its all subject to personal opinion, but in my mind Disney should be ABOVE making money off of someone because of "stupidity." More so how many executives made a larger bonus because of this ridiculous deal? Hollywood is what it is, but that doesn't mean it is right.
    Class of 2005...

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by mainstreetcm View Post
    She created it and she deserves credit and payment. I guess its all subject to personal opinion, but in my mind Disney should be ABOVE making money off of someone because of "stupidity."
    Disney "above" making money?

    I think I will leave that one alone.

    In all honesty, I think if I was creative enough to create something worth while, I think common sense says you should cover your rear on how it's handled. The creator deserves to get nothing if they cannot apply simple, uncomplicated reasoning to their vision.

    They are getting what they deserve....


    Nothing.

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by disneytim View Post
    You'd think Deborah Gregory, the author of the books Disney built the franchise on, would be reaping the benefits of all this success.
    I am wondering if the 'Cheetah Girls turned to be a flop if anyone would be saying "I know she was paid for her work, but she should return some of the money because the studio lost money."

    I think most would be saying well she was paid for her work and its not her fault that disney lost money.
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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by mainstreetcm View Post
    Obviously you've never created something worth buying...

    I think its sad that things like this happen. She created it and she deserves credit and payment. I guess its all subject to personal opinion, but in my mind Disney should be ABOVE making money off of someone because of "stupidity." More so how many executives made a larger bonus because of this ridiculous deal? Hollywood is what it is, but that doesn't mean it is right.

    She may have created something worth buying, but she could not create something salable without Disney. Disney bought an idea and invest Millions more than the author did on the hope that it could make money. I find it hard to believe that anyone in the creative arts does not know that net profit participation means no profit participation.

    Now the Author is in a good position, one of her ideas has made millions. She can come up with another idea and get a much better contract upon sale.
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  10. #10

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by mousechild View Post
    I find it hard to believe that anyone in the creative arts does not know that net profit participation means no profit participation.
    I believe the major TV/movie studios (not just Disney) count on creative artists NOT knowing that net participation means no profit participation. It guarantees that, hit or miss, the studios ultimately control how much money is spent on acquiring and developing an entertainment property.

    It's sad that 15 years after a judge ruled in favor of Art Buchwald's lawsuit against Paramount over authorship and net profit sharing of the movie Coming to America (the judge called the contract "unconscionable"), nothing has changed in how studios structure contracts with net profit clauses. The catch: Since Paramount filed an appeal of the decision and eventually settled out of court with Buchwald, the initial ruling set no legal precedent. It meant business as usual in Hollywood. The only precedent of note is that it took seven years for Buchwald to get a moral victory that didn't even pay half of his legal costs. How many creative artists cheated by "Hollywood accounting" would be willing to take that on?

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    Last edited by disneytim; 02-18-2008 at 07:28 PM.

  11. #11

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Actually, Hollywood Accounting may soon be a thing of the past. Part of the negotiations in the new DGA and WGA deals after the strike were a change in the revenues that are owed writers. I can't remeber the exact terms, I'll have to look them up. Basicly it assures the writers a percentage of the revenues instead of the profits. Also part of the deal is that studios now have to have transparent book keeping so that the directors, writers and actors know exactly what they are or aren't making off of internet, DVD's, box office and Merchandise. Hopefully that will stop this from happening again.

  12. #12

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Not so fast grasshopper, the new contract formulas only cover the base pay for unionized writers/directors. She was selling the rights to her novel and that contract can be negotiated at will. Monkey points will be around as long as people without a track record wish to participate in potential profits. Studio accounting is far from dead, especially since most studios are now strongly tied to the distributor.

    Variety and Hollywood reporter has a few articles talking about how the landscaped for writers has changed since the strike. What appears to have been missed by the writers is while the alliance must hire back the writers that were forced majured from active developments, the contracts are no longer in force. That means each writer must again negotiate a new deal, all the studio has to do is make an offer, and it does not have to be a 'like' offer. So perhaps the writers who had employment prior to the strike did not do so well after all.
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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    So sorry sensei, I'm occasionally an optimist. Mostly because the longer it's enforced and the more deals that are made without Hollywood accounting hopefully the lawyers will learn to insist or perhaps it can become the norm.

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by disneytim View Post
    I believe the major TV/movie studios (not just Disney) count on creative artists NOT knowing that net participation means no profit participation. It guarantees that, hit or miss, the studios ultimately control how much money is spent on acquiring and developing an entertainment property.

    It's sad that 15 years after a judge ruled in favor of Art Buchwald's lawsuit against Paramount over authorship and net profit sharing of the movie Coming to America (the judge called the contract "unconscionable"), nothing has changed in how studios structure contracts with net profit clauses. The catch: Since Paramount filed an appeal of the decision and eventually settled out of court with Buchwald, the initial ruling set no legal precedent. It meant business as usual in Hollywood. The only precedent of note is that it took seven years for Buchwald to get a moral victory that didn't even pay half of his legal costs. How many creative artists cheated by "Hollywood accounting" would be willing to take that on?

    My name's Joe, I'm the CEO.
    Yeah, I'm the man makes the big wheels roll.
    I'm the hand on the green-light switch.
    You get to be famous, I get to be rich.
    --Tom Petty and the Heartbreakers
    I think the studios count on the fact that most people do not have the money to get the system rolling without the studio.

    I thought about bringing up Buchwald's case but since the out of court settlement included a release from any finding of facts I saw no point, it is as if the case never happened. Tahoebob is correct, no artist cries for the studio when their idea fails.

    Technically I don't think the artist is cheated, the accounting rules are well established and defined prior to the signing of the contract, what has occurred is the artist decided not to investigate the totality of the situation prior to signing.

    Many legal scholars at the time of Buchwald thought that the studio had a good chance to get the initial decision overturned on appeal. Until som intrepid soul is willing to take a net points case all the way through final appeals we will not know if the system is unconscionable or not, legally speaking.
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  15. #15

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    Re: Disney Doesn't Pay: 'Cheetah Girls' Creator Falls Victim to Hollywood Accounting

    Quote Originally Posted by Queentitania19 View Post
    So sorry sensei, I'm occasionally an optimist. Mostly because the longer it's enforced and the more deals that are made without Hollywood accounting hopefully the lawyers will learn to insist or perhaps it can become the norm.

    That is indeed wishful thinking. Good luck with that. One reason that it is unlikely to happen is that much of the accounting convolutions have less to do with screwing artists out of their participation point and more to do with tax accounting and screwing the government out of tax revenue that the studios would rather avoid paying. I doubt that there is any artist with enough pull to get a bigger percentage than the one Uncle Sam says should be his.

    So in a sense screwing the artist is just a collateral benefit for the studio.
    Last edited by mousechild; 02-20-2008 at 11:20 PM.
    Quote Originally Posted by SummerInFL View Post
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