In a stunning courtroom defeat, Fox was hit with a $179 million payout to members of the cast and crew of Bones.
The decision came earlier this month but was only revealed late Wednesday. In a bombshell report, the Hollywood Reporter broke down the numerous wrongdoings by Fox, including lying and fraud. Arbitrator Peter Lichtman ruled that executives at Fox not only cheated the show’s stars and executive producer Barry Josephson out of their rightfully earned money but also exhibited a “company-wide culture and an accepted climate that enveloped an aversion for the truth.”
The ruling comes as the world of television is in a transitional state. As streaming giants like Hulu, Netflix, and Prime challenge the success of once-untouchable studios, the way studios and networks approach the distribution of shows is changing. Fox, which has a 30 percent stake in Hulu, learned the hard way.
Fox vs. ‘Bones’: Where it began
The whole process began back in 2015 when a number of people involved with Bones—including stars David Boreanaz and Emily Deschanel—claimed they’d been defrauded by Fox. According to reporting from Hollywood Reporter, Fox found a clever way to bring in money from Bones without sharing the profit with all of those involved.
Fox managed this, according to reports, by charging low costs to streaming services like Hulu. By essentially selling the rights to its own show to sister companies, Fox managed to cut out profit-sharing with those not directly involved in the parent company. A studio typically sells a show on the open market, deducts production costs from profit gained, and then distributes the remaining profit to those involved. In the case of Bones, Fox sold rights to the show to companies it held a stake in at a low cost, allowing itself to hold on to more of the profit.
Fox attempted to side-step these claims, claiming that charging higher fees would have led to the show’s cancellation. In the course of the legal process, however, the arbitrator found that executives never really tried to negotiate higher fees.
Fox vs. ‘Bones’: Charges
After contractually committing to continuing the show, Fox demanded that everyone involved sign a release “barring them from challenging license fees for the fifth and sixth seasons,” according to the Hollywood Reporter. These releases were signed under the guise of a cancellation risk, which Fox said was certain without the cooperation of Bones profit participants.
But there was reportedly never a risk of Bones being canceled, meaning that the entire process was a charade intended to block any potential lawsuits from those involved. This, according to the arbitrator, amounts to Fox being “an accomplice to fraud.”
Fox vs. ‘Bones’: The Hulu problem
Perhaps the most shocking details of the story emerged in the examination of Fox’s dealings with Hulu. In selling the rights for a Fox-owned show to a streaming service that Fox owned a stake in, there was almost certainly a “breach of Fox’s obligations to distribute the series in good faith.”
Lichtman also addressed a telling moment in Fox’s dealings with Hulu. Between 2008 and 2010, the first few seasons of Bones were licensed to Hulu, according to the Hollywood Reporter. The deal, which didn’t include any minimum guarantee of future profit, was signed by Dan Fawcett, a high-level executive at Fox.
It turns out that Fawcett actually signed both halves of the agreement, both on behalf of Fox Entertainment Group and Hulu. It seems unlikely that Bones was the only Fox program to receive such treatment. “The obvious inferences of self-dealing, conflict of interest and the lack of any arm’s length negotiations leap off the page,” Lichtman said of the agreement.
The $179 million in pre-judgment interest, actual damages, plus attorneys’ fees and costs is one of the largest awards in television history, per the Hollywood Reporter. It is second only to the $319 million paid by Disney following its Who Wants to be a Millionaire? scandal.