• by David Goetzl  @dgoetzl, July 18, 2008

On January 15, 2007, three of the most powerful people in entertainment huddled at the Four Seasons in Beverly Hills. Without lawyers (although in retrospect, that may have been a good idea) or anyone else, they sought to reach an agreement on the future of "Project Runway."

 

Would it have a long-term future at NBC Universal, where it remains a profit driver on Bravo? Or would the fashion design competition be on the runway to another network?

A year and a half later, a full New York courtroom sat riveted Thursday as a judge began the process of deciding what indeed happened when NBCU's Jeff Zucker and Marc Graboff met with Harvey Weinstein at the hotel. At stake is whether "Runway" heads to Lifetime, where Weinstein has a deal. Or does NBCU get a chance to keep it by matching the offer, and perhaps then shifting it to USA or NBC? (The fifth cycle launched on Bravo Wednesday.)

NBCU is asking Judge Richard B. Lowe III for an injunction that would allow it to exercise what it says is its right to match the Lifetime offer and keep the show. "We're prepared to match the terms that Lifetime has offered for 'Project Runway,'" Zucker testified in the court.

It's unclear when a ruling from Lowe will come--and furthermore, whether an NBCU success might prompt Lifetime's lawyers to take some sort of action.

One sign of how important the case is came as Zucker and Graboff spent the full day in the courtroom as did Weinstein, who sat next to his attorney--the well-known David Boies--scribbling notes. In his testimony, Zucker called the profit-heavy "Runway" series "a critically important program not just to Bravo but to the entire company."

During testimony Thursday in New York State Supreme Court, Zucker was largely mellowed, Graboff measured and Weinstein fiery at times. All gave complicated testimony on what would seem to be a rather simple issue: what agreement they reached in the January 2007 Four Seasons meeting.

NBCU's CEO Zucker and Graboff, the co-chairman of NBC Entertainment, testified that Weinstein (who heads the eponymous Weinstein production company) agreed to give them the "right of first refusal"--the opportunity to match any offer he obtained from another network for "Runway." "This gave us the right of last protection," Zucker testified. Asked if the agreement didn't include the "first refusal" agreement, Zucker said: "There's no chance."

Weinstein, in turn, testified that he believed he was free to shop the show as he saw fit, but out of good faith would give NBC an early shot at retaining it. When asked whether he had agreed in the Jan. 15 meeting to a "right of first refusal," Weinstein testified: "Absolutely not."

Trying to hammer home a point that Weinstein had indeed agreed to give NBCU "first refusal," Graboff testified that Weinstein said in the meeting that "he wouldn't embarrass Jeff," and Zucker was one of his five best friends.

"We were prepared to pay market prices for the show," Graboff testified about NBCU's desire to do what it took not to let "Runway" leave.

Four days after the Jan. 15, 2007 meeting, Graboff sent an e-mail to Weinstein's representatives at the William Morris Agency outlining the terms that he thought were reached in the discussion. Graboff wrote that NBCU would agree to schedule the series and make other concessions, so that Weinstein would be free to test the marketplace and possibly move "Runway" to another network by the fall of this year. But NBCU, under the "right of first refusal," would have the opportunity to match any offer and keep it.

Graboff testified that William Morris' Mark Itkin, who was representing the Weinstein Co., wrote back later that his client was in agreement and a deal was in place.

But Hollywood may be one of the few places where an e-mail can function as essentially a signed contract. Graboff testified that handshakes or verbal agreements on TV licensing dominate the industry. Frequently, there isn't enough time with production schedules and such to draw up a formal agreement vetted by teams of attorneys, he said.

And Weinstein's attorney--the high-profile Boies--went to work on that point before the court Thursday, arguing repeatedly that any agreements in the Jan. 15 meeting or in an e-mail were essentially non-binding because there was no signed contract or document that "memorialized" the terms. And further, no parameters were ever set up for a "right of first refusal"--how much time NBCU would have to match the offer, etc.

"There's no such thing as first refusal without signing it," Weinstein testified.

Need for a signed document or not, Zucker began to believe NBCU would lose "Runway" after he received a call at home from Weinstein on Feb. 22, 2008, according to his testimony. Weinstein indicated that he had a deal that was so high (which turned out to be with Lifetime) that he thought NBCU would walk away.

Zucker testified that Weinstein said the offer was "so huge and stupid and not even worth countering." Zucker then immediately e-mailed NBCU executive Jeff Gaspin with the news of the Weinstein conversation, saying: "I think we have to assume 'Runway' is gone."

Still, Zucker and Gaspin began strategizing how to exercise what they thought was their "first refusal" right and how to match the undisclosed deal. One possibility: do a bundled deal that kept "Runway" at NBCU if the company would also buy the rights to air Weinstein Co. films.

The Lifetime deal that NBCU would eventually learn about includes "Runway," the rights to two spin-offs and the purchase of films.

In addition to the gripping testimony, several other intriguing issues emerged in court Thursday:

--Weinstein testified that in March 2007, Discovery CEO David Zaslav told him "Runway" had a value of $50 million. Weinstein then approached NBCU with the potential valuation, hoping to spark some sort of negotiation. While it wasn't entirely clear whether Zaslav wanted "Runway" for Discovery's TLC or another network, Weinstein testified: "I believe Zaslav was talking like an offer." He added that anyone who asked Zaslav if he wanted the show would get a strong yes.

--Zucker and Weinstein seem to disagree on how high Zucker is on Weinstein's list of best friends--or was. At the Four Seasons meeting, Zucker testified that Weinstein told him he was one of his five best in the world. But Weinstein later testified Thursday that he said a person only has 15 prized friends and Zucker was one of his.

--In February 2008, when Weinstein told Zucker he had a deal for "stupid" money with another network for "Runway," which turned out to be Lifetime, Zucker initially thought it was with Rainbow's WE channel. And Zucker thought Weinstein had a deal to sell Weinstein Co. films to WE's sister network AMC.

--Weinstein's dislike for Bravo's top executive Lauren Zalaznick apparently cannot be overstated. By the fall of 2006, Weinstein had become so frustrated with her, according to testimony, that he began to make clear that he wanted "Runway" moved to another NBCU property--preferably the wider-reach NBC. Zucker testified Weinstein's frustration was due to a "dislike of the management of Bravo." Graboff was more specific, saying: "My understanding was he had a personal dislike for Lauren Zalaznick."

--Weinstein felt Bravo was not investing enough in improving the show, and since he wanted to ensure its quality, he testified that his company laid out the extra money needed. "They never gave us a dime," he said. He said Bravo was paying him $375,000 an episode, which cost the Weinstein Co. $600,000 to produce.

--Weinstein credited Zucker with landing "Runway" for NBCU. He said originally Bravo didn't want it, but Zucker gave the green light. "The people from Bravo were not that anxious for it," Weinstein testified. "They inherited it."

--Part of Weinstein's anger at Zalaznick and Bravo was his belief that the network simply took the concept of "Runway" and applied it to other fields and made millions. The network, he said, signed Magical Elves, which was involved in the production of "Runway," and then created similarly-conceived reality-competition shows, such as "Top Chef" in the cooking arena. Weinstein said, "We were carbon-copied, Xeroxed ..."

--On the stand, Zucker cagily declined to discuss any of the terms of the Weinstein deal with Lifetime, which NBCU allegedly wants to match. NBCU apparently does not want it public, especially if it has to eventually pony up to keep "Runway." Pressed by Weinstein attorney Boies to disclose terms--any of them--Zucker said he had seen them but could not remember them. Asked to offer any details, he again suggested he would need the documents in front of him.

--When considering the prospect that NBCU could lose "Runway," according to testimony, Zucker planned a counter-offensive to run as many repeats of the first five seasons that it could, perhaps leading to an overexposure of the show and confusion for viewers -- which could hurt its value on Lifetime or another network. "We're competitive," Zucker testified.

--While Weinstein steadfastly maintained that he didn't give NBC a "right of first refusal," Lifetime's deal includes one for "Runway." Weinstein testified, in part, that he has strong, trusting relationships with Disney/ABC's Anne Sweeney, Lifetime's Andrea Wong and Hearst's Cathy Black--which prompted him to agree to that arrangement. Disney and Hearst each own 50% of Lifetime.