• by David Goetzl  @dgoetzl, September 29, 2008

A judge's decision Friday casting doubt on whether "Project Runway" will move to Lifetime could force it to do what networks loathe: hand money back to advertisers. Expecting "Runway" to join its lineup, Lifetime sold the show to advertisers in the recent upfront, garnering commitments that are now up in the air.

Before the judge's ruling, Lifetime filed court papers saying any slowdown in its launching the show--much less a failure to ever air it--could cause the network to be "deprived of vital advertising commitments." In addition, Lifetime said having "Runway" on its 2008-09 schedule "presumably factored heavily into advertisers' decisions to commit advertising dollars" to it in the upfront.

If the show never makes it to Lifetime--a November launch of season six was postponed to January--all bets are off in regard to how the network will negotiate the matter with advertisers. But even before it may have to give cash back, advertisers can begin to reclaim some of their millions of dollars in January by canceling portions of their commitments.

A Lifetime representative said it's "premature" to comment on the court ruling's impact on ad dollars.

Lifetime was not only counting on "Runway" to boost on-air revenues--perhaps through package deals that include other shows--but also via dollars coming from show-branded casual games and other online initiatives.

"'Project Runway' is a critical part of Lifetime's evolution toward expanding its reach to bring in new viewers and advertisers, while continuing to appeal to its core demographic and advertising base," Lifetime said in court papers. "As the cornerstone of this growth, 'Project Runway' has been and continues to be incorporated into all aspects of Lifetime's future plans, including programming, scheduling, marketing, advertising and digital media."

Lifetime has begun casting the show--now in season five on NBC Universal's Bravo--and has invested heavily in developing marketing materials. But those efforts may be for naught after Friday's ruling in New York State Supreme Court.

The judge, Richard B. Lowe III, issued an injunction preventing Lifetime from moving forward on its agreement with "Runway" producers, the Weinstein Co., to take over the show. It also curtails the network's ability to promote or market the show as coming to Lifetime soon.

Although Lifetime was significantly impacted by the decision, it was not a party in the case. NBCU secured the injunction against the Weinstein Co., as it argued it has a right to match the Lifetime offer that Weinstein secured and keep the show. Judge Lowe wrote in his decision that the facts appear to be on NBCU's side.

In February, Weinstein cut a deal to bring "Runway" and other properties to Lifetime. The Weinstein Co. says the deal is worth $200 million (Lifetime just says $100 million-plus).

The injunction is far from a final decision--and "Runway" could still move to Lifetime. Separately, NBCU's breach-of-contract lawsuit against the Weinstein Co. continues to move through the courts, and the parties could go to trial.

NBCU alleges the Weinstein Co. broke an agreement giving it the right of first refusal, meaning that it could match Lifetime's offer (or any other network's) and keep "Runway."

But an expensive trial is unlikely (especially with the judge indicating that NBCU may prevail). NBCU and the Weinstein Co. could settle, where they could agree to keep the show at NBCU--and Lifetime would be compensated. Or NBCU could let "Runway" move to Lifetime in exchange for a large check.

Lifetime, however, could take its own legal action if the show appears to be headed back to NBCU. In what would be a twist, it could turn around and sue the Weinstein Co. for breach of contract--meaning that Weinstein would be sued twice for the same allegation within months of each other.

The Lifetime representative declined to comment Friday on any potential legal action and said the Weinstein Co. is a "partner." In a separate statement, Lifetime said it "will pursue all measures to uphold its valid and binding agreement reached with the Weinstein Co."

In an affidavit, Lifetime's deputy general counsel Jeffrey Schneider said while he was negotiating with the Weinstein Co. to acquire the show, he made multiple attempts to ensure that Weinstein essentially was a free agent and had zero obligations to return the show to NBCU.

And he said that the Weinstein Co. assured him of that. "In fact, I was told by (Weinstein Co.) representatives that Bravo had no such rights ...," he said. Schneider said the final contract included language saying that Lifetime's acquisition would "not infringe on any of the rights of Bravo."

The Lifetime representative said the network is "disappointed" by the injunction and is now in "a holding pattern." NBCU said in a statement that it is "pleased" with the court's decision. A call to the Weinstein Co. was not immediately returned.

The dispute stems from a disagreement over what happened in a Jan. 15, 2007 meeting in a private suite in the Four Seasons in Beverly Hills. NBCU executives Jeff Zucker (CEO) and Marc Graboff met with Harvey Weinstein in an attempt to decide what would happen with seasons four and five of "Runway," and thereafter.

NBCU argues that in exchange for some concessions, it obtained the right of first refusal at the meeting, where it could match an offer from another network the Weinstein Co. might receive for the show. Harvey Weinstein vehemently disagrees, saying he gave no such commitment. He testified in July that he would "rather cut off (his) arm" than give NBCU that option.

No signed legal document emerged from the meeting on the first-refusal issue. There were, however, follow-up e-mails exchanged between NBCU and the Weinstein Co. representative, where both parties apparently agreed to give NBCU that right of first refusal.

Judge Lowe wrote in his decision that the e-mails appear to indicate that such terms were reached--"the writings evidence that the parties reached an agreement by which they intended to be bound." Furthermore, he wrote: "This court has found it to be likely that (Harvey) Weinstein disregarded his commitment to (Jeff) Zucker by not offering the right of first refusal ..."

The show would not air on Bravo if it were to return to NBCU, but another one of its networks.

"Runway" has been on Bravo since December 2004. Harvey Weinstein pitched the concept to Zucker in the fall of 2003. The parties drew up an agreement to air the show on Bravo, but that also was never signed.