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Netflix has a mess on its hands with the collapse of 'House of Cards'

When “House of Cards” debuted in 2013, it catapulted Netflix into a whole new level of Hollywood recognition and acclaim. The dark political series about an unscrupulous Washington power couple became Netflix’s first breakout hit, planting a flag for the streaming service in the competitive world of original TV programming.

But just as its protagonist Frank Underwood fell ignominiously from power last season, the series itself has collapsed in scandalous fashion following allegations around actor Kevin Spacey, who has been accused of sexual harassment and assault by numerous men including employees on the show.

Netflix isn’t the only company left holding the bag. Media Rights Capital is the production company that owns the series and licenses it to Netflix. Since news about Spacey broke Sunday, followed by additional allegations, the companies moved quickly to cancel the seventh season of “House of Cards” and put production of the sixth season on indefinite hold. Netflix said in a statement Friday night that it is cutting all ties with Spacey and that he will not be involved with the show that he has starred in since 2013.

“Netflix will not be involved with any further production of ‘House of Cards’ that includes Kevin Spacey,” the company said in a statement.

While the scandal represents a public-relations debacle for Netflix, it isn’t likely to materially affect the company, even though “House of Cards” remains one of its most popular series, experts said.

“I think of ‘House of Cards’ as a trampoline,” said Paul Levinson, a professor of media and communications at Fordham University. “Netflix put it up, jumped on it and Netflix got so high that it no longer needs ‘House of Cards.’ ”

Netflix spent about $100 million to produce two 13-episode seasons for “House of Cards.” The political drama launched the company’s venture into original programming, helping to transform the streaming service into a global powerhouse and disrupter of the TV business. The Los Gatos-based company now has 104 million paid streaming subscribers and has made massive investments in new shows. It will spend as much as $8 billion on content next year alone.

As a result, Netflix now has multiple hit series — including “Stranger Things,” “Orange Is the New Black” and “The Crown” — that it can rely on to retain and attract subscribers.

The speed at which Netflix responded to the allegations against Spacey — the first of which was made by actor Anthony Rapp on Sunday in Buzzfeed — will likely work in the company’s favor, according to Michael Pachter, a digital media analyst at Wedbush Securities, where he covers Netflix.

“I think Netflix is handling this extremely well,” Pachter said. “This is what you want them to do from an investor’s point of view.”

Analysts said the cancellation of “House of Cards” was likely an easy decision for Netflix to make because the series was already past its prime and nearing the end of its run.

Public scandals are rare for major TV series but not unheard of. The most recent instance was CBS’ “Two and a Half Men,” which saw the departure of Charlie Sheen after the actor’s personal problems became public. His character was killed off from the show.

Among “House of Cards” fans, the most recent season was seen as something of a creative resurgence but the show was clearly on the decline and had lost a lot of its buzz. Creator and showrunner Beau Willimon had left the show last year after four seasons.

"During the time I worked with Kevin Spacey on 'House of Cards,' I neither witnessed nor was aware of any inappropriate behavior on set or off,” Willimon said in a statement. “That said, I take reports of such behavior seriously and this is no exception. I feel for Mr. Rapp and I support his courage."

Rapp alleged that he was 14 when Spacey made an unwanted sexual advance on him during the 1980s. Spacey responded by saying that he didn’t recall the incident, but offered Rapp “the sincerest apology for what would have been deeply inappropriate drunken behavior.” The two-time Academy Award winner also used the opportunity to come out as a gay man.

Since Sunday, the accusations have quickly snowballed, including an unnamed artist who told Vulture that he was a minor when he entered into a consensual sexual relationship with Spacey decades ago.

On Thursday, eight current and former “House of Cards” employees alleged to CNN that Spacey created a “toxic” work environment with his behavior. The allegations include one former production assistant who said Spacey sexually assaulted him during one of the show's early seasons.

A representative for Spacey could not be reached for comment.

Netflix could face civil legal exposure from any employee harassment that occurred on “House of Cards” because Spacey was also credited as an executive producer on the show, which means that he was in a supervisory position, according to Genie Harrison, an attorney who specializes in employment and sexual harassment cases.

“The company will have strict liability because he's a supervisor and because he would be seen as acting on behalf of the company,” Harrison said.

As the studio behind “House of Cards,” Media Rights Capital could also face legal exposure for any of its employees who were harassed by Spacey on the show.

MRC, which is based in Beverly Hills, declined a request for an interview but said in a statement that during the show’s first year of production, in 2012, someone on the crew shared a complaint about a specific remark and gesture made by Spacey. The company didn’t elaborate on the nature of the complaint.

“Immediate action was taken following our review of the situation and we are confident the issue was resolved promptly to the satisfaction of all involved. Mr. Spacey willingly participated in a training process and since that time MRC has not been made aware of any other complaints involving Mr. Spacey,” the company said in the statement.

Netflix, which also declined an interview request, said in a statement Friday that it was just made aware of the 2012 incident and was informed that it was swiftly resolved.

“Netflix is not aware of any other incidents involving Kevin Spacey on-set,” the company said in a statement. “We continue to collaborate with MRC and other production partners to maintain a safe and respectful working environment.”

Both companies said they are evaluating the future of “House of Cards.” It remains unclear if writers and hundreds of Maryland-based crew are being kept on the payroll as executives decide on the fate of the sixth season.

MRC would be on the hook for whatever expenses have to be absorbed as production on “House of Cards” is shut down, though the company could have insurance to cover such events.

“House of Cards” is estimated to cost several millions of dollars per episode, with each season consisting of 13 installments.

MRC sold the international rights for “House of Cards” to Netflix in a deal estimated to be worth more than $200 million, according to one industry executive familiar with the show.

Even if Netflix emerges relatively unscathed from “House of Cards,” the streaming service faces another challenge with an upcoming movie it is making with Spacey, in which he plays the late writer Gore Vidal.

The movie, which had been expected to be released next year, is believed to focus on the years that Vidal spent in virtual exile in Italy. Netflix said Friday night that it will not release the film.

Netflix rival Amazon Studios confronted its own scandal last month when Roy Price resigned as head of the studio after accusations made by an executive producer that Price had made lewd remarks and unwanted advances.

david.ng@latimes.com

@DavidNgLAT

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