Milken Reportedly Will Release UCLA From Videotape Contract

Hoping to end what many say is an embarrassment, UCLA officials are reportedly close to persuading fallen junk bond king Michael Milken to release them from a business contract allowing the convicted felon to use the Westwood school’s name to market videotapes of his classroom lectures in exchange for 5% of the profits.

UC Regent Ward Connerly said Monday that it was his understanding that Milken agreed in principle late last week to rescind the controversial contract, releasing UCLA from any financial involvement in the venture and promising not to use the school’s name or logo.

“He didn’t have to do it,” Connerly said Monday. “Clearly, he could have said, ‘Hell with you guys,’ and proceeded. I don’t know whether it was altruism that drove him or the desire to get out of some potentially lingering bad public relations. All I know is he’s going to do it (rescind the contract).”

Asked to confirm the development in the Milken saga Monday, a UCLA spokeswoman said word of a new agreement was premature, adding that discussions “are under way and the matter is in the hands of Mr. Milken and his advisers.” Joseph D. Mandel, UCLA vice chancellor for legal affairs, said late Monday that “at first blush, Mr. Milken and his attorneys were comfortable” with the proposed terms to rescind the contract.

But he said it is not a final agreement. “Like all deals, this one could fall out of bed,” Mandel said. Connerly said the school is waiting for written confirmation of the change in the contract from Milken and his attorneys.

The school’s association with Milken--the onetime junk bond guru who was convicted of six securities fraud violations--has become a public relations reversal for the Westwood school.

Last year, the school was lampooned in the nationally syndicated comic strip “Doonesbury” for allowing Milken to co-teach 10 three-hour lectures in master’s degree course at UCLA’s graduate management school.

And in February, state Sens. Quentin Kopp (I-San Francisco) and Patrick Johnston (D-Stockton) raised vigorous objections to a contract UCLA officials signed allowing Milken’s new Educational Entertainment Network of Bel-Air to tape and sell videos of the classroom sessions, presumably to other colleges.

They accused Milken of trying to use UCLA’s name to whitewash his image, said the school had been seduced by more than $3.3 million in gifts from Milken over the years, and blasted the contract as an awful deal for a public institution. Under the terms of the agreement, UCLA waived all of its legal rights but allowed Milken to use its logo and name in return for only 5% of the profits.

Unhappy with the bad publicity and irked with the way UCLA handled the contract, the UC regents in March asked administrators to approach Milken and persuade him to rescind the deal. Connerly said Monday that Chancellor Charles E. Young, who has publicly defended the arrangement, was responsible for conducting the negotiations with Milken and his attorneys to rescind it.

Connerly commended Young for persuading Milken, who still intends to sell the tapes, to drop all reference to UCLA as sponsors, thus avoiding the “implication at all that this is something that is sanctioned by UCLA.”

As part of the emerging agreement, Connerly said, the school will forgo its 5% profit but will not be forced, as in other business deals, to buy Milken out by reimbursing him for more than $100,000 in production costs his company has incurred in the project.

The only remaining issue, said Connerly, is whether the tapes will make reference to UCLA by identifying economics professor Bradford Cornell, who taught the course with Milken.

“I think we’re getting a good deal by getting out of it,” said Connerly. “It was an embarrassing situation that wasn’t going to produce much in the way of profits to us.”

Officials with Milken’s entertainment company in Bel-Air did not return phone calls Monday, and a Washington, D.C., spokeswoman for Milken could not be reached.