Five years ago, Victoria Jackson, a onetime Bullock's cosmetics saleswoman, became a star overnight in one of those often-maligned TV commercials known as "infomercials." The makeup line she developed and started pitching on television, Victoria Jackson Cosmetics, has since generated $200 million in sales.
Jackson was touted quickly in the press as an entrepreneur who rose from obscurity to clean up financially. But things aren't always what they seem.
While the cosmetics line she created has probably earned millions for the company that produces her infomercials, American Telecast of Paoli, Pa., for several years Jackson was earning a relatively modest $3,000 to $8,000 a month.
Why? Because Jackson had signed a contract that gave her what's known as an "adjusted gross," a piece of the gross receipts of Victoria Jackson Cosmetics, minus all sorts of deductions such as marketing costs for expensive TV time and distribution costs. After the deductions, Jackson wasn't left with much.
"I've always referred to this as my deal from heaven and hell," said Jackson, who lives in Encino. "From heaven because it put me on the map (and) let me realize my dreams and potential. But from hell because . . . I don't own it, and I don't make all the money I would have, had I done it differently."
Jackson has since renegotiated her deal with American Telecast, and her annual earnings have been as much as $500,000.
Technically, Jackson's first deal with American Telecast was not a "net profit" deal, the infamous Hollywood staple that has prompted actors and writers to sue for not having received any of the profit no matter how successful the production. But in Jackson's case, the results were similar.
Around the time Jackson hooked up with American Telecast, actor James Garner sued Universal Studios over net profits he felt he was cheated out of from the hit TV show, "The Rockford Files." The matter was ultimately settled out of court, reportedly for $12 million.
When Jackson signed her original deal with American Telecast in 1988, she felt desperate. Although she had built a successful career as a Hollywood makeup artist, she had developed a line of makeup and she wanted to take it to the next logical step--selling it at retail. Jackson tried unsuccessfully to raise money on her own, so when executives from American Telecast offered to fund her enterprise, she felt it was an offer she couldn't refuse.
American Telecast offered to pay up front for the research and development of Jackson's makeup line, as well as manufacturing costs and the TV air time to sell it by way of a toll-free 800 telephone number. Jackson would receive 10% of an adjusted gross profit; until the profits started rolling in, she'd receive advances on future earnings. It was a take-it-or-leave-it deal, and she took it. With hindsight, Jackson says she should have found advisers more familiar with the vagaries of entertainment-industry accounting and of infomercials.
Defying the long odds, Victoria Jackson's Cosmetics was a huge success. In the first week, Jackson estimates, 10,000 women a week dialed in to order her cosmetics after viewing the original infomercial in which Jackson and actresses Ali MacGraw and Lisa Hartman chatted in a living-room-like set about the wonders of the Victoria Jackson line.
In subsequent years, American Telecast produced two more Jackson infomercials. And there has been a robust catalogue reorder business. Meanwhile, each time Jackson received quarterly statements from American Telecast, Jackson said, the "profit" figure was zero.
"They kept saying to me every quarter, 'Just hang in there, Victoria; we're on a money train.' I'd just laugh and say, 'Where am I, on the caboose?' "
At first, Jackson stayed quiet. "I kept this profile of not wanting to let anybody know I wasn't making the money," she said.
By 1992, however, Jackson had hired an accountant, a new attorney and a theatrical agent schooled in TV royalties and had audited American Telecast.
"The audit revealed a lot of things that looked like money was owed to me," she said. She considered suing, but instead she accepted an offer to renegotiate her deal. She now gets 2% of the gross revenues of her cosmetic line's sales, the same terms American Telecast extended to MacGraw, Hartman and actress Meredith Baxter, who were in her infomercials.
American Telecast, a privately held company with annual revenues of $150 million, has a long line of infomercial hits. They include a diet regimen from actor Richard Simmons; hair care products promoted by Cher; a fitness treadmill from Jane Fonda and a relationships guidance course featuring Frank and Kathie Lee Gifford, the celebrity broadcasters. "They're the best in the industry," said Steve Dworman, publisher of the Infomercial Marketing Report, an industry publication.
Steve Scott, vice president and founding partner of American Telecast, defends the company's original agreement with Jackson. At the time Jackson was an unknown makeup artist with a product but with no resources to develop it.
"We could have easily found 40 makeup artists in Hollywood who would have killed to get a deal like the one Victoria Jackson got," he said, adding that American Telecast invested $30 million over three years before the cosmetics brand became solidly profitable. "She cut a very good deal considering what she brought to the table," Scott said.
Los Angeles attorney David Rudich, who represented Jackson during the original negotiations with American Telecast, said Jackson didn't have the commercial punch to dictate stronger terms.
"Victoria Jackson made a deal in an infant industry that increased her income and her bargaining power," he said. "Then, she became dissatisfied with the deal. It was ultimately renegotiated." This, he said, is so common in the entertainment industry it's hardly worth mentioning.
And Harley Neuman, principal of Neuman & Associates, an Encino accounting firm specializing in entertainment management, agreed that Jackson lacked clout because she was an unknown.
"You usually don't get a good deal when you're a nobody," he said. Still, Neuman thinks Jackson's adviser should have pushed for more.
"If she had had the right advisers, it's never 'take-it-or-leave-it,' " Neuman said. "If they've made an offer, there's always room to move."
Since she renegotiated her contract, Jackson said, there's been little communication between her and American Telecast, and a year ago the company stopped broadcasting her infomercial. American Telecast and Jackson are now talking about shooting a fourth Victoria Jackson Cosmetics infomercial, probably with MacGraw and Hartman.
Under her new agreement with American Telecast, Jackson is prohibited from putting her name on products in any other beauty field. But she recently appeared in an infomercial for a lingerie line. Her next big project is a one-hour syndicated TV daytime talk show, "Victoria," which she hopes will bow in 1996.
No one need pity Jackson. With her new contract, her earnings have increased substantially. And in 1992, she married Bill Guthy, a partner in Guthy-Renker Corp., the infomercial company that produces the infomercials for Victoria Principal's skin care line and Jose Eber hair extensions.
She now lives in a grand estate with tennis courts, a guest house and an enormous pool. But they, Jackson said, gesturing to the opulent surroundings, reflect her husband's business success. "There's no way I could live like this on my own," she said.