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Duchovny Sues Fox, Alleging Sweetheart Licensing Deal

TIMES STAFF WRITER

David Duchovny, star of the popular TV series “The X-Files,” has sued 20th Century Fox Film Corp., producer of the weekly thriller, alleging that Fox gave its broadcast stations and its FX cable channel sweetheart licensing terms rather than seeking the highest bid in a competitive auction.

In the lawsuit, filed in Superior Court in Los Angeles on Thursday, Duchovny claims that Fox breached his contract by engaging in “self-dealing” with these affiliated companies and by conspiring and colluding with Chris Carter, creator of “The X Files.”

For the record:
12:00 AM, Aug. 14, 1999 For the Record
Los Angeles Times Saturday August 14, 1999 Home Edition Business Part C Page 2 Financial Desk 2 inches; 65 words Type of Material: Correction
Duchovny lawsuit--An article published in Friday’s Business section about the breach-of-contract lawsuit filed by “The X-Files” star David Duchovny against the producer of the television drama, 20th Century Fox Film Corp., incorrectly characterized the advances Fox paid to the show’s creator, Chris Carter. The lawsuit contends that only a portion of the $34 million Carter received from Fox had nothing to do with the series and was given by Fox as “hush money.”

In a statement, Fox said that it does not comment on potential or pending litigation and said that it was unaware of the lawsuit. “Suffice to say, it is regrettable that Mr. Duchovny and his representative have opted to communicate this matter through the press rather than directly with Fox,” the statement said.

The lawsuit contends that “Fox sits on both sides of the bargaining table in any negotiation for the distribution rights to the series, thereby enabling it to manipulate negotiations in any way that serves its corporate interests.” The lawsuit alleges that as a result of the sweetheart deal, Fox has “retained an unreasonable amount of the profits [estimated to be in excess of $800 million] resulting from the broadcast of the series on the Fox network.”

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The lawsuit also charges that Fox paid Carter “hush money” to “buy” his silence. The lawsuit says Carter received advances having nothing to do with the series of more than $34 million since September 1997 and that Fox gave him a 13-episode commitment to create a new series for the Fox television network. The suit said these payments were “a pattern of collusion and conspiracy with Carter to preclude Duchovny and King Baby [Duchovny’s company] from discovering the nature and extent of the self-dealing at Fox.”

Carter was not named as a defendant in the suit, which names parties, acting under fictitious names, that allegedly took part in the action. The suit seeks compensatory and punitive damages.

The lawsuit underscores the complexities of doing business in a “vertically integrated” entertainment environment, where the goal is to extract value from popular programming by pushing it through the distribution chain--exploiting it in books, movies, TV shows, theme park attractions and Web sites.

Earlier this year, Walt Disney Co. settled a similar lawsuit filed by Wind Dancer Production Group, the creator of “Home Improvement,” alleging that Disney struck a sweetheart deal in renewing the hit comedy on its ABC network rather than seeking competitive bids that could have increased Wind Dancer’s profit.

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