The public television network--known for Big Bird, "Masterpiece Theatre" and fund-raising telethons--cheated former Monkee Michael Nesmith in a home video deal and must pay him nearly $47 million, a federal jury in Los Angeles has found.
The Public Broadcasting Service initially sued Nesmith and his defunct Santa Monica-based Pacific Arts Corp. over royalties from the prestigious PBS logo, which Nesmith had licensed as he began to build and distribute a video library of the network's most popular programs.
At the end of a five-week trial, the nine-member jury unanimously rejected the PBS claim and instead found that the network had defrauded Nesmith. Jurors agreed that after sales perked up, PBS went behind Nesmith's back and stole away the rights to the programs. The verdict was reached Monday and announced Tuesday.
A PBS spokesman said the network was "shocked at the verdict" and would appeal vigorously.
Nesmith and his lawyer, meanwhile, had plenty to say about their courtroom victory over PBS.
"They were so bloody arrogant," said attorney Henry Gradstein.
"I'm not the bad guy. I'm the injured party," said Nesmith, adding in his folksy Southwestern twang, "It's like catching your grandmother stealing your stereo. You're glad to get your stereo back, but you're sad to find out that Grandma's a thief."
PBS, he added, "was supposed to be the good guys. But the next thing you know, these guys you think are sweetness and light are perpetrating a fraud. And a fraud is a fraud is a fraud."
Gradstein said jurors found that PBS acted with "unclean hands" in its dealings with Nesmith, a former pop star who bought his way out of his Monkees contract, produced several cult films such as "Repo Man" and, in 1990, virtually created the multimillion-dollar home video market for PBS.
The video market for television shows was in its infancy when Nesmith went to PBS with a plan to buy the rights to its most popular programs and build a home video library that would be distributed in stores. Start-up costs soon left Nesmith's company in financial straits, even though the videos were selling well.
Nesmith decided to sell the rights to the video library for up to $15 million, but PBS promised in writing to help him keep his company afloat.
According to Gradstein, testimony and internal PBS documents discovered during the trial, the network's executives, instead of helping Nesmith, stole the video rights. The PBS video line now brings in about $21 million a year.
Gradstein said that even as PBS executives were sitting at the negotiating table with Nesmith in 1993, discussing how to help his company, they were engineering what became known as "the Columbus Day massacre," a massive termination of Nesmith's contracts with the producers of programs in the video library.
Jurors awarded $14.6 million to Pacific Arts for the value of the loss of the library, plus $29.3 in punitive damages. It awarded $1 million personally to Nesmith, plus an additional $2 million in punitive damages.
"I told [PBS] not to hit me," Nesmith said. "I told them, 'Don't do it, boys. You know you've got skeletons hanging in your closets. You've done a bad thing here.' I was just prepared to lick my wounds and take my loss. I didn't want to pound these guys into the sand, but that was not to be."
Nesmith testified during the trial about "a dark and sinister web woven by PBS."
Faced with taking the stand, he said, "I wondered how was I gonna sit up there and explain all this to people who watch 'Nature' and Big Bird? I certainly don't feel like I've won the Super Bowl. This is a heartbreaker on one level. It shakes the foundation of something I thought was a really good thing."
Nesmith, 56, is best known as the hat-wearing guitar player with the Monkees, a 1960s music and sitcom sensation sometimes remembered as "the prefab four." He was considered the "smart Monkee."
His mother, Bette Claire Graham, invented Liquid Paper, which she sold to Gillette in 1979 for $47.5 million. A year later, Nesmith inherited her fortune when she died. His inheritance financed Nesmith's "Elephant Parts," the innovative video that won the first video Grammy Award.
"It's ironic," Nesmith said Tuesday, that the jury awarded him nearly the same amount Gillette paid his mother for Liquid Paper.