Hollywood Deal Goes Offline

In the latest sign that the honeymoon between Hollywood stars and Internet companies is over, entertainment site Z.com and comedian Chris Rock have filed lawsuits against one another over the collapse of a million-dollar endorsement and content deal.

Z.com filed its suit Tuesday in Los Angeles Superior Court, accusing Rock of failing to produce original programming he was supposed to create for the site, and to force him to return a $1.075-million signing bonus.

Rock, best known for his series of HBO specials, filed a suit of his own Wednesday, accusing Z.com of sabotaging a contract that would have paid the star more than $6 million in cash and stock.

The disputed contract appears to be one of the richest of its kind between an online entertainment company and a major star. It is also a relic from the Internet euphoria that peaked just nine months ago--when online entertainment companies and Hollywood stars were rushing to embrace one another amid visions of riches for both sides.

Joe DiNunzio, chief executive of Z.com, admitted as much in an interview Wednesday, saying “the marketplace has changed dramatically” since the contract with Rock was signed last April.

Back then, Z.com, a creation of Pasadena-based Idealab Inc., barely blinked at tossing $1 million in cash to a star like Rock. But in recent months it has laid off half of its 90 employees and is now searching for new funding or a merger partner to ensure the company’s existence beyond the next few months.

That million dollars paid to Rock “is a significant amount of money for our company,” DiNunzio said. “It represents months of operation.”

The contract squabble comes amid other clear signs of disenchantment between Hollywood and Internet companies.

Shockwave.com, another entertainment site in San Francisco that turned to Hollywood stars to create content, has since abandoned such deals and last week merged with AtomFilms.com in a cost-cutting move for both companies.

Pop.com, the brainchild of Hollywood moguls including Steven Spielberg, was shut down before the site even launched.

Z.com’s contract with Rock called for an exclusive three-year relationship between the star and the site. It was one of the few celebrity “dot-com” deals to involve such a large cash payout upfront. Most deals have centered on equity stakes.

Z.com claims that Rock has failed to produce any of the content he was obliged to create under terms of the agreement. DiNunzio said his only contribution to the site was a backstage appearance at a performance by the band Red Hot Chili Peppers, footage of which was shown on the site.

Rock still appears on the Z.com site, alongside more than a half-dozen other celebrities who have less lucrative deals with Z.com. Rock’s portion of the site includes little more than a biography of the star and some pictures and clips from his concerts and films.

A spokesperson for Rock said he approached Z.com with ideas for new programming, but the company declined to pursue them.

Rock’s attorneys say that the entertainer’s presence on Z.com has already helped the site by boosting traffic and attracting other celebrities and investors.

The agreement, attached to the suit filed by Z.com and signed by Rock, stipulates that he would be obligated to repay the bonus if a more detailed contract weren’t executed within 45 days. DiNunzio said there was no such subsequent agreement.

Rock’s suit claims that Z.com sought to undermine the deal and evade its financial obligations.

Rock’s suit also claims that Z.com has failed to award him millions of shares of stock that the company, and its Idealab parent, promised to buy back from him at $3 a share.