Disney breaks contract with STAR WARS and ALIENS writer Alan Dean Foster

[DMC]

1 hour ago, Ser Scot A Ellison said:

What?

Bob Loblaw in Arrested Development, who Jace was referencing in her response to you, was played by Scott Baio.  It was late.

[Ser Scot A Ellison]

42 minutes ago, maarsen said:

I have had this fight as a union exec so many times. Every time we got new management at the hospital, at any level, the first thing they would do was to try and ignore the union contract. A few grievances and arbitrations later, they come to their senses and back down.

Hope you are correct.  That said people frequently do not understand that Contracts, unless expressly agreed otherwise, are freely assignable.  I frequently get people screaming “I didn’t contract with your client” not understanding that doesn’t matter.

[Ser Scot A Ellison]

31 minutes ago, DMC said:

Bob Loblaw in Arrested Development, who Jace was referencing in her response to you, was played by Scott Baio.  It was late.

[Lord Patrek]

6 hours ago, Ran said:

Yeah, pretty sure they want to force royalty holders to take a flat buyout of their royalty rights. I hope that Foster, the SFWA, and various other royalty holder who've been denied their payments (seen reference to a number of artists and writers involved in Dark Horse's Star Wars and Aliens comics also no longer getting royalties when Disney bought the relevant studios) join together in some sort of suit and shake them down for every penny owed and then some.

Such a lawsuit could stay in court for years, though. And bleed the authors dry. If Disney wants to play hardball, I have a feeling that those authors, down the line after paying loads in legal fees, might just surrender and accept the buyout money.

I reckon this is Disney's strategy.  

[Wilbur]

20 minutes ago, Lord Patrek said:

Such a lawsuit could stay in court for years, though. And bleed the authors dry. If Disney wants to play hardball, I have a feeling that those authors, down the line after paying loads in legal fees, might just surrender and accept the buyout money.

I reckon this is Disney's strategy.  

I agree that this tactic is the likely approach from Disney.  They will just drag it out until Foster passes away.

[Ormond]

5 minutes ago, Wilbur said:

I agree that this tactic is the likely approach from Disney.  They will just drag it out until Foster passes away.

I would assume that this is something his estate/heirs could still sue over, though, so him "passing away" would not necessarily get them off the hook.

[Wilbur]

Just now, Ormond said:

I would assume that this is something his estate/heirs could still sue over, though, so him "passing away" would not necessarily get them off the hook.

I agree that in theory the estate can do this, but often in reality the heirs are just too emotionally tired to continue the fight.  This is what the attorneys will bank on.

[Lord Patrek]

It's not just about Foster, it seems, but most/all Star Wars authors.

Still, in all likelihood the strategy Disney will go for. They have the financial means to keep this in court for years and force them to accept a buyout. That way, there is no precedent that becomes jurisprudence.

[Rhom]

I wonder if it might not just have been easier to stop printing those books...

[Jace, Extat]

1 hour ago, Rhom said:

I wonder if it might not just have been easier to stop printing those books...

But then you don't get the profits.

[Jace, Extat]

4 hours ago, Ser Scot A Ellison said:

Hope you are correct.  That said people frequently do not understand that Contracts, unless expressly agreed otherwise, are freely assignable.  I frequently get people screaming “I didn’t contract with your client” not understanding that doesn’t matter.

Can you clarify for me? I'm not sure I'm picking up what you're putting down here.

[Rhom]

Just now, Jace, Basilissa said:

But then you don't get the profits.

Somewhere there's an accountant out there far smarter than me that can work the balance between sales of 20-30 year old books vs lawyer fees.

As others in this topic have already assumed about other aspects of the case, I'm guessing that Disney is smart enough to know what the balance is and decide accordingly.  So I must be calculating wrong, but it sure seems like it would weigh the other way to me.   

[Rhom]

1 minute ago, Jace, Basilissa said:

Can you clarify for me? I'm not sure I'm picking up what you're putting down here.

I might be able to give a personal similar example.

Early on in my career, I had a contract with an overarching credentialing body that was entirely comprised of health plans.  Benefit for me was that I got credentialed with the one group and was in network with about 6 health insurances at the time.  

Fast forward about four years, I started noticing in network reductions being taken on personal injury claims paid by Progressive.  (In Kentucky, there is no fee schedule for auto injury claims and you get paid 100% of what you bill.)  I protested strongly that I didn't have a contract with Progressive.  In the end, I found out that there was a small one line in the original contact that said something like "and any other future auto/home insurance policies" or some such.  I was able to opt out of that provision of it, but had to give 90 days notice.  So for three months I still had to take the discounts.

(Interesting side story related to that... about ten years later, I accidentally received an EOB on a patient of mine not for services I had performed but for the MRI at the local hospital.  Being that the hospital was county/tax payer owned, I called up the CEO and told him that their contract people needed to look at the Progressive thing and opt out and it would save the hospital tens of thousands of dollars.  I never did feel they were grateful enough for that heads up...)  

[Ser Scot A Ellison]

6 minutes ago, Jace, Basilissa said:

Can you clarify for me? I'm not sure I'm picking up what you're putting down here.

I’m frequently enforcing accounts for clients who purchased the accounts from others.  The accounts are enforcable by my clients but the people against whom the accounts are enforced do not understand contracts and accounts are freely assignable... unless assignablity has been expressly declined in the orignal account/contract.

[Starkess]

This is really blatant and infuriating. I hope they back down, but I too think it is depressingly likely they're hoping to keep this tied up in courts for years and win by default/exhaustion.

[Werthead]

9 hours ago, Lord Patrek said:

Such a lawsuit could stay in court for years, though. And bleed the authors dry. If Disney wants to play hardball, I have a feeling that those authors, down the line after paying loads in legal fees, might just surrender and accept the buyout money.

I reckon this is Disney's strategy.  

The SFWA has quite deep pockets though. Obviously not as deep as Disney's, but far more than any individual member, and certainly enough to take this to court and fight it and drum up a huge amount of publicity in the process.

[Lord Patrek]

Bad PR is the best thing Foster and everyone involved can hope for. If you get shareholders concerned, it would be much cheaper to pay those royalties.

But as I said, if Disney wants to play hardball, the way big corporations and insurance companies usually do, it could linger in court for almost a decade, bleeding the authors dry in the process and put them in a position where they have little choice but to accept a buyout. :/

[Wilbur]

Further thought:  Someone in the decision stack on this at Disney has a private equity background or took the MBA class.

The PE method of acquisition is to buy company A with OPM (other people's money, a loan).  Require company A to also take out a corporate loan or issue debt.  Company A now has a large stack of cash, and also a large loan, on the company A balance sheet.  Company A starts off looking like this on the balance sheet:

CASH + PP&E Assets + Pension Assets ---- Pension Obligations + Debt Equity + PE Shares

Possibly also do a swap with the company A pension fund, if available.  Give the company A pension fund some sort of class B, non-dividend earning stock in company A, and in return take all of the pension funds' cash and marketable equities, which company A can then turn into cash.  Now company A has even more cash, and it has a large equity entry on the balance sheet.

Buckets of CASH + PP&E Assets ---- Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

PE also requires company A to take all kinds of short-term actions to preserve cash and defer payments or investments in a successful future.  Fire pricey top talent, stop paying vendors in a timely manner, sell off PP&E and lease it back, buy cheap toilet paper, stop all employee bonus plans, etc.

Giant Boatload of CASH -----  Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

Then the PE requires company A to issue a huge cash dividend to the shareholders (the PE company).  PE pays off their original OPM loan with the dividend money, and PE stacks the rest of the cash in their own bank accounts.

Crickets + Moths ------ Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

Finally, PE sells off company A, and takes the proceeds of the sale for their own.  PE has now creamed off all of the profits and left company A and the company A pension plan with the task to dig themselves out of debt if they can survive.  The final balance sheet of Company A looks like this, with nothing but obligations.

Crickets + Moths ------ Pension Obligations + Debt Equity + Crummy Shareholder Equity

In the end, PE has taken all of the rights and left behind all of the obligations through shareholder and debt equity machinations, while never actually doing anything productive to help company A grow organically.

The PE now has Company A cash, Company A Pension Plan cash, Company A budget-tightening proceeds, Company A sale of PP&A cash, and the cash from the proceeds of the sale of Company A.  All of the good stuff has been sucked out of Company A.

If I have seen this process before, and I have no ethical concerns, then I can see a portfolio of artistic works in the same way.  I use some legal obfuscation to move the contracts around, using the works to generate revenue for my department while shedding the obligations to pay the royalties into some other legal entity three times removed.

Re-threading the weave of the original contract rights and obligations will take a lot of time and work, but by that time I will have been promoted out of this function or department, and it won't be my mess.

[Ser Scot A Ellison]

7 hours ago, Wilbur said:

Further thought:  Someone in the decision stack on this at Disney has a private equity background or took the MBA class.

The PE method of acquisition is to buy company A with OPM (other people's money, a loan).  Require company A to also take out a corporate loan or issue debt.  Company A now has a large stack of cash, and also a large loan, on the company A balance sheet.  Company A starts off looking like this on the balance sheet:

CASH + PP&E Assets + Pension Assets ---- Pension Obligations + Debt Equity + PE Shares

Possibly also do a swap with the company A pension fund, if available.  Give the company A pension fund some sort of class B, non-dividend earning stock in company A, and in return take all of the pension funds' cash and marketable equities, which company A can then turn into cash.  Now company A has even more cash, and it has a large equity entry on the balance sheet.

Buckets of CASH + PP&E Assets ---- Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

PE also requires company A to take all kinds of short-term actions to preserve cash and defer payments or investments in a successful future.  Fire pricey top talent, stop paying vendors in a timely manner, sell off PP&E and lease it back, buy cheap toilet paper, stop all employee bonus plans, etc.

Giant Boatload of CASH -----  Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

Then the PE requires company A to issue a huge cash dividend to the shareholders (the PE company).  PE pays off their original OPM loan with the dividend money, and PE stacks the rest of the cash in their own bank accounts.

Crickets + Moths ------ Pension Obligations + Debt Equity + Crummy Shareholder Equity + PE Shares

Finally, PE sells off company A, and takes the proceeds of the sale for their own.  PE has now creamed off all of the profits and left company A and the company A pension plan with the task to dig themselves out of debt if they can survive.  The final balance sheet of Company A looks like this, with nothing but obligations.

Crickets + Moths ------ Pension Obligations + Debt Equity + Crummy Shareholder Equity

In the end, PE has taken all of the rights and left behind all of the obligations through shareholder and debt equity machinations, while never actually doing anything productive to help company A grow organically.

The PE now has Company A cash, Company A Pension Plan cash, Company A budget-tightening proceeds, Company A sale of PP&A cash, and the cash from the proceeds of the sale of Company A.  All of the good stuff has been sucked out of Company A.

If I have seen this process before, and I have no ethical concerns, then I can see a portfolio of artistic works in the same way.  I use some legal obfuscation to move the contracts around, using the works to generate revenue for my department while shedding the obligations to pay the royalties into some other legal entity three times removed.

Re-threading the weave of the original contract rights and obligations will take a lot of time and work, but by that time I will have been promoted out of this function or department, and it won't be my mess.

No. If they bought the benefits they bought the obligations.  It doesn’t matter how many shell companies they created or how many “pass throughs” exist.  If they have the power to tell authors “we don’t own your obligations”.  They have the power to set up the structure that shifted the obligations to another corporation (a cashless corporation) in the first place.  

As such, they have the power to pay the author and the commensurate obligation to ensure the authors are paid.

[Werthead]

8 hours ago, Lord Patrek said:

But as I said, if Disney wants to play hardball, the way big corporations and insurance companies usually do, it could linger in court for almost a decade, bleeding the authors dry in the process and put them in a position where they have little choice but to accept a buyout. :/

Disney can outspend any individual author but the SFWA has considerable resources to call upon, including many individual members who are multi, multi-millionaires.

Obviously Disney still has infinitely more resources than them, but the SFWA easily has enough financial firepower to get this into court and get it in front of a judge.