An arbitrator has ordered 21st Century Fox to pay $179 million in a dispute over profits with the stars of the long-running TV show "Bones," saying Fox executives engaged in "intentional fraud and malice."
The decision was reached earlier this month and revealed in a court petition from the plaintiffs Wednesday demanding that Fox pay, a decision Fox said it would contest.
Arbitrator Peter Licthman, a retired Los Angeles Superior Court judge, rebuked top Fox executives by name for self-dealing and deceit and his decision includes $128 million in punitive damages, calling the sum "reasonable and necessary to punish Fox for its reprehensible conduct and deter it from future wrongful conduct."
The overall figure is among the largest ever for a dispute over a television show and comes in a case that shines a light on finances within Hollywood conglomerates.
Lichtman said that Fox executives "engaged in a pattern and practice of fraudulent self-dealing by which it enriched itself" at the expense of the "Bones" producers and stars, who were owed a cut of profits.
David Boreanaz and Emily Deschanel, the stars of "Bones" in its run from 2005 through 2017, sued 21st Century Fox in 2015, saying it denied them profits by licensing the show to Fox's TV division and to Hulu for below-market rates. They were joined by executive producer Barry Josephson and Kathy Reichs, who authored the novels "Bones" is based on. The case went to private arbitration in 2016.
"We are so proud of the hard work we did on Bones for 12 seasons and only ever wanted Fox to live up to its promises and contractual obligations," Deschanel said in a statement.
Boreanaz added in his own statement that "it's clear that what we were saying all along was true: we were owed additional compensation for our work."
Fox denounced the decision and vowed to fight it.
"The ruling by this private arbitrator is categorically wrong on the merits and exceeded his arbitration powers," the company said in a statement. "Fox will not allow this flagrant injustice, riddled with errors and gratuitous character attacks, to stand and will vigorously challenge the ruling in a court of law."
Among Lichtman's findings were that Fox studio executives did not even attempt to try to find the true market value for shows similar to "Bones" when negotiations were going on with the Fox network.
He said that Fox sacrificed the Fox studio's business for the sake of Hulu's success, with the network handing over rights to "Bones" for a share of ad revenue that would not be shared with the studio. That hurt the haul of the producers.
Those parts of the ruling were making waves in Hollywood on Wednesday, with trade papers speculating what it might mean for other studios that have stakes in different entities that do business with each other.
"What we have exposed in this case is going to profoundly change the way Hollywood does business for many years to come," said John Berlinski, attorney for the plaintiffs.
Lichtman also slammed what he called the "cavalier attitude" of the Fox executives who testified.
"None of the witnesses took responsibility or expressed any remorse for their actions," the decision said, adding that the executives "appear to have given false testimony in an attempt to conceal their wrongful acts."
Some of the executives Lichtman called out by name, including Peter Rice and Dana Walden, are headed to Disney as part of its $71.3 billion takeover of most of Fox.
Disney CEO Bob Iger said he stood by his soon-to-be colleagues.
"Peter Rice and Dana Walden are highly respected leaders in this industry, and we have complete confidence in their character and integrity," Iger said in a statement on Wednesday. "Disney had no involvement in the arbitration, and we understand the decision is being challenged and will leave it to the courts to decide the matter."
