Warner vs. Sony--a Talent Hunt Grows Nastier - Entertainment: Lawsuits fly amid a battle royal for the movie-making skills of Peter Guber and Jon Peters.
A tug-of-war between Sony Corp. and Warner Bros. for the movie-making talents of Peter Guber and Jon Peters turned nastier Friday as Warner filed a $1-billion lawsuit accusing Sony of unlawfully recruiting the producers to run Columbia Pictures Entertainment while under contract to Warner.
Within hours of the Warner suit, lawyers for Guber and Peters sued Warner in the same Los Angeles Superior Court, alleging that Warner is trying to “sabotage†Sony’s acquisitions of Columbia and Guber-Peters Entertainment Co., among other things.
The legal battle throws into question not only Columbia’s future management but also Hollywood’s receptiveness to the first foreign buyer of a major motion picture studio. In a chilly statement, the co-chief executive of Time Warner Inc. issued a thinly veiled warning that Sony’s conduct “will not be condoned.â€
Earlier this year, Warner and Time executives played upon nationalistic sympathies in Congress to promote their merger as necessary to compete in a global marketplace against Japanese and European entities.
Although Sony’s $3.4-billion tender offer for Columbia won’t expire until Oct. 31, it already has an option to buy 52% from the biggest shareholders, and Columbia’s top two executives have said they’ll leave.
Three weeks of negotiations apparently reached an impasse earlier this week after Sony declared it would buy Guber-Peters Entertainment Co. for $200 million--regardless of whether Warner released the two principals from their five-year deal with Warner. According to one industry source, Sony’s stance hardened under the fiery leadership of Walter Yetnikoff, the CBS Records president who will oversee Sony’s businesses in recorded music and movie companies in the United States.
Guber and Peters, in their 26-page complaint, claim that Warner has falsely asserted that they have an exclusive deal with Warner that prevents them from accepting senior management positions at Columbia. The two men contend that high-ranking Warner officials, including Time Warner Co-Chairman Steven J. Ross and Warner Bros. Chairman and Chief Executive Robert A. Daly, “previously acknowledged several times†that the two producers would be free to pursue executive opportunities at other studios.
But Warner has a much different view.
“It is the most flagrant case of inducement to breach a contract in corporate history,†declared Daly, the Warner studio chief, in a telephone interview. “Guber and Peters did not have the right to terminate their contract with Warner Bros.; this was recognized by Sony when it originally required Guber and Peters to obtain a release from their exclusive contract with Warner Bros.
“Sony then dropped this requirement and indemnified Guber and Peters against damages because of their breach of the Warner Bros. contract,†Daly said.
Warner’s 17-page complaint essentially accuses Sony and the Guber-Peters defendants of “secrecy, treachery and fraud.â€
In his icy prepared statement, Time Warner’s Ross said: “We regret that Sony has attempted to enter the U.S. motion picture industry by illegally and willfully raiding key talent under exclusive contract to a competitor. This conduct cannot, must not and will not be condoned.â€
Jason Farrow, Sony U.S.A.’s senior vice president of corporate communications, said, “As a company policy, we don’t make any comment on matters under litigation.â€
A spokeswoman for Guber-Peters said the company had no comment.
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