The decision, made earlier this month but until now a secret, pertains to the Fox-produced series Bones, which starred David Boreanaz and Emily Deschanel and ran on the Fox network between 2005 and 2017. But the 66-page ruling by arbitrator Peter Lichtman, who concludes Fox executives lied, cheated and committed fraud at the expense of the show’s stars and executive producer Barry Josephson, is about a whole lot more. The nearly $200 million award amounts to the second largest in television industry history, after a 2011 jury verdict punishing Disney to the tune of $319 million over profit-sharing for Who Wants to Be a Millionaire?. It will not only put Murdoch’s Fox sale in a whole new light, but may also raise questions about the future viability of Hulu, plus any platform enjoying what’s pejoratively known as “Hollywood accounting.” The ruling also comes as the D.C. Circuit Court of Appeals has allowed to stand another mega-merger between AT&T and Time Warner, an example of vertical integration between a distributor of content and a producer.
...But along with other profits fights over long-running hit shows — among them, AMC’s The Walking Dead, Disney’s Home Improvement and Warner Bros.’ Supernatural — the dispute raised a big question about whether profits could ever be expected when one arm of a corporation is making deals with another arm. That’s because the studio is responsible for selling the show on the open market, and after collecting this money and deducting the cost of production, the studio sends out checks to those entitled to a share of profits. If expenses outweigh income, the show runs a deficit. But that doesn’t necessarily mean the show isn’t making good money — at least, for someone, elsewhere.
It’s possible that the studio just isn’t charging enough for rights to exhibit the show, whether it’s streamed online or broadcast on a television. Streaming platforms hawk subscriptions. Television networks sell advertisements and take in additional revenue from cable and satellite companies. Such money doesn't directly go to profit participants. So if a studio is within the same corporate structure as a streamer or broadcaster, an underhanded way for the parent company to derive the spoils from a show (to the detriment of executive producers and stars) may be to undercharge licensing fees to its sister companies.
That’s exactly what the Bones profit participants alleged was happening.