Burnett, Madison Road Settle Lawsuits

LOS ANGELES Mark Burnett Productions and Madison Road Entertainment have settled their respective lawsuits over integration fees charged for The Apprentice, agreeing to co-produce a new reality show and collaborate on at least two episodes of The Apprentice 5 as part of their settlement deal.

“We got to know one another and discovered that it was in our best interests to keep working together and, in fact, to expand the relationship to develop a new show together,” Burnett said in a statement issued Friday.

“Branded entertainment has become such a growth industry that it makes sense for us to be in business with Madison Road.” Madison Road executives and Burnett’s attorney declined to disclose the financial terms of the settlement deal. Burnett was not available for further comment.

Mark Burnett Productions sued Madison Road in March, alleging that the branded entertainment production company misled advertisers into believing that Madison Road owned exclusive rights to brand integration deals on The Apprentice and then charged those advertisers 2 1/2 times what they paid Burnett. The suit sought damages and called for the restitution of any profits earned by Madison Road from brokering the integrations.

Less than a week later, Madison Road countersued for at least $20 million in damages, alleging that Burnett’s lawsuit was aimed at quashing competition for his new in-house branded entertainment team and turning Madison Road into a scapegoat for Burnett’s difficulties in luring new sponsors to The Apprentice due to fees as high as $5 million per episode.

Now with the settlement of their respective lawsuits, the companies are set to further deepen their relationship.

“We saw an opportunity to really take branded entertainment to a new level together because we both so clearly understood its complexities, so it just felt that we had more common ground than we did differences,” said Madison Road chief executive Jak Severson. He said the settlement talks began about six weeks ago when he had lunch with Burnett.

As part of their settlement deal, Mark Burnett Productions and Madison Road will collaborate on developing the “creative and branding concepts” for at least two episodes of The Apprentice 5 on a nonexclusive basis. The integration fees for their collaborative work will be based on Madison Road’s CPM model, which sets the price according to ratings and the quality of the integration that actually winds up on the screen, Severson said. The two companies will share in the fees paid by advertisers for those integrations, he said.

For the integrations that set off the Burnett lawsuit, Madison Road said it had purchased the opportunities from Burnett at a fixed price and then sold them to advertisers, who paid fees based on their CPM model. Under that model, similar to the studio financing model, Madison Road assumes the risk if the ratings fall short of expectations but reaps rewards if they surpass expectations.

Also as part of the settlement deal, the two companies will co-develop and co-produce a new reality-based TV series. “We agreed to co-develop a television show together that would really tie together the production panache that Burnett is known to bring to the screen and our producing capabilities with advertisers to put a whole new television series to work,” Severson said.

While Madison Road helped orchestrate the brand integrations, it is now focused mainly on the development and financing of TV series with brand involvement as a means to reduce network license fees. It is currently co-producing the new NBC series Treasure Hunters with Imagine Television and Magical Elves.