'Pooh' suit put under further review
By Russ Britt
5:15 PM ET Oct. 19, 2002
LOS ANGELES (CBS Marketwatch) -- A second accounting team is expected to be appointed within days on a case in which Walt Disney Co. is accused of withholding millions of dollars in royalties over the cartoon character Winnie The Pooh.
Los Angeles Superior Court Judge Ernest Hiroshige on Friday set aside his June order that would have forced Disney to fork over $200 million in royalties.
Stephen Slesinger Inc., which owns a portion of the rights to the honey-loving character, had called for a second, independent review of the case. Hiroshige had determined the first accountant, Gursey, Schneider & Co. of Los Angeles, conducted a biased review of the case.
Gursey, Schneider had determined that Disney owed Slesinger only a few thousand dollars.
"It was an outrageous result," said Bonnie Eskenazi, an attorney for Slesinger. She said Disney convinced the accountants to simply not factor in data for which there was no record. These records were destroyed by the company, Eskenazi said.
Daniel Petrocelli, Disney's attorney, could not be reached for comment, nor could the company. But Petrocelli told Reuters the company expected to prevail in the case.
In June, Hiroshige, developed a formula that would have forced Disney to pay $200 million. At that time, the judge called for a new accountant to review the case.
Certain rights to Pooh were sold by author A.A. Milne to Slesinger in 1930. In 1961, the Milne and Slesinger families reached an agreement with Disney that gave the entertainment company licensing rights.
Eskenazi said that in 1983 those rights were renegotiated, as the Slesinger family called for the company to stop commingling royalty allotments for Pooh with Disney's own characters such as Mickey Mouse. She said the company then would give a disproportionate amount to its own characters, thus shortchanging Pooh.
"Even though they promised in that agreement to stop doing it, they kept doing it," Eskenazi said.
Disney bought out the Milne family's rights for Pooh two years ago for $350 million, Eskenazi said.
Over the years, Disney has produced three Pooh feature films, an animated television series and markets children's merchandise featuring the characters created by Milne.
A key task of the new accounting review will be to determine the amount of royalties based on those sales.
By Russ Britt
5:15 PM ET Oct. 19, 2002
LOS ANGELES (CBS Marketwatch) -- A second accounting team is expected to be appointed within days on a case in which Walt Disney Co. is accused of withholding millions of dollars in royalties over the cartoon character Winnie The Pooh.
Los Angeles Superior Court Judge Ernest Hiroshige on Friday set aside his June order that would have forced Disney to fork over $200 million in royalties.
Stephen Slesinger Inc., which owns a portion of the rights to the honey-loving character, had called for a second, independent review of the case. Hiroshige had determined the first accountant, Gursey, Schneider & Co. of Los Angeles, conducted a biased review of the case.
Gursey, Schneider had determined that Disney owed Slesinger only a few thousand dollars.
"It was an outrageous result," said Bonnie Eskenazi, an attorney for Slesinger. She said Disney convinced the accountants to simply not factor in data for which there was no record. These records were destroyed by the company, Eskenazi said.
Daniel Petrocelli, Disney's attorney, could not be reached for comment, nor could the company. But Petrocelli told Reuters the company expected to prevail in the case.
In June, Hiroshige, developed a formula that would have forced Disney to pay $200 million. At that time, the judge called for a new accountant to review the case.
Certain rights to Pooh were sold by author A.A. Milne to Slesinger in 1930. In 1961, the Milne and Slesinger families reached an agreement with Disney that gave the entertainment company licensing rights.
Eskenazi said that in 1983 those rights were renegotiated, as the Slesinger family called for the company to stop commingling royalty allotments for Pooh with Disney's own characters such as Mickey Mouse. She said the company then would give a disproportionate amount to its own characters, thus shortchanging Pooh.
"Even though they promised in that agreement to stop doing it, they kept doing it," Eskenazi said.
Disney bought out the Milne family's rights for Pooh two years ago for $350 million, Eskenazi said.
Over the years, Disney has produced three Pooh feature films, an animated television series and markets children's merchandise featuring the characters created by Milne.
A key task of the new accounting review will be to determine the amount of royalties based on those sales.
