Jillian Michaels was never a contestant on The Biggest Loser, but did star as the motivational training coach who sometimes looked like she was going too far. Well, she recently took Lionsgate to court and went far enough to be awarded nearly $5.8 million.
The reason for Lionsgate handing over almost $5.8 million to Michaels? Lost past and future profits due to how YouTube streamed videos Lionsgate produced of her work. The decision came down from an arbitrator on Wednesday who also ruled Lionsgate needs to pay for attorney fees and arbitration costs.
According to The Hollywood Reporter, Michaels filed this claim in question back in April 2015.
Back in 2007, Michaels struck a deal with Lionsgate that would result in the company producing and distributing fitness videos by Michaels that weren’t directly from Biggest Loser, but did relate to what she did on the show.
Here’s THR’s outline of the deal:
“The agreement had Michaels creating six workout videos for both DVDs sold in stores as well as video-on-demand offered both online and for Exercise TV, carried to approximately 21 million homes through Comcast, Time Warner Cable and other cable providers. Lionsgate was granted significant distribution rights in perpetuity. Michaels got a $250,000 minimum guarantee and escalating royalties depending on the number of units distributed. She also gained the right to meaningfully consult with Lionsgate before content was distributed.”
The videos did well enough that Lionsgate wanted to add more components to it and lengthen the deal as well. Instead of sticking with Lionsgate, Michaels struck a deal with Gaiam Inc. to distribute similar videos to what she had produced with Lionsgate.
“It took some time for BeFit to gain traction,” writes the arbitrator in the decision. “From 2012 to 2013, views of BeFit content increased from 6.7 million to over 27.5 million. During that time, sales of Michaels’ DVDs declined and continued to decline through 2015 as views on BeFit continued to increase or stay steady.”
Despite the views on the YouTube videos reaching incredible numbers, Michaels was only given $85,000 for them.
One thing led to another and arbitrator Bruce Friedman determined that Lionsgate’s decision to put the videos on YouTube and not compensate Michaels fairly for the increase in viewership was “unreasonable.”
“Interpreting the Agreement as [Lionsgate] suggests would confer no direct financial benefit on Michaels and in fact, potentially have a negative effect on her brand, in that offering content for free can lead consumers to believe that [her] brand no longer holds premium value and diminishes their willingness to pay for content, according to Michaels’ experts,” he writes. “It defies logic that she would agree to create content for [Lionsgate] that would ultimately be given away for free, preventing her from being compensated under the Agreement and potentially hurting her brand… [H]ad Michaels been an up-and-coming fitness personality, it may have made sense to offer certain content for free to build up interest in her brand. However, Michaels was already an established celebrity.”
Friedman also added that it’s unlikely Michaels’ agents and lawyers would have signed onto a deal that would negatively impact their client in the ways Lionsgate presented.
“Based on the evidence and the Agreement itself, the Arbitrator finds that interpreting the Agreement to confer any right to [Lionsgate] to exploit the Fitness Videos in such a way as to remove the possibility that Michaels could collect payment under the Agreement does not reflect the intent of the parties and leads to a nonsensical result,” Friedman concludes, adding that the studio breached its obligation to meaningfully consult with her before putting the videos on YouTube.
It was ruled Lionsgate violated and breached their contract with Michaels, resulting in their nearly $5.8 million payment to the Biggest Loser star.
One of the most interesting aspects of all of this is how Michaels was partially paid for “future value.” The arbitrator had to not only determine how much money Michaels may have lost in the past, but also how much she may have lost in the near future until the matter was settled. This ultimately could have big implications for future lawsuits involving YouTube.
“We are thrilled for Jillian. This is an incredibly important decision for all artists in the YouTube era in which we live. This decision represents a firm pronouncement that placing work on YouTube for free devalues it, and damages artists, like Jillian, who created it.” Micahels’ representative Richard Busch said. “We argued throughout that Lion’s Gate tried to build a YouTube business, BeFit, on Jillian’s back and popularity, but did not care that it did not have the right to do so, or the damage it did to her. We are very happy with the Arbitrator’s decision, including the Order requiring the removal of Jillian’s content from YouTube.”