UPDATED: Discovery Communications has gotten some advantage in its bitter falling out with LMNO Entertainment, which produced numerous reality shows for the giant media company’s cable networks. On Friday, A U.S. magistrate judge in Los Angeles recommended that a District Court judge order LMNO to turn over the second season of 7 Little Johnstons, which Discovery said was being “held hostage” by LMNO.
In his 13-page ruling (read it here), Judge Steve Kim found that under its contract, Discovery had the right to terminate its agreement with LMNO “at any time and without cause,” and that once LMNO had been paid, it would have to “promptly deliver to Discovery all program materials of any kind produced as of the date of termination.”
In a statement, LMNO said: “We respectfully disagree with the Magistrate Judge’s recommendation to the District Court Judge – who will be making the final ruling on this issue. LMNO will file its response and objection next week, and we look forward to the District Judge’s final order. LMNO has consistently maintained that it very much wants this show to be aired, and the entire dispute is over whether Discovery has to pay the agreed price. Therefore, LMNO is heartened that the Magistrate recognizes that the question of who possesses the materials is irrelevant to LMNO’s ultimate right to recover the amounts due.”
Discovery paid LMNO just over $2 million for the second season before terminating the agreement, and the judge ruled that that satisfied the terms of the contract and that Discovery is now “entitled to the property claimed.”
LMNO had been one of Discovery’s leading suppliers since 1999, but in June, Discovery took control of all the shows LMNO was producing for its various cable channels. Discovery accused LMNO of keeping two separate sets of books to conceal deceptive business practices, while LMNO claimed that it was the victim of an embezzling and vindictive accountant who falsified the company’s financial records and took the phony documents to Discovery in order to destroy LMNO’s business.
LMNO claims that it was the victim of an embezzling accountant who cooked the company’s books, and that Discovery is using the fraudulent accounts as part of an “elaborate shell game” to make it look like LMNO had engaged in deceptive business practices. The FBI raided LMNO’s offices in Encino in June.