Another Tutorial About "Leverage"

Professor James Garner teaches a lesson in studio accounting, and gaining what's yours ...

... I became an actor by accident, but I'm a businessman by design. My company, Cherokee Productions, produced The Rockford Files. I took less money up front in return for a 37.5 percent share of the profits. I was personally paid about $30,000 per episode, which was and still is a lot of money, but it could have been several times that. But I figured once Rockford went into syndication, the profit sharing would be my real reward and annuity for my old age.

Early in 1979, someone at Universal mistakenly sent me an account sheet that The Rockford Files had lost $9.5 million in its first five years on the air. It shocked me. I thought we were doing well.

It's demoralizing to break your neck bringing a show in on budget and on schedule only to find you've been wasting your time and effort because they've been bookkeeping you to death. ...

CEO Lew Wasserman and Universal didn't invent "creative accounting," they just made it a science. Creative accounting is too polite a term for what Universal was doing, it was flat-out larceny. They systematically inflated the expenses to reduce -- to wipe out -- the net profit. ... Universal tried to tell us that despite taking in $120 million in revenues from syndication and foreign sales, the show had earned less than $1 million in profits. ...

If you had the nerve to complain, they pretended not to know what you were talking about. If you persisted, they shrugged their shoulders and told you to sue them. ... And if anybody had the money to hire a battery of lawyers and the guts to risk his career, Universal would drag out the litigation for years. It was like being in business with the Mafia, only Universal didn't need a gun, just a pencil.

Well, I had the money in the bank -- over $5 million. I'd put it there just in case, and I didn't care about hurting my career. I was in it for the duration.

In December 1988, after seven years of filings and depositions, Universal sent me a check for $607,000. It was an insult. A few months later, they offered $6 million. I declined. We'd found out something Universal didn't want us to know.

Universal's salesmen went to TV stations and pitched reruns of popular series, those that had attained the magic number of one hundred episodes. My lawyers discovered that Universal was syndicating The Rockford Files as part of a package. Station managers were told they could have Rockford cheap, but only if they'd also take the less popular Quincy. Universal would bill Quincy at twice the rate of Rockford. In other words, on paper, Rockford earned only a fraction of the income it should have commanded, cheating me out of millions of dollars in profits.

When we confronted Universal with this knowledge, they immediately offered to settle out of court if we would seal the record. They didn't want this practice revealed, and they certainly didn't want to open their books. ...

On March 23, 1989, we settled the case "on the courthouse steps." As part of the settlement agreement, I promised not to reveal the amount Universal paid me. ...[So] I can't legally comment on [the cash total], but I can say that for a week or two afterward, [my wife] Lois had to keep telling me to wipe the grin off my face, and that she drew a big "V" for victory in lipstick on our front door that stayyed there for a year. ...

James Garner -- "The Garner Files" -- pp. 137-142

The above is one more iteration of the ancient wisdom "You get what you have the leverage to get."

In this case, Mr. Garner had all the principle components of Leverage. He had the Power. He had the Knowledge. And he had the Courage/Moxie/Resolve to press ahead with his mission. (Many don't.)

Plus, he had the willingness to fail, which is a major part of leverage. Because without that willingness, you won't press down hard on the lever to get to where you want to go.