Question

Many of you may have watched Friends when it was on television and may even still watch the reruns. In 2000, the case of Friends, one of the hottest shows on television, demanded a pay increase. The demand was made with a valid contract in place and near the time NBC was to announce its fall lineup. The six stars demanded $1,000,000 each per episode. NBC settled for $750,000 per star, up from the stars’ $150,000 per episode figure renegotiated in 1998.

When stars seek to renegotiate contracts before their expiration, the network can replace them if they fail to live up to their contracts, and it can enforce the standard contractual clause, which prohibits them from doing other television work until the expiration of their contracts. Recasting six stars for a highly successful show would not be feasible. To offset the stars’ bargaining power, NBC prepared a television promotion that would relabel the last show for that season as the “series finale” and announce “See how it all ends on Friends.” The cast were informed of NBC’s threat to end the series in this manner. Renegotiations quickly ensued and led to the $750,000 agreement. Two years later the six stars obtained their goal of $1 million per episode paychecks.

Jay Leno was asked about the tactics of the Friends stars. He responded, “You have to get what you can while you can in this business.

Was it ethical for the stars to threaten to strike just before the fall lineup announcements? Are the stars breaching the contract if they ask for more money during a contract? Should it matter that the show has become more successful since the contract was signed? What tactics do they use to get the attention of the network executives? Is that ethical? Why or why not? What does each side have to gain and what does each side have to lose when stars want to change a valid contract?

When the new agreement was reached, was there a mutual rescission of the existing contract and the substitution of a new contract, or did the new contract fail for lack of consideration? Finally, do you agree with Jay Leno’s comments? Why or why not?

Business law

Answer 1

I don’t feel that it was ethical for the stars to threaten to strike right before the fall lineup announcement. That puts NBC in a sticky situation to not know if they will have a show or not. If the stars wanted to strike they should have done it and the end of the previous season to allow time for renegotiations. I don’t feel that they are breaching the contract by asking for more compensation if they are continuing to do their job in the meantime. Them going on strike would be a breach in the contract. The success of the show shouldn’t matter to the contract unless there is a clause in the contract that states something along the lines of “contract up for negotiation based on success”. The actors should have made negotiated to have that clause included. The tactics used were simply waiting till the fall lineup announcement so as to make the network question if there would even be a show. I somewhat agree with Jay Leno’s comments because had the stars potentially waited the show could have ended and they would have never felt fully compensated.

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