A Bombshell Case Goes Phfft!

By Gerald Clarke

ABC and the producers of Charlie's Angels are off the hook

In Hollywood they were calling it Angelgate. It had everything a big production could want: TV stars, starmakers and money--lots and lots of money. But when Los Angeles County District Attorney John Van De Kamp released his long-awaited report on the Charlie's Angels case last week, what had been billed as television's scandal of the decade turned out to be something less than many had expected. "We have determined after careful evaluation of the evidence," said the D.A., "that there are insufficient grounds to institute criminal charges."

Most relieved, of course, were the principal targets of the investigation, Producers Aaron Spelling, 52, and Leonard Goldberg, 46. The two had been accused of trying to cheat investors in ABC's Charlie's Angels, chiefly Actor Robert Wagner, 50, and his actress-wife Natalie Wood, 42, by siphoning off at least $660,000 of Angels 'profits to Starsky and Hutch, a show that the producers owned a larger percentage of. Only slightly less elated were executives at ABC who had approved the transfer of funds and ABC President Elton Rule, 63, a close friend of the two producers. If Van De Kamp failed to make the criminal charges stick, he did provide the closest look out siders have ever had into the wheeling and dealing that goes on to make a TV series.

The investigation began in 1979 after Jennifer Martin, 32, a lawyer in ABC'S West Coast contracts department, pointed out to her boss that for each episode of Charlie's Angels the network was paying Spelling and Goldberg $30,000 for "exclusivity." Why, she asked, should ABC pay for exclusivity when under the terms of an earlier agreement it already had exclusive rights to their services? According to Martin's memo of the meeting, which the D.A. quoted, ABC V.P. Ronald Sunderland, replied: "You want to know what it's really for? They're [cheating] the Robert Wagners out of their money. We've been putting it into Starsky and Hutch up until now, but since Starsky is off the ah", the money's got to go somewhere else, so we're calling it exclusivity."

Shocked by Sunderland's comment, which he complains was misinterpreted,

Martin sent memos fluttering to the top of the ABC Building in Manhattan. The network did two things: it launched its own internal inquiry, and it fired Martin for "unfinished and sloppy work." That ABC investigation found nothing wrong. Apparently concerned that Martin would send her memos to the authorities, however, ABC Counsel Frank Rothman gave his findings to Van De Kamp in October 1979. Since then the TV world has been waiting for the D.A. to pounce. Instead he issued an 81-page report that found the main culprits to be sloppy business practices and a kind of Alice-in-Wonderland bookkeeping.

The reason for the convoluted accounting is the networks' refusal to pay full production costs of the shows they buy. A program like Charlie's Angels, which is really a display case for three beautiful detectives wearing as little as possible, costs $623,000 a segment. But ABC pays Spelling-Goldberg Productions only $583,000, leaving a deficit of between $800,000 and $900,000 a season. It is generally not until a series is sold for syndication that the deficit is erased and the big profits begin. Until then, producers borrow, worry about cost overruns and beg the networks for more money.

Spelling and Goldberg are among the most successful of that struggling class. Spelling is a kind of Texas-style Woody Allen who put himself through Southern Methodist University, winning every drama award available before going to Hollywood. Goldberg grew up in Brooklyn and graduated from the University of Pennsylvania's Wharton School. He was chief of production for Screen Gems before forming the partnership with Spelling in 1972.

Despite their success, neither man is in business to lose money, and both were appalled at their problems with Starsky and Hutch, a shoot-'em-up centered on two offbeat policemen. Their lawyer, William Hayes, 59, repeatedly asked ABC to help them out. ABC made additional payments, and then refused to give another dollar. According to the D.A.'s report, Hayes says that former ABC Vice President George Reeves told him: "No, I can't help you. Don't even come ask me, because everybody here has had it up to their ears with Starsky and Hutch!" Finally Hayes suggested that some of the extra cash that was supposed to go to Charlie's Angels be diverted to Starsky and Hutch instead. Reeves replied: "If you want to allocate it that way, it's up to you. Just write me a letter and tell me what you're going to do so we can put it on our records."

Spelling and Goldberg say the money diverted to Starsky and Hutch was supposed to be returned to Charlie's Angels when S&H was canceled. And that, apparently, is what has been happening. All transactions were duly recorded, Van De Kamp notes, and there was none of the secrecy--"the badges of fraud"--that usually indicates criminality. Yet a few questions remained. Nowhere does the report explain, for example, Sunderland's statement that the exclusivity gimmick was a device to cheat the Wagners.

For their part, the Wagners, who stand to make several million dollars from Charlie's Angels, were happy with the out come of the case. They will settle for the payment indicated by the D.A.'s audit.

The two writers involved, who together have 12 1/2% of the profits, were less pleased. Ben Roberts said the decision not to prosecute was "shady" and added that he and Ivan Goff may file a civil suit to get all the money owed them by Spelling and Goldberg. Nor can ABC totally relax.

Lawyer Martin is asking $6 million for, among other things, the damage done to her reputation when she was fired. There is also the prospect that action might be brought by the Securities and Exchange Commission, which is examining the possibility that ABC has violated obligations to its stockholders with its casual accounting procedures.

Whatever the courts decide, the case raised some touchy issues.

One involves the chumminess that seems to surround deals between ABC and its Hollywood producers. Hayes, for instance, is not only the lawyer, manager, accountant and negotiator for Spelling and Goldberg, but also Rule's lawyer and the manager of his personal accounts. All three of Rule's children, moreover, work for Spelling, who produces by himself as well as with his partner. "Nepotism is everywhere," says Hayes with a shrug. "Who should you direct your children to? Strangers?"

Another issue raised is the responsibility of the networks. By refusing to pick up the full costs of new shows, they virtually force producers into some kind of inventive bookkeeping. "If a network has faith in its producers, it should pay them the money it costs to do the shows," says Goldberg. "They pay, we deliver. But they always want more added to the script.

Their ideas are bigger than their purse."

Spelling agrees, adding: "If it rains, it costs us $30,000. And if an actor is late, we pay. Script changes, which occur often, are also at our expense."

Many people in the industry approved of Van De Kamp's decision not to prosecute. "This is a dynamic business," says Manhattan Lawyer Richard Barovick, whose clients are mostly in entertainment.

"It's more creative than professional. This isn't manufacturing chairs in Wisconsin to be delivered in Tennessee."

What next? There will be tougher bookkeeping, and auditors will probably ask more revealing questions -- for a while. "Things will tighten up," says Joel Segal, a broadcasting expert at the Ted Bates advertising agency. He adds cynically -- or perhaps realistically: "Then it will get lax again." The moral, which the D.A. repeated several times: Hire a good accountant.

-- By Gerald Clarke. Reported by Martha Smilgis/Los Angeles

With reporting by Martha Smilgis

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