A multimillion-dollar federal ruling against VeggieTales creator Big Idea Productions has landed the struggling children's entertainment company on the sales block.
On July 1, U.S. District Judge Barbara M.G. Lynn of the Northern District of Texas upheld an $11 million April jury verdict that found the VeggieTales company had breached a verbal contract with former general-market distributor Lyrick Studios Inc. Lynn also tacked on court fees, attorney fees and interest, which could bring the judgment to $15 million.
As a result, Big Idea founder and CEO Phil Vischer announced a major restructuring and admitted he was actively seeking a buyer or large investor to save the company.
"We are in a full restructure," Vischer told Charisma after the ruling. "We have to rethink how does the ministry go on in a more financially responsible, viable way?"
During the production of its first full-length theatrical production, Jonah: A Veggie-Tales Movie, Big Idea had a record full- and part-time staff of roughly 200. In the last several months, the company has downsized to 45.
Vischer said troubles began when Big Idea tried to develop too many new products too fast, creating a financial burden that could not be sustained. Then came the lawsuit by Texas-based Lyrick, distributor of the popular children's shows Barney and Wishbone, alleging that Big Idea broke a verbal contract with Lyrick when the Veggie- Tales company shifted its general-market distribution to Warner Home Video in late 2001.
Big Idea made the move to Warner after Lyrick underwent a buyout that Vischer said changed the mission of the company. Vischer said he believed he was legally free to switch when negotiations with Lyrick failed to culminate in a signed contract after three years.
Vischer said Lyrick's attorneys painted an inaccurate picture of Big Idea's intent, convincing the jury that the VeggieTales company that touted itself as operating under Christian values just wanted more money.
"We thought we were right in leaving Lyrick for three reasons," Vischer said. "No. 1, we had never signed a contract. No. 2, we had inserted a 'key-man' clause in the contract we were negotiating that would allow us to leave Lyrick if the Christian owner, Dick Leach, left the company. Third, we had also put in a 'change in control' clause to allow us to leave if the company was sold. When Dick sold Lyrick and died two months later, we clearly felt that both of those clauses had been invoked."
A Lyrick spokesperson said the litigation was not meant to attack the integrity of Big Idea's product.
"The business litigation between Lyrick Studios Inc. and Big Idea Productions Inc. was based upon a contractual dispute regarding distribution of the VeggieTales video and audio products," a Lyrick spokesperson said. "The litigation was in no way a reflection upon the quality content of the product, as we continue to believe in the value of the product."
"The jury bought it that all we wanted was more money and wanted to make an example out of us," Vischer said.
At press time, Big Idea planned to continue developing new products using its original creative team comprised of Vischer, Mike Nawrocki, music director Kurt Heinecke and others. The next VeggieTales video, The Ballad of Little Joe, was scheduled to release in early August, and Big Idea planned to roll a re-priced classic VeggieTales DVD line this fall. Another new VeggieTales release, The Easter Carol, is in the pipeline for next spring.
"I think we are going through a great maturing process here, and I am not sure exactly how it's going to come out," Vischer said. "But I can say that this trial by fire has forged a very strong core team of creative and business people who are still about the mission."
Natalie Nichols Gillespie
The Charisma Podcast Network is now live. Featuring a variety of programs including news, leadership, inspiring stories, women's topics, sports, and even more.
Subscribe now for free!