Saturday, December 21, 2013

Fiduciary Responsibility

Here's something that I don't understand: why haven't shareholders filed suit against A&E Television Networks, LLC for breach of fiduciary duty in getting rid of the Duck Dynasty guy?  The rest of the clan say they won't do the show without him - go after one of them, go after all of them.  No doubt the company would claim that its management best knows how to maximize advertising revenue (and therefore return to shareholders).  The problem with this is that Duck Dynasty is by far the most viewed program on all of the A&E networks:
An hour-long Christmas special premiered on December 5, 2012 as the season two finale and became (at the time) the most-watched A&E episode in the network's history.[37]

The February 27, 2013, the season three premiere tallied 8.6 million viewers, including five million in the adults 25–54 demographic and five million in adults 18–49 demographic, making the premiere (at the time) the most watched telecast in network history, beating the season two finale.[38] The one-hour season three finale (shown on April 24, 2013) tallied 9.6 million viewers, with 5.6 million in the Adults 25–54 demographic and 5.5 million in the Adults 18–49 demographic, making it the highest rated telecast in A&E history.[39]

On August 14, 2013, the season four premiere drew a total of 11.8 million viewers, an increase of 37% vs. the season three premiere, drawing 6.3 million viewers in the Adults 25–54 demographic, making it the most watched nonfiction series telecast in cable television history.[3]
Actually, you can change my comment to "the most viewed program in the history of cable television".

And so to what seems to be the problem for A&E (and also Hearst and Disney who formed A&E as a joint venture).  They would have to claim that they are maximizing shareholder return on their cable network by getting rid of the most watched program in the history of cable television.  That's a cunning plan, right there.

Now, I am not a lawyer, but there's a legal principle that seems to apply here.  Res ipsa loquitur:
In the common law of negligence, the doctrine of res ipsa loquitur (Latin for "the thing itself speaks") states that the elements of duty of care and breach can be sometimes inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved.
Canceling the most popular cable tv show (or even putting it at risk) simply cannot lead to maximized shareholder value.  The thing speaks for itself.

Yeah, I know this is a lot of Wikiscaping.  Sue me.

3 comments:

c w swanson said...

Absolutely correct. The shareholder lawsuits should be being filed now, only to be dismissed when Phil is reinstated and all the management that made this stupid decision are handed their pink slips. Nothing else is sufficient.

Dave H said...

Sorry, I don't see it working. Management can claim that they were trying to prevent a boycott of the show, which could have been equally disastrous to ratings. Plaintiffs would have to prove that no boycott would have occurred, which is impossible.

Jake (formerly Riposte3) said...

I think Dave H has it. Plus, I've read somewhere (though I haven't seen it confirmed) that he had been warned by the network previously about making similar statements. If true, that means he's had the limits explained to him more than once, and that he's crossed those boundaries more than once. Fiduciary duty also means disciplining employees who habitually break the rules that the shareholders have (at least by proxy) approved, especially when the violation is done so publicly.

Success at making an employer money can buy a lot of leeway (usually in direct proportion to the degree of success), but there are almost always limits.