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Success of “Friends” – business asignement Essay

    Prior to the success of “Friends”, the cast of six actors had few professional prospects. Most were doing B-movies and appearing in failed pilots. No one had any idea that “Friends” would turn into such a phenomenon. The issue of fairness in regard to the forced contract renegotiation is a complicated one. Legally, the cast was bound by their contracts and they would have been in breach of those contracts if they had not shown up for work. On the other hand, the network should have offered a bonus or a raise in light of the success in the show, as an act of good faith. Unfortunately, entertainment contracts tend to favor the employer: had “Friends” not been a success, NBC could have cancelled the actors’ contracts and not been in breach. If NBC had signed new contracts agreeing to the actors’ demands, then the contracts would be enforceable. NBC, at any time, could have fired the actors and cancelled the show. If they chose not to do that and sign new contracts, they would be bound by those new contracts, just as the actors would.

    NBC’s defense to enforcing the contract is that the contracts were a product

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of extortion: had the actors’ not shown up for work, NBC would have been liable for production costs, which would have to be duplicated in order to make up for the lost time.   The actors would be liable for the production costs for each day that they did not show up for work. This includes the cost of the equipment, the employees, and other costs of running a television show. Contracts negotiated for higher salaries are absolutely supported by consideration. Actors do not demand higher salaries when a show is a failure; the “Friends” cast demanded it because the show was a success. In return for the higher salaries, NBC was not only able to have the highest-rated television show, but they were able to turn Thursday evenings into “Must-See Television”, which persuaded viewers to watch NBC’s other Thursday evening offerings. “Friends” was often used as an anchor to which to attach new television shows. Jay Leo was correct in stating that `You have to get what you can while you can in this business.` Entertainers are only bound by their current contracts, and these contracts always fall in favor of the employer. Leno’s statement is proven by the fact that only one of the six friends, Jennifer Aniston, was able to continue her success; the other cast members’ careers since “Friends” have paled significantly. One can only hope that the other five cast members invested wisely.

    PepsiCo’s commercial featuring the Harrier Jet was done entirely in jest. An advertisement is not an offer, and Leonard should have known that, as the jet was not featured in the official catalog. Leonard’s phone call to PepsiCo was not significant at all. Companies often have employees who will answer the questions they’re asked, without the required knowledge of what they’re answering. While this was significant to Leonard, it did not constitute a contract.

    If I were a PepsiCo executive, I would settle with Leonard immediately. While the advertisement was not an offer, it was still part of the commercial and there was nothing in the commercial that explicitly stated that the jet was a joke. In order to maintain PepsiCo’s positive image and to avoid negative press, I would have offered Leonard his choice of several products from the catalog as well as paying all of the court costs and laywers’ fees.

    There is an ethical obligation on the part of PepsiCo. While the average, reasonable person would see the commercial as a joke, the atypical, not-so-reasonable consumer might be inclined to take it literally. The marketing executives at PepsiCo should have anticipated this and used caution in producing the commercial.

    Leonard was not taken advantage of. On the contrary, Leonard is taking advantage of PepsiCo by pursing a lawsuit that has no merit. He found out that the offer of the jet was a joke and he chose to pursue the lawsuit regardless. PepsiCo cannot furnish the jet; therefore Leonard is simply extorting PepsiCo for money.

    In Microsoft’s last antitrust lawsuit, Microsoft was accused of being a monopoly in the way they operating system sales and web browser sales. By bundling Internet Explorer with the operating system, Microsoft was assured victory over other software companies. In addition, they were accused of restricting the market for competing web browsers (such as Netscape Navigator). Finally, the last accusation was that the operating system software was designed to work only with Internet Explorer. Microsoft’s view was that combining Microsoft Windows and Internet Explorer was the result of innovation and competition, and that the two products are essentially the same and should be linked.

    Java filed suit stating that Microsoft corrupted their program in order to make it work with Windows. In order to prevent Microsoft’s monopoly over the Internet, Microsoft was required to bundle Java with their operating system without corrupting it. The justices also found that several of Microsoft’s products violated Sun’s licensing agreements. Microsoft agreed to comply with the order to bundle Java with its products, then made a mockery of it by offering gift cards for Starbucks Java with every purchase.

    In April 1995, Microsoft announced its plans to purchase Intuit, the maker of Quicken and other financial software. The Antitrust division determined that allowing the purchase would allow Microsoft too large a share in the software industry and as such, would drive up prices. Microsoft offered a settlement, but it was rejected by Antitrust. By May of 1995, Microsoft gave up and announced that it no longer intended to acquire Intuit.

    ImClone is a biopharmaceutical company that specializes in cancer medication. Its troubles began when its stock price dropped sharply at the end of 2001. This occurred when its drug Erbitux failed to get FDA approval. The SEC discovered shortly thereafter that ImClone’s executives sold their stock just before Erbitux’s failure was announced on December 28th, 2001. At this point, the SEC began prosecuting the offending executives.

    ImClone’s founder, Samuel D. Waksal, was arrested on insider trading charges, because he sold his own stock and told his friends and family to do the same.  His daughter and father sold just over $10 million in stock between the 27th and 28th of December, 2001.  Other executives within the company did the same thing. Waksal pled guilty to securities fraud, and was sentenced to just over seven years in prison.

    The most famous member of the ImClone offenders was, of course, Martha Stewart.  It became public knowledge that she sold about $230,000 in ImClone shares on December 27, only one day before the big announcement. Stewart insisted that she knew nothing about the failure of Erbitux, but she was found guilty and sentenced to five months in prison, five months of home confinement, and two years probation. She was found guilty of lying about a stock sale, conspiracy, and obstruction of justice.

    A congressional hearing was held in October 2002, and this hearing revealed that Samuel Waksal’s signature had been forged numerous time for financial gain. The executives insisted that they had conducted an internal investigation but there was no evidence of it. In January, 2006, ImClone was put up for sale. There were no buyers, due to the fact that ImClone had significant competition and few viable products. The executives eventually had no choice but to withdraw the sale of the company.

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