Scannell: Concerned Cronin Has MTVNTrade Secrets

Publish date:
Updated on

New York -- Nickelodeon president Herb Scannell testifiedlast week about his concerns that the ex-Nick at Nite/TV Land executive Rich Cronin coulduse his full access to key confidential MTVN documents so Fox Family Channel could'counter our actions.'

The testimony came during MTV Networks' bid to blockCronin from joining Fox as CEO before July 11.

But Cronin's attorney, Margaret Blair Soyster, pressedScannell to finally concede, 'I'm not accusing him' of sharing those tradesecrets with outsiders. She also pointed out that Cronin could have taken that sameinsider information to 'the biggest competitor' on July 1 this year, the dayafter his MTV contract was to expire, without fear of the legal action that's put hiscareer on hold.

'He saw all our plans,' Scannell said of Cronin.He had 'full access to our programming, scheduling and marketing,' which couldenable him to bolster not only Fox Family but FX and Fox News Channel by under-cutting MTVNetworks' pricing, he added.

Specifically, Scannell said secrets to which Cronin wasprivy included Nickelodeon's 1998 budget presentation, profit-and-loss projections,ad sales growth estimates and specifics on future programming. In addition, he saw 'astrategic review requested by Viacom' that spelled out strengths and weaknesses ofrivals and 'what we might do ... to fortify Nickelodeon' if Fox were to proceedwith its then-rumored kids' cable service. He also saw an affiliate update among thetop MSOs, which Scannell said could be used by Fox to target 'switch-outs' inproblem areas.

Scannell conceded that none of those sensitive documentswas marked 'confidential.'

Cronin's lawyer pointed out that the former TV Landand Nick at Nite executive had access for years before signing his first MTVN contract, inApril 1996.

Scannell said he had planned to renew Cronin'scontract, with a bonus, but later, under prodding from Cronin's attorney, conceded hehad not discussed renewal or promotion with him prior to Fox's lucrative job offer.Scannell dismissed Soyster's claim that Cronin was 'frustrated ... by the dualreporting structure' by observing, 'My interpretation was Rich liked hisjob.'

There was tension evident during Scannell'scross-examination at the New York Supreme Court hearing. Scannell showed impatience withsome of the Soyster's lines of questioning. And at one point, when he wanted to bringup 'the big issue' -- namely, trust -- she snapped, 'I don't want tohear about'the big issue.''

When Soyster, in her cross-examination, sought to getScannell to indicate he had no knowledge that Cronin had given his inside information tooutsiders -- presumably Fox -- Scannell wouldn't go along.

'I don't know what he showed or what hedidn't,' he said repeatedly. Asked if he'd heard Cronin threatendisclosure, he said, 'Not that I'm aware of.' Cronin's access to thatinformation 'concerns me a great deal,' he said, adding, 'I don't knowwhat he's sharing with them.'

Soyster also got Scannell to agree there's no writtenpolicy at MTVN that bars executives -- including himself -- from taking such documentshome and that he'd never warned Cronin against doing so.

'I didn't micromanage him,' Scannell said,but he noted that Viacom contracts do say that such secrets are 'meant to be keptconfidential' and returned on termination.

Scannell added, 'I was surprised at the number of[MTVN] documents he had at home' -- seven boxes. Having the papers home didn'tnecessarily mean he shared them with others, Cronin's attorney stressed -- to whichScannell answered, 'I can't say yes or no.' But, when pressed further, headded, 'I'm not accusing him.'

Later, Scannell observed, 'I don't know that it[Cronin's exit] will impair TV Land ... for a fact,' but he admitted he wasunaware of any operator or advertiser no longer wanting to do business since his ouster.

Cronin's attorney tried to show Cronin was not theonly key Nickelodeon executive, first by citing press releases and other internaldocuments describing Larry Jones, part of Cronin's 'replacement team,' as'one of the original architects of TV Land' -- but when she tried to admit aninternal 'Q&A' that said, 'Nickelodeon is bigger than any one person,as has been proven since Gerry Laybourne's departure,' Scannell said hecouldn't recall having seen it, so Judge Herman Cahn disallowed it.

Soyster described Scannell as 'the senior guy'and 'the public face' at Nickelodeon but when she tried to admit Scannell'scontract -- with a Dec. 31, 1998 expiration -- as 'pertinent,' the judgedisagreed. When she tried to indicate a lot of Nick executives had left for othernetworks, Cahn disallowed it -- especially after Scannell disputed her claim that one,John Miller, had gone to another cable network.

She also sought, in vain, to point out that Cronin wascontractually entitled to 10 days written notice of his termination; the judge,unimpressed, dismissed that tack. Scannell said, 'I think he was given such clearsignals.'

And when she sought to admit as evidence the now-famousSumner Redstone description of Cronin as 'a low- to middle-level executive,' thejudge vetoed it -- but not before Scannell said he disagreed with the Viacom Inc.chairman's assessment and saw Cronin instead as 'a talented executive.'

Scannell also proved uncooperative as Soyster tried toindicate that in the past three months new ideas and strategies were developed for thenetworks. Those were 'not dramatic changes,' he contended. And he wouldn'tlet Cronin off the hook. 'I don't know what Mr. Cronin knows... That's hardto say.'

When Soyster said Cronin had not participated in akids' upfront for Nick since 1993 -- including Fox Family's, held Jan. 13, thesame morning as this proceeding --

Scannell countered that he nonetheless remained stronglyassociated with the Nickelodeon brand name via Nick at Nite.


The Nick president reiterated that he thought it'ludicrous' for Cronin to think he could continue at MTVN after having acceptedFox's offer since 'he would have divided loyalty.' Later he added, 'Ithink he breached his contract... in a premeditated plan.'

Much of last Tuesday's hearing was spent on rehashingthe timeline of when Cronin told MTVN about the Fox offer, when MTVN made a counter-offerand when MTVN dismissed him. In early October, Scannell recalled, Cronin seemed to shiftfrom being 'inclined' to accept Fox's offer to being '50/50.'Even as late as mid-October, he said Cronin seemed to consider staying since he askedabout office space at MTVN.

At the Fox Family upfront, Fox Kids Worldwide chairman HaimSaban said he is sticking with Cronin as his choice for top executive. 'He [Cronin]will be the CEO [of Fox Family], period,' Saban said under press questionning .