It looked like the $500 million marriage between Maker Studios and the House of Mouse was all but final, but it seems that one interested party couldn’t be persuaded to hold his peace. Though the deal has been widely covered in the industry media, including here on Tubegeeks, it seems that the Maker board of directors has yet to officially vote to approve the acquisition of the company by Disney. Now, on the eve of that vote, ousted founder and CEO Danny Zappin has filed a lawsuit to block the vote and delay the acquisition. Zappin is already engaged in a lawsuit with Maker over the circumstances surrounding his removal as CEO. The new lawsuit aims to stall the Disney acquisition until Zappin’s preexisting case against the studio can be settled.
In the suit, Zappin and his co-plaintiffs charge the current Maker leadership with stock dilution, financial mismanagement, and de facto embezzlement. The central argument is that Maker’s executive board has undercut the value of their stock in order to expedite the company’s acquisition and realize the financial gains associated with the sale. According to the suit, before the deal can proceed to a vote the true value of the Maker common stock held by major shareholders, including Zappin himself, must be settled. Considering that the Disney deal has been valued at anywhere between $500 million on the low end to $950 million, even small changes to the value of common stock can have significant financial ramifications, particularly for majority shareholders like Zappin.
Since his dramatic exit from Maker Studios last May, Zappin has had little to say about the company he helped found and lead. Despite ongoing legal proceedings he has moved on to other ventures, the most notable of these being the purchase of online video news site New Media Rockstars. Many suspected that Zappin would use the NMR as a mouthpiece to articulate his side of the Maker story, but thus far the site has remained relatively quiet about developments at Maker. A post today by editor-in-chief Alan Van addressed the lawsuit but made only cursory reference to Zappin despite his central role in the conflict.
This isn’t the first time Maker Studios has been sued, nor even the first time it has found itself in conflict with a major partner. Since its founding in 2009 Maker has been a magnet for controversy. The network’s founders represent some of the top YouTube creators of the day including Lisa Donovan, Shay Carl Butler, Kassem Gharaibeh, and Phillip DeFranco. DeFranco soon departed, citing his distaste for the business . He has since publicly expressed his displeasure with Maker’s subsequent conduct in videos and interviews. More recently, top YouTube creator Ray William Johnson split acrimoniously with the network, threatening legal action when Marker refused to return control of his ad revenue after the term of his contract had expired. Despite the signs pointing to what could at best be described as a troubled corporate culture Disney has remained enthusiastic about the merger. It seems unlikely that yet another lawsuit will give the media giant cause for pause.
According to a statement released by a Maker Studios representative, Zappin’s legal action has been denied by the Superior Court of California. While the original lawsuit alleging stock dilution and corporate mismanagement will continue the motion to halt the $500 million merger of Maker and Disney will proceed having been approved by a majority vote of the company’s shareholders. The charges leveled by Danny Zappin and his co-plaintiffs, if found to be true, could still yield significant damages however, it is now almost certain that Zappin and the other outsted members of Maker’s leadership will not return to positions of authority within the company.