Deborah Gregory should be sitting pretty: As a first-time author, she wrote the Cheetah Girls novels, a 16-book series that is wildly popular with tweens and teens. She appeared to hit an even bigger jackpot when she sold the dramatic rights to the Disney Channel.
Her breezy, street-smart tales of girl pals chasing pop music careers were turned into two hit television movies, and a third is being filmed in India. Cheetah Girls CDs and DVDs have sold in the millions, and concert tours have hit more than 80 cities. Meanwhile, Disney's fabled merchandising machine flooded the market with Cheetah Girls shoes, dolls, toothbrushes, video games, backpacks, notepads, pillows, posters, T-shirts and the like.
Gregory expected to get a piece of the action when she signed a 2001 contract promising her 4 percent of the net from all of this activity. But like many other authors who have signed away dramatic rights, she says she never got a penny of the profits.
Gregory said she has pocketed $125,000 in the past nine years in option fees and payments for her title as co-producer of the movies. Although she has asked for them, she has never gotten "net profit participation statements" from Disney, spelling out details of expenses and revenues. If anyone is getting rich on this formidable franchise, Gregory said, it's not the woman who created it.
"People think I must be living in a palace, when they think of the success of the Cheetah Girls," she said, sitting in the cramped studio apartment she rents in Manhattan. "But look at this place. It's a . . . dump."
Old story in Hollywood
Gregory, an outspoken African-American, doesn't mince words. She has a saucy, cheerfully profane sense of humor that she struggled to keep in check in interviews, and her anger over what has happened is palpable.
Disney officials, asked to explain why Gregory has not received any net profits - and to estimate the collective revenue the Cheetah Girls has generated - declined to respond. "Disney Channel doesn't comment on the terms of its contracts," spokeswoman Patti McTeague said in an e-mail.
"This is an old, old story in Hollywood," said literary agent Nicholas Ellison, who has represented numerous clients in book-to-film negotiations. When studios are asked why an author has not received any net profits, he said, they often point to expenses that have grown larger than expected and contend that a hit picture has not made money.
It's called "Hollywood accounting," and in some cases studios may be on solid ground, citing legitimate costs such as promotion and development. But in other cases, contracts contain definitions of "net profits" that make it all but impossible for an author to collect money.
In one of the most notorious cases - when columnist Art Buchwald sued Paramount over its use of his idea for the 1988 film Coming to America, which grossed $350-million, and then for its failure to pay him revenues - a judge ruled in 1990 that the studio's internal accounting procedures were "unconscionable."
"Is Disney notorious for having a legal department the size of Western Europe and being particularly ferocious?" Ellison asked. "Yes. But that doesn't mean they're unethical. Or different from any other studio."
Studios' upper hand
The stakes are high because 43 percent of Hollywood movies in the past five years were adapted from books and other written materials, according to the Writers Guild of America. What makes Gregory's case unusual is that she didn't simply write a book, she wrote bestsellers that led to a movie and marketing bonanza.
And there was no union to help her. Writers often turn to the Authors Guild, a national organization in New York, for advice in protecting their rights with publishers. Though the Authors Guild offers a checklist of things to keep in mind when dealing with Hollywood, it does not provide individual guidance or counseling.
"Hollywood deals are a trap for the unwary; they're almost intended to deceive," said Paul Aiken, executive director of the Authors Guild. "The best advice we give is that you should try to get as much of your money upfront. You can't count on net profit deals for anything."
Even if writers hire the best agents and lawyers, it might not make much difference, said veteran literary agent Jane Dystel.
"Studios are always offering authors take-it-or-leave-it deals, and if they don't get what they want, they're prepared to walk away," she said. "They'll tell you that there are plenty of other good books out there for them to buy, and they're right."
Asked about Gregory's case, industry observers offered differing takes: She was a first-time author who didn't know the ropes when she negotiated her deal. Her attorney had limited leverage because she was an unknown author. Disney officials grabbed any advantage they could, just like any studio. And few could have predicted that the Cheetah Girls would become such a marketing sensation.
Because "net profits" are virtually worthless, many agents seek alternatives: One strategy is to request bonus payments regardless of a film's bottom line. An even better deal is to win a share of "gross points" from box office revenues.
Yet this is the pot of money used to pay big-ticket actors, directors and other stars, and only the strongest players claim a share. For everyone else, there is a gnawing resentment that they've been excluded.
"I never dreamed things would turn out the way they did," Gregory said, recalling the heady days when she first wroteThe Cheetah Girls and the Disney Channel expressed interest. "I really believed I would be able to share in everything that was created, that I was going to be a participant. Well, honey, that was a sham."
A concept is born
Born in New York, Gregory grew up in the city's foster care system. She never knew her mother or father and was bounced from one home to the next. At an early age, however, she displayed an interest in fashion design and creative writing.
She graduated from the Fashion Institute of Technology and began writing freelance stories. By 1990, she was the fashion and beauty writer at Redbook; she also wrote articles about all-girl groups like Destiny's Child for Essence, Us magazine and other publications. The seeds of what would become her novels took root during her reporting: She went shopping in Houston with members of Destiny's Child at the Galleria, which became the name of one of her characters.
The story was called Shop in the Name of Love, which became the title of her second novel. Gregory wore leopard-patterned clothes on the assignment - a personal taste that would become a trademark for the Cheetah Girls.
Her life changed when she got a call in 1998 from Hyperion Books, owned by Disney. The publisher wanted books aimed at urban children. Did Gregory have any ideas? As a foster child, she was often lonely, and the notion of a bunch of girl pals who chase their dreams was born.
"This is the core of who I am," she said, describing the birth of her imaginary group of African-American and Latino girls. "I'm someone who grew up in foster care with nothing. I have no family to this day. And what the Cheetah Girls represents to me and others is . . . a chance to transcend your background through sheer talent."
Hyperion gave her a $40,000 advance for the first four novels, and Gregory's first installment, Wishing on a Star, appeared in 1998. Hollywood came calling before it was published. Independent producer Cheryl Hill had gotten wind of the project and instantly saw its potential.
"The material was incredible, it was just jumping off the page," said Hill, who brought the project to BrownHouse Productions, a company that included pop singer Whitney Houston and producer Debra Chase. After the Disney Channel expressed interest, the wheels began turning.
Like many authors, Gregory was starstruck by the Hollywood attention. With her entertainment attorney, Lita Richardson, she signed a 2001 contract giving Disney approval to make a movie or TV series based on the books, as well as merchandising. She was to get 4 percent of the net profits.
"I think authors are blindsided by this," said Susie Norris-Epstein, a former Disney development vice president who was key in helping the company acquire the Cheetah Girls. "They're impressed by the Disney machine, which is very good at marketing, and what they think it might mean for them."
Gregory's 16 novels went on to sell an estimated 2-million copies for which she got $180,000 in advances. But beyond her title as a co-producer on both films, she had limited creative input as Disney turned her books into a TV and marketing phenomenon. And she didn't share in the bounty.
For some the lessons are clear: "If somebody from Hollywood tells you they love your novel and they'll take care of you on the back end, run for the hills and double the price," Ellison said. More important, don't make the same mistake twice.
In June, Random House will publish Catwalk, the first in a new series of novels by Gregory about budding fashionistas in New York. Once again, there has been Hollywood interest. But this time, Gregory vows to be patient in negotiating a contract.