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Rosie scores one at trial
Publishing firm's CFO admits it managed financials to avoid losing magazine.
November 11, 2003: 10:13 AM EST

NEW YORK (CNN/Money) - Attorneys for Rosie O'Donnell got the CFO of Gruner & Jahr to admit that the former publisher of Rosie magazine managed financial statements to avoid losses that would have allowed O'Donnell to leave the venture, CNNfn reported.

Gruner & Jahr Chief Financial Officer Larry Diamond took the witness stand Monday in the breach-of-contract trial and answered questions about a clause that would have allowed either party to quit the magazine venture without penalty if it lost more than $4.2 million by the end of June 2002.

O'Donnell's attorneys contended that Gruner & Jahr knew that a loss of that size was looming, but that the publisher played with the numbers to keep O'Donnell at the magazine.

The lawyers focused on an e-mail Diamond wrote to his bosses saying the "management team of G&J USA is recommending to you we manage the financials such that we do not fall below the required threshold point so that we can continue to publish 'Rosie'. We are asking for your approval to this strategy."

"Your management team decided that you didn't want the actual losses, if you want to use that term, to exceed $4.2 million. Correct?" Diamond was asked, according to the New York Times. "Yes, that's correct," Diamond answered, the paper reported.

An accounting specialist brought in by the O'Donnell team for $450,000 said Gruner & Jahr managed the financials by not setting aside money to pay back advertisers when circulation fell, according to the Times.

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O'Donnell v. Gruner+Jahr (PDF)
Gruner + Jahr v. O'Donnell (PDF)

The specialist said the company should have set aside $374,000 and that, as well as the deferral of other expenses, allowed the venture to report a loss less than $4.2 million, the paper reported.

Those watching the trial had expected that Monday would be its last day. But when O'Donnell asked the judge if she should return Wednesday, the judge told her she should, as he "might have something interesting to say," according to the Times.

O'Donnell left Rosie magazine 13 months ago, following a dispute over editorial control, and the publisher shut the publication shortly afterward.

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Gruner & Jahr, owned by the German publisher Bertelsmann AG, sued O'Donnell for $100 million, alleging she acted unprofessionally and breached her contract when she pulled out of the venture in September 2002.

O'Donnell countersued for $125 million, saying Gruner & Jahr took away her editorial control.  Top of page




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