Charlie Sheen’s Business Ethics

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    It’s ironic that Charlie Sheen played the character with the ethical conscience in the 1987 film “Wall Street.” Now he’s at the center of a titillating Hollywood scandal that has lessons to teach us about business ethics and the business of Hollywood.

    As has been widely reported in the Los Angeles Times and elsewhere, CBS Warner Bros studio announced that TV’s most popular sitcom, “Two and a Half Men” will be suspended, and perhaps canceled, due to the public dispute between the lead star of the show, Charlie Sheen, and the show’s writer-producer, Chuck Lorre.

    Television critic Mary McNamera summarized the issue this way in a column this weekend in the LA Times:

    If you are the star of a hit comedy on CBS, you can keep your job in spite of accusations of: threatening your pregnant second wife; holding a knife to your third wife’s throat on Christmas Day; and indulging in cocaine-fueled weekends during which your bizarre behavior causes your female companion to fear for her life.

    But say mean things about Chuck Lorre and You Are Toast.

    It is difficult to feel anything but relief regarding CBS’ recent decision to officially halt production of its hit comedy “Two and a Half Men.” A crazed Charlie Sheen once again took to the radio airwaves this week, this time to denounce the show’s creator, whom the troubled actor accused of stealing from him. Within hours, CBS and Warner Bros. finally put their foot down; for once, the writer trumped the performer, perhaps because Lorre also produces two other very successful comedies on the network, “The Big Bang Theory” and “Mike and Molly.”

    The impact of both Sheen’s off-screen behavior as well as his dispute with the producer has significant financial ramifications. Some estimate that the cost of canceling the show could exceed $200 million in lost licensing revenue to Warner Bros.

    In most other companies that generate this much revenue, there is clarity as to standards of behavior and accountability to meet those standards, or face the consequences. The stories of numerous CEOs who have been forced to resign for engaging in far less egregious activity are proof. But Hollywood, like many professional sports franchises, have trouble deciding how to treat their stars. Does the business demand that everyone adhere to certain standards, including the stars, or does the franchise revolve around the idiosyncrasies of its stars, apologizing and rationalizing unacceptable behavior? Would the show go on with a new star? There are many examples, in Hollywood and in sports, where the business transcends the personalities, and the franchise has the ability to withstand the personality foibles of any one individual.

    Two and a Half Men is a major business. Clarity as to its values and standards would help guide its stakeholders to know how to best protect the value of the franchise for the long-run.