Valerie Harper was wrongfully fired from the show. Basically, Valerie had asked for a raise and told the show she wouldn't show up for work until there was some sort of agreement reached. The show filmed the first episode of Season 3 without her. A week later, an agreement was reached where Valerie was given a 15% raise and more profit shares in the show (hard to believe she had to fight to get this since she created the show with her husband and it was named originally after her). She showed up for work, they re-shot the episode to include her in it, and things were back to normal. New contracts were drawn up and she was back to work, ready for a full season. The episode that they shot was inevitably the episode "Liars and Other Strangers" for "Valerie's Family". Look at that episode and you'll see Jeremy Licht's hair go from short to long to medium length etc. It's because this was the episode that was initially shot without Valerie at all, and then re-shot (with some scenes kept) with her in it, and then re-shot again to include Sandy, although Sandy doesn't figure much into it.
Anyway, in the interim, someone had mentioned Sandy Duncan who had a deal with NBC for a new pilot and series to follow. When Brandon Tartikoff learned of what was going on at "Valerie", he figured he could write off his contractual obligation to Sandy Duncan by placing her as the female lead. The problem was, things were worked out between Harper and Lorimar/NBC so to save face both publicly and legally, they back pedaled and claimed "buyer's remorse", telling Harper, while she was in a costume fitting for Season 3 of "Valerie", that she was not coming back. That's when she held a press conference and announced publicly that she was fired. Hence the rumors of her greed and being unstable went into overdrive. Lorimar and NBC stated that she wasn't worth the pay increase when the show had the ever-growing popular teenage heart throb Jason Bateman. They claimed that she was disruptive and combative and greedy, and then proceeded to downplay her involvement in the show by not mentioning her at all or mentioning her death as a setup for a joke (tasteless as that may seem, it's what was done). I'm thrilled she won in the end.
A side note. Valerie didn't just star in the show. She and her husband were co-producers and helped to create the show before it even aired, so when the show started to pick up steam ratings-wise, it's not unreasonable to expect a monetary increase as well. Also, she wanted more input into the writing since she felt the show was regressing into the typical Miller-Boyett formula (a la "Full House"/"Family Matters" etc.) type of story and felt the show could be so much more. It wasn't a case of a star getting a swelled head. In fact, I'd even say so much that the main reason the show was able to carry on without her had to do with her input in developing it. She came from an ensemble history ("The Mary Tyler Moore Show" and "Rhoda") and knew how things were done in that regard. So the fact that it succeeded without her is testament to her as well. Not only her, mind you, but she clearly wasn't unimportant as some have suggested. In fact, I think had the show started out with Sandy as the lead and had the same type of dumbed down stories that it had once they canned Valerie, no way would it have survived as long as it had.
Ed
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