Film financier TSG Entertainment is suing Disney and 20th Century Studios for breach of contract. It alleges Disney has withheld profits from certain films, and has also cut deals with TSG made in an effort to boost its streaming platforms.
TSG claims Disney has helped breach a contract it had with 20th Century Studios
According to the lawsuit (via The Hollywood Reporter), TSG Entertainment claims 20th Century Studios breached its contract by shorting them profits from films they had financed. They also claim Disney is the one behind that plan.
TSG notes it has conducted an independent audit of three films — including 2017 Best Picture winner The Shape of Water — and found that it’s owed more than $40 million in profits. It’s estimated the actual number will be in the hundreds of millions.
In the lawsuit, TSG’s attorney John Berlinski — who also represented Scarlett Johansson in her lawsuit against Disney on Black Widow profits — claims this is a standard practice for large studios to “cheat” out others when it comes to money.
“Disney (and the executives running it) had and continue to have every incentive to do anything and everything they can, including manipulating distribution of the Qualifying Pictures and preventing TSG from liquidating its interests in certain tranches of Qualifying Pictures, to attempt to boost Disney’s share price at the expense of TSG and other profit participants,” writes Berlinski.
At the heart of the lawsuit are steadily declining profit shares from films, claims TSG. The company initially entered into a revenue participation agreement (which has been amended nine times since) with 20th Century Studios in 2012. Under that deal, TSG agreed to co-finance production and marketing costs in exchange for a share of gross receipts from the film.
In total, the company claims to have invested around $3.3 billion into the studio (via CNBC) since the deal began. According to TSG, however, the money they’ve received in the following years have “decreased dramatically,” leading them to launch the independent audit that led to the suit.
TSG goes on to claim 20th Century Studios denied an attempt to exercise a clause in their deal that allowed them to repurchase a group of five consecutively released films and either sell them back to 20th Century or a third party. TSG alleges this was done at the behest of Disney.
Because of this, claims TSG, the company didn’t have enough money to help fund future films by 2022. This forced them to take advances out to help fund movies — including the hit 2022 movie Avatar: The Way of Water. This advance has led to a reduction in the profit they make from the films.
The lawsuit alleges that it has been overcharged and underpaid in a variety of places and also says that Disney’s change in distribution windows has also hurt the company. It accuses Disney of doing this in order to prop up the Disney+ streaming platform and increase its own stock.
