Avatar: The Way of Water

Courtesy: The Disney Company

Hollywood financier is suing TSG Entertainment disney for breach of contract.

The lawsuit, filed Tuesday in Los Angeles Superior Court, alleges that Disney and its studio 20th Century Fox committed multiple violations, including withholding profits and cutting deals to boost its streaming platform and stock price. The lawsuit states that the act deprived TSG of cash to invest in individual films and efforts to sell its stake in other films.

Representatives for Disney did not immediately respond to CNBC’s request for comment.

TSG co-finances the production and marketing costs of films in return for a share of defined gross receipts after the film’s release. The group has helped co-finance nearly 140 films produced by 20th Century Fox, which Disney acquired in 2019, including “Avatar: The Way of Water.” Overall, the company said it has invested about $3.3 billion in studio content since 2012.

Viewers will also recognize TSG from the opening credits of films such as “The Menu,” “Jojo Rabbit,” “The Greatest Showman” and “Gone Girl.” The financier’s logo is a depiction of a man with a bow shooting arrows at the ends of several axe.

Noticing declining profits, TSG requested a sample audit of the three films it had financed for 20th Century Fox. TSG alleges it found “massive self-dealing” and “accounting tricks” on the books and was underpaid by at least $40 million.

“At its core, this is a horrific example of how defendants Fox and Disney, two Hollywood giants with a long and shameful history of Hollywood accounting, attempted to use virtually every trick in the Hollywood accounting playbook to deprive plaintiff TSG – the financier. have attempted, in good faith, to invest with them more than $3.3 billion – out of hundreds of millions of dollars,” the lawsuit states.

In a reported incident, TSG said that Fox licensed “The Shape of Water”, which won Best Picture at the 2018 Academy Awards, to studio-owned channel FX for $4 million less as part of its output agreement.

Additionally, TSG stated through its audit that it found it was not credited with revenue it received and was charged millions of dollars for distribution fees that were not part of its revenue-sharing agreement with the studio. Was.

TSG is represented by John Berlinsky of the law firm Bird Marella, who previously represented Scarlett Johansson She sued Disney for showing Marvel’s “Black Widow” on Disney+ at the same time it was released in theaters. that was the suit finally settled,

TSG is claiming Disney’s 2021 deal warner bros discoverywhich waived exclusivity to the HBO Premium channel and Max streaming service in exchange for a smaller license fee, directly cutting into TSG’s potential profits.

Additionally, TSG stated that when it attempted to exercise its right to sell its stake in other films it had financed back to Disney or a third party, it was denied. As a result, TSG says it does not have the financial resources to invest more in individual films such as “Avatar: The Way of Water”.

The lawsuit alleged, “The result was that TSG’s share of defined gross receipts was dramatically reduced, reducing TSG’s ability to generate liquidity for future production and robbing it of the benefits of its agreement with Fox.” TSG’s ability to realize let down.” “The most serious thing is that the scheme introduced a provision [revenue participation agreement] which entitles Fox to a 50% share of TSG’s profits following the termination of TSG’s investment vehicle.”

wall street journal First reported on the trial.

Leave a Reply

Your email address will not be published. Required fields are marked *