• Wed. Apr 24th, 2024

Disney, Film Financing Partner TSG Settle Lawsuit Over “Hollywood Accounting”

Disney and TSG Entertainment Finance have settled litigation from August of 2023 when the financier sued the media giant for “rampant self-dealing” and breach of the parties’ revenue participation contract.

“The matter has been resolved,” said a Disney spokesperson.

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TSG said it has financed more than 140 films to the tune of $3.3 billion over the years with Fox, which Disney acquired in 2019, including Avatar: The Way of Water, Bohemian Rhapsody, Deadpool, Deadpool 2, X-Men: Days of Future Past, Logan, Dawn of the Planet of the Apes, The Martian, The Grand Budapest Hotel, JoJo Rabbit, The Banshees of Inisherin, Hidden Figures, The Shape of Water and Empire of Light.

TSG’s lawsuit filed last August in Los Angeles District Court said that Fox had promised TSG a share of defined gross receipts for pictures under the companies’ long-term participation agreement but that the studio used “nearly every trick in the Hollywood accounting book” to not pay. The financier accused Disney/Fox of self-dealing with FX, Hulu and Disney+, said its revenue began to shrink and that an audit it commissioned showed breaches of contract. It didn’t specify which films were examined.

Elsewhere in the suit it noted 2017 Oscar-winning The Shape of Water was licensed to Fox “in a backroom side deal that appallingly shaved nearly $4 million off of the parties’ previously agreed-upon price.”

TSG said studio had promised to distribute co-financed films “on a fair, reasonable, good faith and non-discriminatory basis” but did not, TSG said, noting former CEO Bob Chapek’s shortened exclusive theatrical windows in favor of pushing content onto Disney+ to grow the streamer’s subscriptions, reducing the theatrical revenue that TSG counted on.

That was an issue for others as well. Scarlett Johansson sued Disney over the release of Black Widow across both movie theaters and Disney+ in 2021. “By 2022, this admittedly thoughtless Disney strategy, and Fox’s pattern of systematic self-dealing and Hollywood Accounting, had deprived TSG of the cash it needed to fund future Qualifying Pictures. But for this lack of liquidity, TSG would have fully invested in additional Fox films and reaped the full financial benefits associated with maximizing its investments in these Qualified Pictures.”

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