The Walt Disney Company and 20th Century Studios have reportedly settled a breach of contract lawsuit from film financier TSG Entertainment, according to The Hollywood Reporter.
What’s Happening:
- Disney and 20th Century Studios have reportedly settled a breach of contract lawsuit from TSG Entertainment, which accused them of withholding profits and self-dealing to boost numbers for their own streaming platforms.
- According to the report, lawyers for both sides notified the court on January 5th to resolve the suits, though the terms of the agreement were not revealed.
- TSG sued 20th Century last year for breach of contract and Disney for inducing that breach. Shortly after, Disney filed their own suit seeking a court order that showed they lived up to their end of the deal with TSG, a longtime partner who had invested more than $3.3 billion into films, including Deadpool, Dawn of the Planet of the Apes, The Banshees of Inisherin and more.
- The case was focused on an independent audit of three films that TSG invested in, including The Shape of Water, which revealed that they were owed at least $40 million. The company then alleged that this shortfall caused the financiers to take a lesser position when investing in Avatar: The Way of Water that deprived them of necessary funds to exercise options to invest in other films.
- TSG said it sued after noticing that money from its investment “decreased dramatically.” According to the complaint, an audit showed that 20th Century failed to credit TSG with revenue, charged tens of millions in distribution fees not permitted under their deal, deducted expenses not related to the pictures in their slate and “uncovered rampant ‘self-dealing,’ the practice by which a studio enters into ‘sweetheart’ deals with its licensee affiliates to artificially minimize the profit payments to stakeholders like TSG.”
- TSG’s suit also dealt with changes in distribution windows. According to the complaint, 20th Century had agreed to license films to HBO for the “Pay 1 window” from 2012-22 for a reported $200 million per year. That changed in 2019 when Disney acquired 21st Century Fox. TSG claimed Disney made its subsidiary renegotiate its deal with HBO to boost Disney+ and Hulu and “give up a significant portion of its guaranteed HBO license fees” in order to do so, contracting its home video window to get content up on its streamers faster.
- In a cross-complaint, Disney responded, “The 20th-FX output deal explicitly excludes Searchlight films, such as The Shape of Water.” The company also looked for a court order clarifying that it has “sole discretion and control over distribution decisions” and stressed that TSG “ignores that distribution patterns have been changing throughout the industry for years.” It also argued that its decision to renegotiate licenses with HBO to allow 20th Century to enter into a coexclusive license with HBO resulted in fees exceeding those that TSG would’ve received under the prior, exclusive deal.
- Regardless, after everything, a settlement has been reached, the terms of which have not been disclosed.