TSG Entertainment, a film financing company which helped provide funds for Avatar: The Way of Water and the Deadpool franchise for 20th Century Studios, is reportedly suing The Walt Disney Company for an alleged breach of contract, according to The Wall Street Journal.
- TSG Entertainment alleges that the Disney-owned 20th Century Studios “intentionally withheld profits and cut sweetheart deals to boost its own streaming platforms Hulu and Disney+, as well as its stock price, at the expense of its partners.”
- TSG says it spent $3.3 billion co-funding more than 140 movies, including films like Hidden Figures, Jojo Rabbit, The Shape of Water and The Banshees of Inisherin.
- The lawsuit says Disney and 20th Century Studios “have tried to use nearly every trick in the Hollywood accounting book” to deprive it “of hundreds of millions of dollars.”
- Disney has not commented on the lawsuit.
- TSG has been in partnership with 20th Century Studios since 2012, long before it was owned by Disney.
- Deals between film financiers and studios typically allow the former to invest in a slate of films and later off them the opportunity to invest more in individual titles.
- TSG requested an audit after noticing a decline in its profits and, after examining, the company alleges it found “rampant self-dealing” and “accounting tricks” that showed it had been underpaid by $40 million.
- The Wall Street Journal likens the lawsuit to the one filed in 2021 by the actress Scarlett Johansson against Disney over the company’s decision to put her Marvel movie Black Widow on Disney+.
- That suit was eventually settled.
- TSG is represented by Bird Marella partner John Berlinski, the same lawyer who represented Johansson in that case.
- The suit also alleges that 20th Century Studios’ recent renegotiation of a deal with Warner Bros. Discovery’s HBO channel and Max streaming service affected their profits.
- Under their original agreement, HBO paid a premium for an exclusive window to carry the studio’s films.
- That was renegotiated in 2021 to allow Disney to put the films on Disney+ and Hulu at the same time as HBO.
- In exchanged for the loss of exclusivity, the fees HBO paid for the films were reduced.
- The suit alleges that the renegotiated deal has cost the studio “many millions of dollars,” impacting TSG’s portion of the profits.