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Hollywood financier TSG Entertainment has taken legal action against Disney for breach of contract, asserting that Disney and its studio, 20th Century Fox, engaged in wrongful practices. TSG co-finances films, investing in production and marketing in exchange for a share of profits post-release. The lawsuit, filed in Los Angeles, accuses Disney and Fox of holding back profits, striking deals to boost streaming services and stock prices, and thereby denying TSG funds for film investments and stake sales. The lawsuit aims to address these issues and seek compensation.
TSG has co-financed about 140 movies with 20th Century Fox, including "Avatar: The Way of Water," investing roughly $3.3 billion since 2012. Its logo depicts an archer shooting an arrow through axe heads, familiar from film openings like "The Menu," "Jojo Rabbit," and "Gone Girl."
TSG sought an audit due to profit decline, revealing alleged manipulative accounting and underpayments totaling at least $40 million. The lawsuit highlights Hollywood Accounting tactics employed by Disney and Fox, impacting TSG's financial interests.
In one instance, TSG claims Fox undersold "The Shape of Water" to its own FX channel by $4 million, contrary to their agreement. The audit exposed missing revenue credits and unauthorized distribution fee charges.
TSG alleges that Disney's 2021 deal with Warner Bros. Discovery, which waived exclusivity for HBO and Max, directly impacted its potential earnings. Moreover, TSG asserts that when attempting to sell its stakes in funded films, Disney denied permission, leading to reduced resources for further investments.
This situation weakened TSG's ability to generate liquidity for future projects and triggered a clause entitling Fox to 50% of TSG's post-investment profits. TSG's lawyer, John Berlinkski of Bird Marella, also represented Scarlett Johansson in her dispute with Disney over "Black Widow," which was resolved through settlement.
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