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Disney sued by major financing partner for too much 'Hollywood Accounting'
Posted on 8/16/23 at 12:27 pm
Posted on 8/16/23 at 12:27 pm
quote:
Walt Disney Co. is facing labor agitation on two fronts. It’s posting big losses from its streaming businesses. And now the Burbank-based behemoth is getting sued by one of its major financial partners.
TSG Entertainment, a film-financing firm, has accused Disney and its subsidiary 20th Century Studios (formerly 20th Century Fox) of breach of contract and self-dealing in a lawsuit filed Tuesday in Los Angeles County Superior Court.
In part, the financier’s lawsuit hits Disney for allegedly cutting “sweetheart” deals to put TSG-backed movies on its own streaming services to boost subscriber numbers, while depriving the investor of substantial revenue.
Disney did not respond to a request for comment on the suit. A spokesperson for the law firm representing TSG declined to discuss the case.
TSG says it has invested more than $3.3 billion with the studios and financed more than 140 of 20th Century’s films, including recent hits such as “Avatar: The Way of Water” and “The Banshees of Inisherin” as well as various entries in the X-Men and Deadpool franchises.
The financier had a revenue participation agreement with 20th Century, the lawsuit says, laying out how TSG would get a portion of certain films’ revenue in exchange for co-financing production and marketing-related expenditures.
This post was edited on 8/16/23 at 12:36 pm
5
Posted on 8/16/23 at 12:36 pm to Jack Ruby
you know Disney is cooking the books
They aren't far from being Bud Light at this point
They aren't far from being Bud Light at this point
Posted on 8/16/23 at 12:42 pm to Jack Ruby
quote:
the financier’s lawsuit hits Disney for allegedly cutting “sweetheart” deals to put TSG-backed movies on its own streaming services to boost subscriber numbers, while depriving the investor of substantial revenue.
Seems like what they have been doing. The question is whether that was allowed by the terms of their deal.
The other question I have is whether their streaming is a worthwhile endeavor. They don't seem to be generating revenue from that in total - even with the massive advantages of their Disney film library. There's nothing wrong with just simplifying. They could always farm out their products to generate revenue from other streaming services.
The parks still make money. Just stop doing shite that doesn't work.
Posted on 8/16/23 at 1:00 pm to theunknownknight
quote:
you know Disney is cooking the books
They aren't far from being Bud Light at this point
You realize this company is suing them for under-reporting revenue right? They get a percentage of the money made, they are saying disney is making more than they are claiming
quote:
Noticing a decline in profits, TSG requested an audit of a sampling of three of the films it financed for 20th Century Fox. TSG alleges that it found “rampant self-dealing” and “accounting tricks” within the books and had been underpaid by at least $40 million.
This post was edited on 8/16/23 at 1:03 pm
Posted on 8/16/23 at 1:12 pm to Corinthians420
To be fair, Disney is far from the only studio that pulls this bullshite. They all do it and it would take major legislation to curb it. Of course we all damn well know that won't ever happen.
shite, Warner Bros claimed that Harry Potter and the Order of the Phoenix LOST $167 million even though it made over $940 million at the box office.
shite, Warner Bros claimed that Harry Potter and the Order of the Phoenix LOST $167 million even though it made over $940 million at the box office.
Posted on 8/16/23 at 1:15 pm to molsusports
quote:
other question I have is whether their streaming is a worthwhile endeavor
No streaming is worthwhile unless you bombard it with pharmaceutical ads like the nightly news or cable have done over the last decade.
Posted on 8/16/23 at 1:20 pm to molsusports
quote:
They don't seem to be generating revenue from that in total - even with the massive advantages of their Disney film library. There's nothing wrong with just simplifying. They could always farm out their products to generate revenue from other streaming services.
I think a lot of families would pay for just the disney backlog.
all the pixar movies, all the old disney cartoons. All the old Mickey Mouse Stuff
that alone would have done well
I think they’ve been over spending on originals. Now Mandolorian really did drive subscriptions, but they’ve probably out out too many marvel and star wars shows.
but they’re also probably doing their own version of “costs”
on those too.
This post was edited on 8/16/23 at 1:23 pm
Posted on 8/16/23 at 1:31 pm to theunknownknight
quote:
you know Disney is cooking the books
They aren't far from being Bud Light at this point
It's true. They can't afford lawsuits right now.
Posted on 8/16/23 at 2:36 pm to Corinthians420
quote:
You realize this company is suing them for under-reporting revenue right?
Uh yeah
Because they are cutting corners to recoup losses and don’t want to spend the money to pay people what they are owed
What’s your point?
Posted on 8/16/23 at 2:38 pm to Jack Ruby
Better start making some princess movies stat.
Posted on 8/16/23 at 2:44 pm to St Augustine
quote:
Better start making some princess movies stat.
They have one coming. It looks like shite and has gotten almost zero pub or promotion outside of theatrical previews.
LINK
Disney will be sold to Apple by the end of 2025 for pennies on the dollar at this pace.
Posted on 8/16/23 at 2:54 pm to Jack Ruby
quote:
They have one coming. It looks like shite and has gotten almost zero pub or promotion outside of theatrical previews.
I don’t know I don’t think that looked a fraction as bad as the period movie, strange world, remakes, and light year. At least it looked like a Disney movie.
Posted on 8/16/23 at 3:17 pm to molsusports
quote:
They could always farm out their products to generate revenue from other streaming services.
Apparently Ms Marvel has already aired on ABC. They could always put stuff on Freeform and FX as well. I think they missed a big opportunity not releasing Prey to theaters and the new Alien movie is going straight to Hulu as well. They could have sold some tickets to both of those. Disney has mostly ignored the Fox library so far.
Posted on 8/16/23 at 3:20 pm to SammyTiger
quote:
I think a lot of families would pay for just the disney backlog.
all the pixar movies, all the old disney cartoons. All the old Mickey Mouse Stuff
that alone would have done well
This is all my family cares about
Posted on 8/16/23 at 3:36 pm to theunknownknight
quote:
Because they are cutting corners to recoup losses and don’t want to spend the money to pay people what they are owed
no they’re over reporting loses to keep from paying people.
Posted on 8/16/23 at 3:43 pm to Jack Ruby
Posted on 8/16/23 at 3:46 pm to jchamil
quote:
This is all my family cares about
Same. We actually watch a lot of the older live action movies from 50s and 60s.
Posted on 8/16/23 at 4:33 pm to Jack Ruby
They signed a shitty back end deal for net profits. No film ever has net profits. Ever.
Posted on 8/16/23 at 4:44 pm to theunknownknight
quote:
Because they are cutting corners to recoup losses
That's not why studios do it.
They do it b/c they can.
Here's an article from 2011 about 20th Century Fox and Lucasfilm using BS tactics to say that Return of the Jedi was a financial failure even though it made $475 million on a $32 million budget.
quote:
Here is an amazing glimpse into the dark side of the force that is Hollywood economics. The actor who played Darth Vader still has not received residuals from the 1983 film "Return of the Jedi" because the movie, which ranks 15th in U.S. box office history, still has no technical profits to distribute.
How can a movie that grossed $475 million on a $32 million budget not turn a profit? It comes down to Tinseltown accounting. As Planet Money explained in an interview with Edward Jay Epstein in 2010, studios typically set up a separate "corporation" for each movie they produce. Like any company, it calculates profits by subtracting expenses from revenues. Erase any possible profit, the studio charges this "movie corporation" a big fee that overshadows the film's revenue. For accounting purposes, the movie is a money "loser" and there are no profits to distribute.
"Return of the Jedi" made almost half a billion dollars. But Return of the Jedi, Inc, still has no profit to pay its famous villain because the movie corp has paid so much of its revenue back to the studio in distribution fees. Here's actor David Prowse, via Techdirt:
"I get these occasional letters from Lucasfilm saying that we regret to inform you that as Return of the Jedi has never gone into profit, we've got nothing to send you. Now here we're talking about one of the biggest releases of all time," said Prowse. "I don't want to look like I'm bitching about it," he said, "but on the other hand, if there's a pot of gold somewhere that I ought to be having a share of, I would like to see it."
Most corporations try to make a profit by limiting costs. Movies corporations manage to record a loss by maximizing costs.
LINK
This post was edited on 8/16/23 at 4:47 pm
Posted on 8/17/23 at 4:40 am to Jack Ruby
quote:
No streaming is worthwhile unless you bombard it with pharmaceutical ads like the nightly news or cable have done over the last decade.
They have almost 150 million subscribers. They pay for a catalogue that is primarily already paid for. They just need to stop wasting money on some of the dumb content that only goes to the streaming service.
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