TSG Entertainment, which has reportedly invested more than $3 billion in multiple 20th Century Studios (FKA 20th Century Fox) films, including James Cameron's recent blockbuster sequel Avatar: The Way of Water, has accused Disney of using Hollywood accounting tricks to cheat it out of a serious amount of money.
In a lawsuit filed on Tuesday, TSG alleges that the House of Mouse tried to "use nearly every trick in the Hollywood Accounting playbook" to short them hundreds of millions of dollars in connection with its investments.
The suit names Twentieth Century Fox Film Corporation and Walt Disney as defendants (referring to the studio entity as “Fox,” even though the Disney-owned company is now known as 20th Century Studios).
The suit claims that Disney engaged in “self-dealing” by diverting Fox movies from a lucrative HBO license to its own Disney+ and Hulu platforms. The lawsuit also alleges that Fox engaged in “sweetheart” deals when it licensed these films to the FX cable channel.
The financier says it has invested more than $3.3 billion into over 100 films, including Bohemian Rhapsody, Deadpool, Dawn of the Planet of the Apes, The Martian, The Grand Budapest Hotel and The Banshees of Inisherin.
“Disney (and the executives running it) had and continue to have every incentive to do anything and everything they can, including manipulating distribution of the Qualifying Pictures and preventing TSG from liquidating its interests in certain tranches of Qualifying Pictures, to attempt to boost Disney’s share price at the expense of TSG and other profit participants,” writes TSG’s attorney John Berlinski in the complaint.
There's a lot more to the lawsuit, but the bottom line is that Disney could be looking at a very costly legal battle.
“Perhaps most egregiously, after TSG informed Fox of its intent to file this action, Fox and Disney capitalized on Fox’s own breaches of the RPA in a bad-faith attempt to whitewash their misconduct,” concludes Berlinski. “On August 11, 2023, Fox sent TSG an e-mail taking the position that, because it had previously issued the Fox Picture Advance, it was entitled to invoke a provision of the RPA that would purportedly allow it to repurchase all released Qualifying Pictures and extinguish TSG’s hundreds of millions of dollars of legal claims.”
Disney has yet to respond, but we'll update as soon as we have more to share.