A key financier behind hits like "Avatar: The Way of Water" and the "Deadpool" franchise has issued a lawsuit against Disney and its subsidiary Twentieth Century Fox over an alleged breach of contract.
In a lawsuit filed in Los Angeles Superior Court, TSG Entertainment accuses Disney of deliberately holding back profits.
The entertainment giant reportedly forged favorable deals for its streaming platforms, Hulu and Disney+, and manipulated stock prices at the expense of its partners.
TSG says these hindered its ability to exercise investment options in individual movies and obstructed the sale of its stakes in other films for further investments.
The lawsuit details TSG's expenditure of $3.3 billion over the past decade, co-funding over 140 movies.
It includes acclaimed titles such as "Hidden Figures," "Jojo Rabbit," "The Shape of Water," and "The Banshees of Inisherin."
The lawsuit claims Disney and Twentieth Century Fox maneuvered to withhold "hundreds of millions of dollars" from TSG, using what the lawsuit terms "Hollywood accounting tricks."
Public disputes between entertainment entities and talent over revenue are relatively common.
But conflicts between financiers and studios rarely escalate to litigation.
The lawsuit is an unusual turn, given that most disputes of this nature are typically settled privately between the parties involved.
However, according to the arrangement between TSG and the movie studio, conflicts are initially filed in court, with both sides subsequently agreeing upon a private judge.
Disney accused of "Rampant self-dealing" and "accounting tricks"
The investigation allegedly uncovered "rampant self-dealing" and "accounting tricks" that led to TSG being underpaid by $40 million.
The lawsuit also claims revenue due to TSG wasn't correctly credited and that excessive distribution fees were charged against the terms of their revenue participation agreement.
The legal action is similar to Scarlett Johansson's 2021 suit against Disney.
It was over the simultaneous release of "Black Widow" on Disney+ and in theaters, a case that was eventually settled.
TSG is represented by the same attorney who represented Johansson, John Berlinski of Bird Marella.
