Disney sued by partner for allegedly defrauding them of millions.

Film Financier‌ TSG Sues⁢ Disney⁢ for Withholding ⁣Profits

Film‍ financier TSG is taking legal action ⁣against Disney, accusing the entertainment giant of ⁢using deceptive accounting practices to withhold ⁣millions in profits. TSG, which⁢ has invested a staggering $3.3 billion in 140 projects at Fox, claims⁣ that Disney employed “nearly every trick in the Hollywood⁢ accounting book” ‌to cheat them out of their rightful earnings.

Some of the notable ‌projects financed by TSG include “The Banshees of Inisherin,” “Avatar: The Way of Water,” “Bohemian Rhapsody,” “Deadpool,” “The Grand Budapest Hotel,” and “The Shape of Water.”

Shifting Distribution Standards and Financial Losses

One of the ⁣key issues in the lawsuit revolves around the changing landscape of film ‌distribution. With the rise of⁢ streaming services and the‌ impact ⁤of COVID-19 ⁢lockdowns, distribution strategies‍ have undergone significant transformations.

The lawsuit argues that ⁣collapsing distribution windows, a ‌practice⁢ aimed at maximizing profits, has‌ resulted in missed revenue opportunities for studios and investors like TSG. Disney allegedly forced 20th Century Film Studio to renegotiate its output deal, sacrificing a substantial portion of guaranteed HBO license fees in exchange for streaming rights on Disney+ and Hulu. While this move proved lucrative for⁤ Disney and its shareholders, TSG‌ claims it cost them‌ millions.

The financial setback caused by‌ this arrangement also hindered TSG’s ability to invest ⁢in future projects, including‍ the highly‍ anticipated “Avatar: ⁣The Way of Water.”

Allegations of Unfair⁣ Deals and Manipulation

TSG further alleges that ⁣20th Century Film‌ Studio violated a ​standing agreement with ⁢FX Networks by brokering a ⁣secret ‌side deal that undervalued the films. The lawsuit accuses Disney and its⁣ executives, including ⁤CEO Bob Iger, of prioritizing their own interests over​ those⁣ of ⁢TSG and other profit participants.

Attorney John Berlinski, who represents TSG, describes this practice as “Hollywood accounting,” a‌ way for studios to cheat investors out of‌ their rightful share of profits. Berlinski⁢ previously represented Scarlett Johansson in ‍her lawsuit‍ against Disney over her ‍compensation for‍ “Black Widow.”

Financial ⁤Losses​ and ⁢CEO Admission

Auditors​ estimate that ‌TSG’s earnings were reduced by at least⁣ $54.5 million due​ to Electronic ⁣Sell-Through distribution. The lawsuit also highlights comments made by Disney CEO Bob Iger during an earnings call, where he⁤ admitted that ⁢the company ⁤pursued​ its streaming strategy‌ without proper​ consideration for pricing.

Disney has yet to publicly comment on the lawsuit.

(Disclosure: The Daily Wire has announced ⁢plans for kids entertainment content.)