Disney has been hit with a lawsuit in Los Angeles Superior Court by film financier TSG, which claims that the media giant used “nearly every trick in the Hollywood accounting book” to hoard hundreds of millions in profit.Echoing the Scarlett Johansson suit over the release of Black Widow across both movie theaters and Disney+ in 2021, TSG contends that Disney made a number of moves aimed at feathering its own streaming nest. WarnerMedia (now Warner Bros. Discovery) faced similar legal blowback from longtime co-finance partner Village Roadshow over the day-and-date streaming release of The Matrix Resurrections and other films.TSG has spent $3.3 billion to help back some 140 projects at Fox, which joined the Disney fold as part of the $71.3 billion acquisition of most of 21st Century Fox in 2019. TSG’s credits include The Banshees of Inisherin, Avatar: The Way of Water, Bohemian Rhapsody, Deadpool, The Grand Budapest Hotel and The Shape of Water.The suit names Twentieth Century Fox Film Corporation and The Walt Disney Company as defendants, referring numerous times to the studio entity as “Fox” even though the entity owned by Disney is now called 20th Century Studios.Disney did not immediately respond to Deadline’s request for comment on the suit. 6-Distribution is the crux of the case, as it was with Johansson’s complaint, which was brought by Bird Marella partner John Berlinski, the same lawyer repping TSG). After issuing a barbed statement attacking Johansson, Disney wound up settling with the star.Since Covid, studios have overhauled long-established business practices in terms of film distribution. Specifically, the theatrical window has come under pressure as consumers have become accustomed to streaming and media companies pour billions into their services. In TSG’s view, the changes have come at the expense of finance partners.“This windowing of film distribution is designed to maximize profits for the studios (and for stakeholders like TSG) by preventing one distribution revenue stream from cannibalizing another,” the lawsuit says. “When windows are collapsed on one another, however, the studio (and its investors) miss out on significant potential sources of revenue.”The complaint calls out a major shift in the 20th slate’s pay-1 release window, which for many years was with HBO. After acquiring the studio, Disney “ordered” 20th to renegotiate the output deal and surrender “a significant portion of its guaranteed HBO license fees,” in return for HBO letting the films stream on Disney+ and Hulu. While that move benefited Disney, its shareholders and senior executives, TSG says, it cost the financing entity “many millions” to which it is entitled.TSG, which is run by Chip and Robert Seelig, formed ties with Fox in 2012 and has also had a relationship with Warner Bros. and Sony.In addition to the allegedly lost proceeds due to Disney’s distribution decisions, TSG contends that a resulting lack of cash flow impaired its ability to invest in films like Avatar: The Way of Water, which became a massive hit.Disney in recent months has dismantled a corporate creation of Bob Chapek during his brief tenure as CEO: a centralized distribution organization. While Disney Media and Entertainment Distribution (DMED) intended to optimize decision-making and accelerate streaming growth, it irritated many creative and financial partners who felt cut out of the process. Bob Iger, who had appointed Chapek as his successor in February 2020, returned to the company in November 2022 after Chapek’s ouster.
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