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Disney Faces Accusations of Holding Back Millions from ‘Avatar’ Sequel Financier

Hollywood financier Disney is being sued by TSG Entertainment for breach of contract.

In a lawsuit filed on Tuesday in Los Angeles Superior Court, Disney and its studio 20th Century Fox are accused of breaking several laws, including hoarding income and cutting up contracts to raise the value of their streaming services and shares.

TSG’s efforts to sell its holdings in other movies and to invest money in individual films were both hampered by this statute, the lawsuit claims.

A request for comment from CNBC was not immediately answered by Disney representatives.

In exchange for a portion of the film’s defined gross profits following its release, TSG co-finances the expenditures associated with its production and marketing. Almost 140 movies made by 20th Century Fox, which Disney acquired in 2019, including “Avatar: The Way of Water,” have benefited from the group’s co-financing. The business claimed that since 2012, it had spent roughly $3.3 billion on the studio’s output.

TSG was also featured in the opening titles of “The Menu,” “Jojo Rabbit,” “The Greatest Showman,” and “Gone Girl,” among other movies. The image of a man with a bow and arrow shooting through numerous axe heads appears as the financier’s logo.

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TSG Launches Audit and Lawsuit Against 20th Century Fox

Hollywood financier Disney is being sued by TSG Entertainment for breach of contract.

TSG ordered an examination of a sample of three of the movies it has financed for 20th Century Fox after noticing a reduction in profits. TSG claims it was underpaid by at least $40 million and discovered “rampant self-dealing” and “accounting tricks” in the books.

In one alleged example, TSG said Fox licensed “The Shape of Water,” the 2018 Academy Award-winning best picture, to FX, a studio-owned channel, for $4 million less than it was required to under its production agreement.

TSG further claimed that after conducting an audit, it discovered that millions of dollars in distribution fees had been charged to it even though they were not covered under its revenue-participation agreement with the studio.

John Berlinkski of the legal team Bird Marella, who successfully defended Scarlett Johansson in her lawsuit against Disney for airing Marvel’s “Black Widow” on Disney+ concurrently with its theatrical release, is TSG’s legal counsel. That lawsuit was ultimately resolved.

TSG claims that Disney’s 2021 agreement with Warner Bros. Discovery, which waived exclusivity to the Max streaming service and the HBO premium channel in exchange for lower license costs, directly reduced TSG’s prospective profits.

TSG also claimed that it was turned down when it tried to exercise its right to resell its investment in other movies it had financed to Disney or another party. TSG claims that as a result, it lacked the funds to make additional investments in individual movies like “Avatar: The Way of Water.”

The lawsuit was first covered by The Wall Street Journal.

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Source: MSN

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