The Walt Disney Company is facing yet another lawsuit. This time the suit is about films alleged creative accounting, and “sweetheart deals.” TSG Entertainment, a company that has made significant investments into Hollywood productions, is suing Disney and 20th Century Studios (Disney’s renamed 20th Century Fox), claiming that the media giant has used creative accounting practices to withhold hundreds of millions of dollars.
TSG has invested over $3 billion in 140 different Fox films. Among the issues is the third-highest-grossing film in history, “Avatar: The Way of Water.”
TSG alleges that Disney used “nearly every trick in the Hollywood Accounting playbook” to withhold money the investment group says is owed to them. They also argue that Disney engaged in “self-dealing” to themselves regarding streaming rights for these films.
They argue that Disney took films away from services like HBO, losing lucrative licensing agreements, to put the same movies on their Disney-owned services like Hulu, Disney+ and even call licensing films to FX a “sweetheart deal.” TSG argues this also cost them millions of dollars, as the income deficit has hindered their ability to invest in other “high-value projects.”
TSG also “alleges that Disney sought to prop up its stock price, and the pay packages of CEOs Bob Iger and Bob Chapek, at TSG’s expense.”
This comes after an attempted class action lawsuit by some investors, including a pension fund that argues “under the Disney reorganization in 2020, Bob Chapek and other defendants used the restructuring to hide the actual performance of Disney+ from investors, including the costs and losses.”
The attorney for TSG, John Berlinski of Bird Marella, is the same attorney Scarlett Johansson also used when she fought Disney over her compensation for ‘Black Widow.’ Johansson also argued that Disney dropped the Black Widow film on Disney+ to drive up their revenue and stock prices instead of waiting for a theatrical release. Her deal was tied to the theatrical release, not a streaming release, which would cost her millions of dollars in lost money. Ultimately she won and settled out of court.
Disney has been accused of creative accounting before, and it even went to the SEC for investigation. The whistleblower, who argued she was fired over reporting the issue, ultimately won in court as well.
I’m unsure if Disney can take much more bad PR and lawsuits.
Maybe they’ll settle out of court for this one as well.
What do you think? Comment and let us know.
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