Disney Faces Huge Lawsuit for Reportedly “Hoarding Millions of Dollars” – Inside the Magic
Disney has been facing an uphill battle in recent years, as a ton of movies producer under the media conglomerate have not been as lucrative as they once were. Now, the House of Mouse is being targeted in a new lawsuit by finance partner TSG, who claims the company has been hoarding millions of dollars.
Related: Disney Lawsuit Claims Company Stole Famous Mascot, Demands It Axed
Much like the writer”s and actor”s strikes that have halted the show business world, both unions are striking simply because of how successful streaming services have been. However, the actors and writers have not received proper residuals from working on said properties. The emergence of streaming service popularity and the confusion with how movies and shows are shown on those services needs some ironing out.
One of the main financers that helps Disney to release shows and films is TSG, which has a reported 140 projects they had released through Fox, which is now 20th Century Studios. Disney acquired most of 21st Century Fox in 2019 for a staggering $71.3 billion.
Since then, TSG has helped finance titles that include The Banshees of Inisherin (2022), Avatar: The Way of Water (2022), Bohemian Rhapsody (2018), Deadpool (2016), The Grand Budapest Hotel (2014), and The Shape of Water (2017).
TSG claims that the window between releasing a film from theaters to streaming has significantly impacted the revenue that the company”s investors would receive.
TSG Sues Disney
TSG has named both Twentieth Century Fox Film Corporation and The Walt Disney Company in its lawsuit, though the lawsuit refers to 20th Century Studios as “Fox.” This might be because of the change between 2019 and when Disney acquired the studio entity. According to the report from Deadline, TSG claims that Disney used “nearly every trick in the Hollywood accounting book” to hoard millions of dollars of profit, primarily from streaming.
TSG is coming after the House of Mouse in the same way that Scarlet Johannson had done so when Black Widow (2021) was released on Disney+ versus remaining in theaters. Johansson”s deal was to be sweetened by the film remaining in theaters, though Disney had decided to put it out on streaming instead. Though the company had initially and publically shamed Johansson, they would settle out of court.
TSG has a similar complaint. According to the company:
“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 text that states “when windows collapsed on one another” likely refers to the time it takes for certain streaming services to receive a hit film. Sometimes media companies decide to release films that either did well or didn”t do well quickly on streaming in an effort for the streaming services to garner significant revenue. One of those streaming services belongs to HBO.
The lawsuit states that Disney reportedly “ordered” 20th Century Studios to renegotiate its deal with HBO, surrendering “a significant portion of its guaranteed HBO license fees.” This deal allowed HBO to stream movies under the Disney+ and Hulu banner. Though it would strengthen the streaming revenue for Disney, it reportedly did little to benefit the investors and financers like TSG.
TSG claims this new deal and streaming service output resulted in the company losing “millions of dollars” in profit. TSG also claims the resulting dip in cash flow would not allow the company to invest in Avatar: The Way of Water, which secured $2.32 billion.
Related: Disney Releases Confusing Reports Amid “Deception” Lawsuit
Disney has not yet commented on this situation, though if it is anything like the Scarlet Johansson lawsuit, we expect that the House of Mouse will settle out of court. We will update everyone when more information becomes available.
What do you think of Disney being sued by TSG? Let Inside the Magic know in the comments down below!
