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Film finance partner TSG Entertainment Finance has filed a lawsuit against Disney, accusing the entertainment giant of hindering a deal between 20th Century Studios and TSG in an alleged effort to boost subscriptions for Disney+ and Hulu, as well as stock prices and executive compensation. The lawsuit claims that an independent audit of three films, including the best picture winner “The Shape of Water,” revealed that TSG is owed more than $40 million, according to The Hollywood Reporter. The company suspects the total owed could reach into the hundreds of millions. The alleged cash shortfall has also affected TSG's investment position in “Avatar: The Way of Water.”
Disney has been sued by film financier TSG, which claims Disney used “nearly every trick in the Hollywood accounting book” to hoard hundreds of millions in profit.
TSG has co-financed films such as Banshees of Inisherin and Avatar: The Way of Water.
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TSG has invested approximately $3.3 billion in supporting around 140 projects at Fox, which became part of Disney through the $71.3 billion acquisition of most of 21st Century Fox in 2019. Among TSG's credits are notable films like “Bohemian Rhapsody,” “Deadpool,” and “The Grand Budapest Hotel.”
The lawsuit draws parallels to the legal action taken by Scarlett Johansson against Disney over the simultaneous release of “Black Widow” in theaters and on Disney+. TSG alleges that Disney has made strategic moves to benefit its streaming platforms. WarnerMedia faced similar legal challenges from co-finance partner Village Roadshow over the simultaneous streaming release of films like “The Matrix Resurrections.”
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Assertations
TSG's attorney, John Berlinski, asserted that Hollywood Accounting, a practice that allegedly skews profit distribution to favor studios, is being employed to deprive profit participants of their rightful earnings. The lawsuit claims that Disney has manipulated the distribution of qualifying pictures and hindered TSG's efforts to liquidate its interests in certain tranches of these pictures. Berlinski wrote in the complaint that Disney has shown a willingness to prioritize its own interests, potentially at the expense of its partners.
TSG Entertainment Finance, led by Chip and Robert Seelig, has maintained relationships with multiple studios over the years, including Fox, Warner Bros., and Sony.
