Earlier today, TSG Entertainment Finance filed a lawsuit against Disney, suing the company for allegedly using “every trick in the Hollywood Accounting playbook” to cheat them out of film profits. After working together for years to finance Disney films, TSG conducted an audit and found that their company is owed over $40 million, according to The Hollywood Reporter. But that is just the beginning.
A former partner with Disney and 20th Century Studios is now suing the media conglomerate for manipulating finances to save money.
TSG began working with Disney and 20th Century Studios on December 31, 2012, in an effort to help them finance films. Since then, the finance company has invested over $3 billion in over 100 films, including Bohemian Rhapsody, Deadpool, Dawn of the Planet of the Apes, The Martian, The Grand Budapest Hotel, and The Banshees of Inisherin.
The initial agreement (which has been amended nine times) was that TSG would co-finance the production and marketing costs of films in exchange for a share in gross receipts. However, it looks like Disney has not kept up their end of the deal. The company has allegedly been using accounting tricks to take money away from TSG and instead put it towards Disney+ and Hulu subscriptions, stock prices, and executive compensation.
When TSG conducted their audit of Disney and 20th Century Studios, they found that they were owed at least $40 million for their contribution to three films, including best picture winner The Shape of Water. In actuality, the finance company may be due hundreds of millions of dollars.
A further look into the audit revealed several shady acts by 20th Century Studios. The production company allegedly did not give TSG any credit for their revenue, and they entered into a ‘sweetheart’ deal to cut down on the amount of profits they had to pay TSG. Despite a ‘sweetheart’ deal sounding like a good thing, it is actually used to significantly benefit some parties while screwing over others.
When TSG conducted their audit of Disney and 20th Century Studios, they found that they were owed at least $40 million for their contribution to three films, including best picture winner The Shape of Water.
From one perspective, it looks like Disney was trying to bump up its stocks’ streaming platforms and share price by using the funds from TSG, which sounds highly illegal. Bob Iger, the CEO of Disney, even admitted that the company was growing too fast for them to understand and set an appropriate pricing strategy for their streaming service, which has already raised its prices twice this year.
Previously, TSG needed to get a cash advance from 20th Century Studios (which has since been acquired by Disney) so that they could help fund films like Avatar: The Way of Water. This reduced the company’s share of gross receipts and ended up giving 20th Century Studios more of the film’s profits.
John Berlinski, the same attorney that won Scarlett Johansson’s lawsuit against Disney, is representing TSG in their multi-million dollar lawsuit.
TSG’s attorney John Berlinski is spearheading the lawsuit, which is very reminiscent of his previous work on Scarlett Johansson’s lawsuit against Disney. In 2021, when Disney released Black Widow (starring Scarlett Johansson), they streamed it online as well as released it in theaters which cut into the actress’s profits. After a legal battle, Scarlett Johansson received $40 million in a settlement.
Disney has yet to comment on the lawsuit, but it does not look good for them. Don’t be surprised if the subscription price of Disney+ goes up once again before the end of the year.