Tom Cruise And Other Paramount Stars Getting Cut Out Of Millions Of Dollars?
Tom Cruise and other stars are in discussions with Paramount about profit-sharing rates from Epix.
Tom Cruise and a number of other major film stars suspect that they are not receiving the paydays they expect when it comes to their work with Paramount. According to a report in Fortune, insider conversations are happening between A-list stars like Tom Cruise and Paramount Pictures (or at least, their respective legal teams) over the amount of profit-sharing paid to them. Specifically, Tom Cruise and other Paramount-affiliated stars are concerned that the rate of profits being paid out to them via the cable channel Epix and its agreements with the studio are significantly lower than they should be.
The Tom Cruise Paramount profit-sharing contention is complex and concerns deals between multiple companies that at some points share parent corporations, but we will try to break it down as simply as possible. Basically, the biggest stars (and producers, directors, and other less visible Hollywood figures) often negotiate profit-sharing as part of their salary for a film, which can include post-theatrical revenue sources like video-on-demand rentals and purchases and licensing fees from third parties that wish to show the movie (for example, a channel like Epix or HBO). Since things are never super straightforward when it comes to either money or show business, the rates by which the studio is paid from a third party are negotiated not by the individual film, but as an ongoing agreed-upon amount.
This all becomes relevant to Tom Cruise, his relationship with Paramount Pictures, and its relationship with Epix in that last year, the studio and the cable channel (which Paramount used to jointly own with Lions Gate Entertainment Corp. and Metro-Goldwyn-Mayer) renegotiated their licensing agreement, presumably including the payout rate. It seems that the studio agreed to a significantly lower rate than Tom Cruise and his peers would have preferred Paramount to, and they feel that they are losing revenue because of that. For its part, Paramount Pictures claims that it received “market” rates for its new agreement with Epix.
While all of this is dry legalese, in practice, it results in potentially tens of millions of dollars of difference for the players involved. For example, if the recent Tom Cruise blockbuster Top Gun: Maverick grossed nearly $1.5 billion (and counting) in theaters, it becomes very, very desirable for cable channels to get the streaming rights. If Paramount has contractually bound itself to license those streaming rights to Epix at a rate that is not proportional to its level of popularity, a lawyer could argue that the studio is not adequately compensating the people behind it.
No lawsuits have yet been filed in this developing case, but undoubtedly no studio would want to get involved in a drawn-out legal argument with some of its biggest stars. In this case, Tom Cruise, Sandra Bullock, and Jim Carrey all had enormous movies produced by Paramount in 2022 (The Lost City and Sonic the Hedgehog 2, for the latter two), resulting in a grotesque amount of money potentially in play. Hopefully, everyone will manage to deal with this politely and everyone gets richer.