Disney Sued, Alleges Cheating Partner Of Millions

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A financial firm is alleging one of the world’s most powerful studios of using “Hollywood accounting” to pocket millions of dollars in profits.

The private equity firm TSG Consumer Partners has filed a lawsuit against Disney alleging it withheld millions in profits by using “nearly every trick in the Hollywood accounting book.”

TSG has invested in more than 140 projects with Fox Studios since the company acquired Fox in 2019 for more than $71 billion. Those projects include “The Banshees of Inisherin,” “Avatar: The Way of Water,” “Bohemian Rhapsody,” “Deadpool,” “The Grand Budapest Hotel,” and “The Shape of Water.”

At the heart – and the money – of the suit is the distribution of these films in an ever-changing industry landscape that has shifted focus to streaming services since the onset of the COVID pandemic.

The complaint states the studio “ordered” 20th Century Film Studios to renegotiate its output deal with HBO, forfeiting much of its share in profits only to benefit Disney, according to The Hollywood Reporter. It is estimated by auditors that this cost TSG $54.5 million in Electronic Sell-Through distribution.

Additionally, the suit alleges Disney shifted responsibilities to maximize profits with little thought as to the effects, pointing to a speech made by Bob Iger, Disney’s CEO. “We grew this business really fast, really before we even understood what our pricing strategy should be or could be.”

The complaint also names Iger specifically, saying, “Disney (and the executives running it) had and continue to have every incentive to do anything and everything they can…to attempt to boost Disney’s share price at the expense of TSG and other profit participants,” as detailed in The Hollywood Reporter.

TSG’s attorney, John Berlinski, is no newcomer to Hollywood lawsuits, having represented Scarlett Johansson in a case against Disney. He used the phrase “Hollywood accounting” to describe how studios “cheat” investors out of money.

Disney has not commented on the lawsuit and did not respond to requests for comment on the matter.

At this time, it is unclear what the consequences for Disney will be, should the firm win the suit and what any potential settlement could look like. However, one thing is for sure: this case is far from over.

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