Disney is facing yet another critical turn in the spotlight as film financier TSG has filed a lawsuit in the Los Angeles Superior Court accusing the media giant of using “nearly every trick in the Hollywood accounting book” to constrict the sharing of profits.
The move echoes the lawsuit brought forwards by Scarlett Johansson in 2020, in which she accused Disney of maintaining dual releases for her movie Black Widow, both in theaters and on Disney+ streaming. Similarly, TSG claims that Disney made a series of decisions focused on bolstering its own streaming service.
TSG has funded 140 projects, spending $3.3 billion, at 21st Century Fox, which is now owned by Disney. This includes projects such as The Banshees of Inisherin, Avatar: The Way of Water, Bohemian Rhapsody, Deadpool, The Grand Budapest Hotel, and The Shape of Water.
The lawsuit is aimed towards both Twentieth Century Fox Film Corporation and The Walt Disney Company, referring to the studio owned by Disney as “Fox.
The lawsuit claims that Disney has shifted the established pay-1 release window for films, usually partnered with HBO, to prioritize Disney+ and the streaming services that fall underneath it. This shift, TSG alleges, has padded Disney’s pockets at the cost of film finance partners, such as TSG, while also limiting available revenue streams for the studios.
Disney has not yet responded to the accusations. However, back in 2020, in response to Johansson’s lawsuit, Disney followed up with an aggressive statement condemning her complaint.
TSG is firm in believing that the windowing of film distributions, to avoid one release from solely relying on revenue from another, allows all parties involved to see the profits they deserve. Additionally, TSG believes that a restricted cash flow limits the ability to fund productions, which TSG attributes to its losses on movies such as Avatar: The Way of Water.
Disney has since dismantled a centralized distribution organization put in place in 2020 by Bob Chapek during his brief time as CEO. The decision clearly has not been viewed favorably, as financiers and creatives have exhibited their displeasure for the organization cutting out parties in the process.
Disney’s current CEO, Bob Iger, returned in November 2022 after Chapek’s dismissal in February, aiming to better handle the company’s decision-making and accelerated streaming growth. It is clear that Disney is taking major steps to accomplish its goals, however, the steps may have come at an inmate cost of partnerships.
It remains to be seen what the future holds, both for Disney and TSG when it comes to the exchanged profits between media companies and financiers. Whatever the result, this lawsuit and the reaction of Disney will remain an important turning point in the future of streaming and movie production.