‘Hollywood accounting’ duds Cruise, Bullock out of tens of millions

After years of losses and underwhelming efficiency, the film studio Paramount Footage has delivered its greatest box-office ends in a decade. The primary 5 films it launched in theaters this yr all opened within the prime spot, culminating with “Prime Gun: Maverick,” the highest-grossing movie of the yr to this point.

However not everyone seems to be celebrating. Lots of the stars and producers of those films, together with Tom Cruise, Sandra Bullock and the creators of “Jackass,” consider they’re going to miss out on tens of millions of {dollars} due to a deal involving Paramount, its Paramount+ streaming service and the cable channel Epix, which is owned by Amazon.com Inc.

Stars together with Tom Cruise observed the distinction between Common and Sony pay cheques and their Paramount pay cheques.

Film stars, producers and filmmakers usually get a reduce of the earnings from their films, together with a share of digital gross sales and licensing to 3rd events. These paydays can quantity to tens of tens of millions of {dollars} on a giant film like “Prime Gun: Maverick,” starring Cruise, or tens of millions on a smaller-scale hit like “The Misplaced Metropolis,” starring Bullock.

Revenue contributors in Paramount films consider their earnings are beneath what they need to be as a result of the studio is receiving much less from Epix than different studios are getting in comparable offers, in line with a number of folks conversant in the conversations. Representatives for the expertise have met with Paramount to ask for more money, stated the folks, who requested to not be recognized as a result of the talks are ongoing.

Whereas nobody has threatened a lawsuit but, attorneys are assessing their choices. One risk is that Hollywood labor unions will take motion. Guilds additionally gather residuals on these films, and Paramount’s take care of Epix means they too could have additionally missed out on tens of millions of {dollars} relative to what they get from different studios. The guilds declined to remark. Representatives for Cruise, Bullock and “Jackass” star Johnny Knoxville didn’t reply to requests for remark.

In an announcement to Bloomberg Information, Paramount stated it hasn’t had an possession curiosity in Epix for 5 years, and that “our agreements are entered into at market charges.”

Attorneys and brokers have all the time bemoaned “Hollywood accounting,” by which studios overstate prices and disguise earnings in order to not share proceeds with monetary companions. Either side would quite keep away from a lawsuit, however there have been some large circumstances during the last decade. AMC Networks Inc. was compelled to pay $US200 million to one of many creators of “The Strolling Useless,” whereas Fox settled a multimillion greenback dispute with the contributors within the present “Bones.”

Employees fear that the rise of streaming providers has made it even simpler for studios to cover their earnings from expertise by self-dealing. Most studios used to license their movies to premium cable networks like HBO, however now they license them to streaming providers, usually ones they personal. Warner Bros. places its films on HBO Max, Walt Disney Co. sends its films to Disney+ and Common has a take care of its company sibling, Peacock. Common additionally struck a take care of Amazon.

Streaming providers usually don’t license their unique films to others in any respect. Fairly than give expertise a share of the possession in a mission, Netflix, Amazon and Apple purchase out their rights up entrance. The Writers Guild has already secured $US42 million in arbitration from Netflix for what the union referred to as “self-dealing” and $US4 million from Amazon in unpaid residuals.

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