The relationship between Disney and TSG Entertainment has taken a tense turn, as the latter is suing the former for breaching their contract. On Tuesday, TSG Entertainment filed a complaint against Disney and its subsidiary, 20th Century Fox, in the Los Angeles Superior Court.
The allegations include withholding profits, entering deals to enhance streaming platforms and stock prices, which reportedly had a detrimental impact on TSG.
To understand TSG Entertainment’s involvement in Disney films, we need to dive a bit deeper. When it comes to the production of films, TSG Entertainment partners up to cover the cost of making and marketing them. In exchange, they take a share of the gross receipts after the project’s release.
Reportedly, 20th Century Fox and TSG Entertainment worked on 140 projects, which were later acquired by Disney Studios. According to reports, the latter invested around $3.3 billion in the content of 20th Century Fox.
TSG Entertainment has been a part of some stellar projects such as Jojo Rabbit and Gone Girl. However, despite some big-time releases, there was a shocking decline in profits.
After observing this, TSG Entertainment requested an audit of a couple of films they funded for 20th Century Fox. The results revealed a clear betrayal by the big studios, as they had underpaid TSG by at least $40 million using accounting tricks and other tactics.
Moreover, TSG expressed that when they tried to exercise their option to sell their share in other films they had supported, either to Disney or another party, they were met with refusal. This situation left TSG without the necessary financial means to make further investments in specific films, such as “Avatar: The Way of Water.”
TSG has been on the receiving end of these kinds of incidents before, as Fox treated them in a similar way. Even the Academy Award-winning film ‘The Shape of Water’ ended up costing TSG $4 million due to being underpaid.
