‘Hollywood Accounting’ duds Cruise, Bullock out of millions

After years of losses and an underwhelming performance, the Paramount Pictures film studio has delivered its best box office results in a decade. The first five films to hit theaters this year all took first place, culminating in Top Gun: Maverick, the highest-grossing film of the year so far.

But not everyone celebrates. Many of the stars and producers of these films, including Tom Cruise, Sandra Bullock, and the creators of “Jackass,” believe they will lose millions of dollars in a deal with Paramount, its streaming service Paramount+, and cable channel Epix, which is located in the Owned by Amazon.com Inc.

Stars like Tom Cruise noticed the difference between Universal and Sony paychecks and their Paramount paychecks.

Stars like Tom Cruise noticed the difference between Universal and Sony paychecks and their Paramount paychecks.

Movie stars, producers and filmmakers often receive a share of the profits from their films, including a share of digital sales and licenses to third parties. Those paydays can run into the tens of millions of dollars on a big movie like Cruise’s Top Gun: Maverick, or millions on a smaller hit like Bullock’s The Lost City.

Profiteers on Paramount films believe their earnings are below what they should be because the studio is getting less from Epix than other studios on similar deals, according to several people familiar with the talks. Representatives for the talent have met with Paramount to ask for additional money, the people said, asking not to be identified as talks are ongoing.

Although no one has threatened a lawsuit, lawyers are evaluating their options. One possibility is that unions will take action in Hollywood. Guilds also collect backlogs on these films, and Paramount’s deal with Epix means they, too, may have missed out on millions of dollars compared to what they’re getting from other studios. The guilds declined to comment. Representatives for Cruise, Bullock and “Jackass” star Johnny Knoxville did not respond to requests for comment.

In a statement to Bloomberg News, Paramount said it has not had an interest in Epix for five years and that “our agreements are entered into at market prices.”

Lawyers and agents have always bemoaned “Hollywood accounting,” in which studios overstate costs and hide profits to avoid sharing proceeds with financial partners. Both sides would prefer to avoid a lawsuit, but there have been some big cases in the past decade. AMC Networks Inc. was forced to pay $200 million to one of The Walking Dead’s creators while Fox settled a multi-million dollar dispute with the cast of the show Bones.

Workers fear the rise of streaming services has made it even easier for studios to hide their profits from talent by doing proprietary deals. Most studios used to license their movies to premium cable networks like HBO, but now they license them to streaming services, often their own. Warner Bros. makes its films available on HBO Max, Walt Disney Co. sends its films to Disney+ and Universal has a deal with its corporate sibling Peacock. Universal also struck a deal with Amazon.

Streaming services typically do not license their original films to third parties at all. Instead of giving talent a share of ownership in a project, Netflix, Amazon and Apple are buying up their rights up front. The Writers Guild has already received $42 million in arbitration from Netflix for what the union calls “self-dealing” and $4 million in unpaid balances from Amazon.

https://www.smh.com.au/business/companies/hollywood-accounting-duds-cruise-bullock-out-of-millions-20220921-p5bjoi.html?ref=rss&utm_medium=rss&utm_source=rss_business ‘Hollywood Accounting’ duds Cruise, Bullock out of millions

Brian Lowry

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