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2 YEARS

StudioCanal Sues Universal Claiming Millions in Working Title Film Revenue

The suit seeks "tens of millions of dollars and likely more" after an audit showed underreported revenue

Universal Studios has been sued by its former partner in a series of films made by Working Title.

In a lawsuit filed Thursday in Los Angeles Superior Court, StudioCanal claims Universal and parent company NBC Universal have failed to account for "tens of millions of dollars and likely more" from films developed by the Working Title label during a joint venture from 1999 through 2009. France-based StudioCanal and Universal jointly created Working Title when the two companies were both owned by Vivendi. They distributed films in different parts of the world and maintained an obligation to account to each other. 

Read the lawsuit here.

While Universal and StudioCanal were partners, they produced and released 44 films, including About a Boy, Billy Eilliot, Love Actually and O Brother Where Art Thou?. When the studio was sold to GE and combined with NBC to create NBC Universal, the duty to account for revenue to StudioCanal remained, according to the suit.

StudioCanal says it performed an audit of six of the films from the joint venture and found millions of dollars in missing revenue.

"Those audits revealed that Universal was violating its fiduciary and contractual obligations to StudioCanal," the lawsuit states. The suit claims Universal hid money from "off-balance-sheet financing arrangements," failed to report ancillary revenue from sources such as music publishing, double-charged the studio for producing fees paid to Working Title, and deducted millions of dollars in "unsubstantiated expenses."

The two sides apparently have been communicating about the audit issues for months but talks have broken down. "In fact, Universal has simply stopped communicating with StudioCanal at all— not even to acknowledge the passing of dates by which Universal had promised a substantive response," the suit states.

THR has reached out to Universal for comment and will update with a response.

The suit, filed by attorneys Robert Schwartz, James Pearl, Harrison Whitman and Nikolas Primack, alleges causes of action for breach of fiduciary duty, constructive fraud, breach of contract, breach of covenant of good faith and fair dealing, account stated and accounting.

Email: Matthew.Belloni@thr.com

Twitter: @THRMattBelloni