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This story first appeared in the March 1 issue of The Hollywood Reporter magazine.
An executive showdown over profits from TV’s most successful mob drama is pitting one Hollywood studio against the mogul who runs another, with tens of millions of dollars on the line.
THR revealed Feb. 15 that Universal Studios has filed a confidential arbitration claim against Paramount Pictures chairman and CEO Brad Grey for allegedly refusing to honor a 50-50 profit-sharing arrangement on The Sopranos. Before taking the top Paramount job in 2005, Grey was a longtime talent manager and principal at the Brillstein-Grey management/production company. He helped pitch the series to then-HBO head Chris Albrecht with creator David Chase, who was signed to a development deal with Brillstein-Grey. Based on his efforts, Grey became an executive producer of all 86 episodes of Sopranos and earned tens of millions of dollars from the series, which ran on the premium cable network for six seasons between 1999 and 2007.
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In 1996, Universal, looking to boost its TV business, bought half of Brillstein-Grey. Three years later, the studio divested its interest in the company, and at the time, Universal and Grey entered into a separation agreement that divvied up rights to several TV projects. Sopranos was one of those shows, and Universal is said to be arguing that the separation agreement entitles it to split Grey’s profits. One source says that as Sopranos became a worldwide sensation, Grey was able to increase the percentage of backend profits he received from HBO, but those negotiations occurred after he ended the relationship with Universal, which now believes it should have been entitled to benefit from subsequent improvements to Grey’s profit definition. The studio declined comment.
By contrast, a representative for Grey says that Universal is trying to revisit rights it signed away long ago. “In 1999, Universal and Brad Grey agreed to split the rights for a number of TV shows he developed at that studio,” the Grey rep tells THR. “As part of the agreement, Universal negotiated away specific rights from The Sopranos, then in its first season. Fourteen years later, Universal is seeking monies for rights it traded away. This contractually mandated arbitration is simply an effort to redo an old deal, and the claim is without merit.”
Grey is said to have been paid $50 million or more in revenue from HBO, which could entitle Universal to $25 million or more if it is successful in the arbitration. The claim was filed in December, according to sources.
STORY: Universal, Paramount’s Brad Grey at War Over $50 Million in ‘Sopranos’ Profits (Exclusive)
Even though the dispute is a holdover from Grey’s pre-Paramount life as a manager and producer, it’s extremely rare for a top Hollywood executive to be targeted in such a way by a rival. But studios have been under increasing financial pressures. Making matters more complex, Grey and Universal Studios COO Ron Meyer are said to be close friends. Meyer and Grey are said to have met last year to discuss the matter, but neither side was willing to concede. One source says Meyer had no choice but to authorize the legal claim despite his personal relationship.
Sopranos debuted on HBO in 1999 and became the biggest hit in the network’s history. The show was syndicated (it ran in the U.S. on the A&E network) and sold extremely well on DVD. HBO, which is not a party to the arbitration, accounts to Grey, Chase and all the participants on the show.
The legal dispute had been brewing for some time — one source says several years, another says it was raised in a recent audit. Regardless, Universal escalated the fight in December, hiring noted Hollywood litigator Daniel Petrocelli of O’Melveny & Myers to initiate the arbitration proceeding. Grey countered by engaging litigator Evan Chesler at the white-shoe New York law firm Cravath Swaine & Moore to handle the arbitration. The case likely will remain secret as it proceeds to an arbitrator chosen by both sides.
Kim Masters contributed to this report.
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