Village Roadshow upped its legal salvo against Warner Bros. on Monday, claiming in court documents that the major studio is shutting it out from being a co-owner and financial partner on dozens of projects that are being developed based on movies they share the rights to in order to boost the value of its parent company’s streamer HBO Max.
“WB’s admission leaves no doubt that its coercive conduct is a continuing, thinly-veiled effort to eliminate Village Roadshow’s rights going forward so that it can keep for itself valuable derivative rights to tent pole films, and use those films (and future creative derivative products arising from those films) to steer would-be theatergoers to HBO Max, thereby gaining billions in enterprise value,” states the Village Roadshow filing.
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In a strongly-worded statement defending its business strategy, Warner Bros. had harsh words for Village Roadshow for taking the feud out of arbitration.
“Village’s actions have been duplicitous and this dispute is equally contrived. Village was happy to have their name on the credits of the film, traveled to the world premiere in San Francisco, and held themselves out to the media as producers on the film. But they have now reneged on their contractual obligation to pay their share of the cost of the film,” stated Warner Bros. in its retort.
Warner Bros added: “It is notable that throughout 2021, we reached mutually acceptable agreements on all films in the 2021 slate to provide additional compensation to Talent and our partners in light of our ‘day and date’ release strategy during the Covid-19 Pandemic. The only exception was Village, which refused to honor its commitment to pay their share of production costs, rejecting the opportunity we offered to de-risk them from any financial underperformance. Instead, Village wanted to enjoy the benefit of publicly holding themselves out as co-owners and producers while preserving a ‘free look’ at the ultimate outcome of the film performance without any financial investment on their part. This is not how we conduct business, certainly not with trusted partners.”
Diana Torres, representing Village Roadshow, responded that “WB’s statement is not only untrue, it seeks to deflect attention from the core issues.”
“Village Roadshow paid WB $4.5 billion to produce and distribute 91 films,” she said in a statement. “The complaint details a pattern of calculated conduct by WB designed to eviscerate Village Roadshow’s rights to the derivative works from those films. As set forth in our ex parte application filed this morning, WB is in active development of several of those derivative works.”
The motion seeking to lift a stay on the case, which currently cannot proceed because it’s in arbitration, further details the decay of the companies’ 25-year partnership that culminated in a lawsuit over the studio’s decision to release Matrix Resurrections simultaneously on HBO Max and in theaters.
During a discussion about television series based on Edge of Tomorrow, Warner Bros. allegedly “made clear that, going forward, it will not allow Village Roadshow to co-finance and co-own any derivative works from any of the 91 films Village Roadshow co-owns, despite the over $4.5 billion Village Roadshow has paid WB to make and distribute those 91 films.”
Village Roadshow claimed it’s being excluded from several prequels, sequels or television shows that Warner Bros. has actively been developing based on shared rights, including Sherlock Holmes, the Ocean’s series, Ready Player One, I Am Legend, Where the Wild Things Are and Yes Man, among other movies.
“WB has publicly stated its intent to release half its films on HBO Max rather than through an exclusive theatrical release, and has indicated to Village Roadshow that at least some of those it intends to release initially on HBO Max are derivative works of Village Roadshow films,” writes Village Roadshow attorney Mark Holscher.
Nick Soltman, a partner Kinsella Weitzman Iser Kump Holley LLP who’s not involved in the case, said that studios generally have broad discretion on when to move forward with projects based on factors like creative choices and the market for certain content.
It gets trickier, Soltman said, when decisions are made in bad faith. “Warner doesn’t have to consider any particular project — they retain ability to say ‘We won’t do an Edge of Tomorrow series,'” he said. “It’s less clear that they can make that decision based solely on the basis that Village Roadshow won’t give up its rights.”
Village Roadshow seeks an order allowing it to co-invest and co-own projects based on movies it shares the rights to with Warner Bros and to prevent the studio from further breaching their contract to promote HBO Max.
Warner Bros. will likely try to keep the case in arbitration. Village Roadshow argues that it can pursue its case because its contract has a carve-out for injunctive and non-monetary relief.
Daniel Petrocelli, who was the attorney for Disney when Scarlett Johansson sued over the release of Black Widow, represents Warner Bros.
