4:33pm PT by Eriq Gardner
Starz Sues MGM for Not Honoring Exclusivity Deal
MGM is being sued for allegedly infringing the copyrights on its own movies.
According to a complaint filed Monday in California federal court, Starz Entertainment says it had a deal for MGM's library, including recent James Bond movies as well as Bill & Ted's Excellent Adventure, Bull Durham, Rain Man, Thelma & Louise, Mad Max, The Terminator and many others. Starz alleges the deal gave it the exclusive right to exhibit those movies and that MGM represented it would not take any action to materially impair bargained-for rights.
"MGM breached both promises," states the complaint. "Unbeknownst to STARZ, by at least 2015 (and potentially earlier), MGM began granting licenses to the STARZ-exclusive Pictures to other competing content services during the very time periods in which STARZ had the exclusive rights. By its own admission, MGM licensed over 32% of the Pictures in the Library Agreements to competing services, in violation of STARZ’s exclusive rights to those movies. Although MGM has admitted to the breach generally, it is not yet confirmed how many platforms licensed Pictures from MGM. STARZ’s own investigation has revealed that over 150 titles have been breached, with some breaches occurring on MGM’s own network, Epix, which competes with STARZ."
The two companies are said to have been in talks since last August, when Starz says it discovered Bill & Ted's was available for streaming on Amazon. MGM allegedly claimed it had just become aware of 136 movies and 108 TV series episodes in breach of the library agreement, but Starz says it then discovered nearly 100 more movies.
The plaintiff is claiming damage in the form of lost profits, diminished reputation and loss of goodwill. Starz, represented by Evan Chesler at Cravath, brings causes of action including direct and contributory copyright infringement, breach of contract and breach of the covenant of good faith and fair dealing. Through the suit, Starz is eyeing MGM's profits and also demands an order enjoining MGM from infringing copyrights.
Starz is owned by Lionsgate and is frequently the subject of spinoff and M&A rumors.
MGM's outside attorney Orin Snyder, in a statement, responded, "The lawsuit is a transparent effort by Starz to use litigation to deflect attention away from its own competitive shortcomings. Starz is pretending that a routine licensing dispute with MGM, that had no meaningful financial impact, is the cause of Starz’s failure to win in the marketplace. We will vigorously defend against these claims.”