Weinsteins File Lawsuit Against Time Warner Over 'Hobbit' Sequels Profits

UPDATED: The move comes on the heels of escalating tensions between the two camps, including Warner Bros. and its New Line division initiating arbitration proceedings.
Warner Bros.

Harvey Weinstein has made good on his threat to file a lawsuit against Time Warner, studio Warner Bros. and its New Line division over claims to a percentage of revenue from the next two Hobbit films.

As Warner Bros. prepares to release The Hobbit: The Desolation of Smaug on Friday, The Weinstein Co. filed a lawsuit late Tuesday night in New York Superior Court. The Weinstein complaint asks for $75 million.

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The move comes on the heels of escalating tensions between the two camps. The Weinsteins, repped by attorney Bert Fields, and the studio began trading nasty letters in November. As THR first reported, Warner Bros. and its New Line division initiated arbitration proceedings against Miramax on Nov. 26 over former owners Harvey and Bob Weinstein's claims to a percentage of revenue from Smaug and its follow-up, The Hobbit: There and Back Again.

Warner Bros. says in a statement: "This is about one of the great blunders in movie history. Fifteen years ago, Miramax, run by the Weinstein brothers, sold its rights in The Hobbit to New Line. No amount of trying to rewrite history can change that fact. They agreed to be paid only on the first motion picture based on The Hobbit. And that's all they're owed."

With last year's The Hobbit: An Unexpected Journey, the Weinsteins collected $12.5 million, or 2.5 percent of first-dollar gross of the film's $1 billion haul, according to a studio source (the studio typically splits box-office receipts with exhibitors).

The Weinstein cut was the result of an agreement inked in 1998 when the brothers owned Miramax, which once controlled film rights to the J.R.R. Tolkien fantasy and its sister property The Lord of the Rings. THR obtained a copy of the original Hobbit contract (read it here), which contains language that arguably could support both interpretations.

Though the brothers had nothing to do with the production of the Lord of the Rings films, a source says they did put up early seed money, including $10 million to help director Peter Jackson start special-effects house Weta, which became instrumental in making the three Lord of the Rings films at a modest budget (the trilogy earned some $3 billion at the box office worldwide.

The Weinsteins contend that they and Miramax are entitled to a piece of all Hobbit films. But Warners' position is that the contract limited the Weinsteins merely to a cut of the first Hobbit, not its two sequels.

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If New Line and Warners are forced to pay the Weinsteins again, they would dole out roughly 5 percent of Smaug's first-dollar gross to Miramax, which then would split that sum with the Weinstein brothers. Other stakeholders in the property include the estate of author Tolkien and producer Saul Zaentz.

Warners has retained Evan Chesler at Cravath Swaine & Moore in New York and John Spiegel at Munger Tolles & Olson in Los Angeles.

The Hobbit: There and Back Again is set for release in December 2014.

Email: Tatiana.Siegel@THR.com
Twitter: @TatianaSiegel27