Disney is facing another lawsuit over its distribution practices. Scarlett Johansson made headlines in 2021 when she sued Disney for diminishing potential box office returns by simultaneously releasing Black Widow theatrically and on Disney+. Now the studio has a similar lawsuit on its hands, but this time it's coming from their Film Finance Partner TSG, who claim the studio is hoarding profits from their films.
TSG was originally partnered with Fox, which was acquired by Disney back in 2019. Since the acquisition, TSG has worked on projects like Avatar: The Way of Water and The Banshees of Inisherin. According to Deadline, the company is suing Disney over how it has shifted its distribution since COVID-19, and the industry-wide focus on streaming. The defendants, which Disney and Fox are named as in the lawsuit, allegedly are hoarding profits by shortening their theatrical windows in favor of streaming profits. TSG claims that this model comes at the expense of financing partners.
This is similar to the Johansson lawsuit because her case also surrounded profits being diminished by streaming. The Marriage Story actress had negotiated a percentage of box office profits when she signed on for Black Widow. At the time, the Oscar nominee argued that the film did not do as well at the box office due to the film streaming on Disney+ the same day. Therefore, this may have made her own profits from the film lesser, as she did not negotiate streaming profits as well. At the time, Disney had just started doing streaming releases for their blockbuster films, and she claimed she had no way of knowing that their distribution plan would have differed from previous MCU projects. Johansson eventually settled the lawsuit with Disney in October 2021.
While Disney has limited simultaneous releases as theaters are attracting audiences once again, their theatrical window has still been shortened after shifting focus to building up Disney+. Some blamed this shift in focus for Disney on former CEO Bob Chapek, who seemed to want to prioritize the centralization of distribution for Disney. This means Disney would be in control of all aspects of production as well as release, instead of having to share distribution profits with theaters and third-party distribution companies. Chapek’s leadership was rumored to be unpopular, and Bob Iger was reinstated as CEO in November 2022.
Along with streaming distribution financial losses, TSG has also named the resulting lack of cash flow as another issue in the lawsuit. The company claims that the cash flow made it difficult to invest in Avatar: The Way of Water, which was a box office sensation, and a major theatrical money maker. This also leads back to the streaming model. While streaming seemed like a logical focus for Disney as Netflix and home media has become more popular, it doesn’t seem to be benefiting everybody. Johansson was able to settle her lawsuit with the conglomerate, so we will have to wait and see if TSG does the same.
Details about this lawsuit just were released, and we’ll continue following the situation to see how it plays out, and if this has a major impact on how Disney distributes its content in the future. Disney’s, and the rest of the industry’s focus on streaming is also a major point of contention for the 2023 Writers Strike and SAG-AFTRA Strike, so profit margins due to the practice will continue to be discussed as it becomes more and more prevalent in upcoming years.
