Jackson could still make The Hobbit

[Particle_Man]

I disagree. New Line's tactics have nothing at all to do with who is right and who is wrong. It's basic defense - oppose the other side for a long time, to foster settlement. They could be very confident they are correct, and still not want an audit any time soon.

Why wouldn't they want an audit if they are not in the wrong?

 

[Vocenoctum]

Why wouldn't they want an audit if they are not in the wrong?

Because the stuff they're argueing about is not as cut & dry as it may seem. This is not about hidden money, it's about stuff like whether they took a contract that earned them less money than if they'd done more shopping around.

For instance, LotR toys contracted to Toy Company X (who is part of New Line, or allied, or whatnot). Could they have gotten more money from Toy Company Y?

How do you prove that now? LotR was a huge gamble, and saying that the folks that would give good money for the contract now, would have invested that money BEFORE Fellowship was a hit, it's just not possible to judge it. So, does the mediator look at it, say "hey, it's obvious LotR was gonna be a hit" and award Jackson money for it?

 

[Umbran]

Because the stuff they're argueing about is not as cut & dry as it may seem. This is not about hidden money, it's about stuff like whether they took a contract that earned them less money than if they'd done more shopping around.

You have a cite on that? Because it hasn't been in any official statement I've seen, and if it has been, I'd like to see it...

 

[Vocenoctum]

You have a cite on that? Because it hasn't been in any official statement I've seen, and if it has been, I'd like to see it...

One of the old threads had a couple links to new agencies, I didn't save them. Google found this: http://www.nytimes.com/2005/06/27/b...a16f91a8555&ei=5090&partner=securitas&emc=rss

"Lawsuits in Hollywood are as common as hobbits in Middle Earth. What makes Mr. Jackson's suit draw such widespread interest here, other than his clout in the industry and the amount at stake, is one specific allegation about New Line's behavior. The suit charges that the company used pre-emptive bidding (meaning a process closed to external parties) rather than open bidding for subsidiary rights to such things as "Lord of the Rings" books, DVD's and merchandise. Therefore, New Line received far less than market value for these rights, the suit says."

Like I said, the problem with it from my view, is that it wasn't an issue before the films were blockbusters. Now that they are blockbusters, I'm sure plenty of places would have paid through the nose for these rights, but how can you accurately judge what someone would have paid when it was The Director Of the Frighteners making a fantasy elf story?

Who knows what the amounts SHOULD be, so how can you determine what they should have been, and then take Jacksons percentage?

 

[Mark]

Like I said, the problem with it from my view, is that it wasn't an issue before the films were blockbusters. Now that they are blockbusters, I'm sure plenty of places would have paid through the nose for these rights, but how can you accurately judge what someone would have paid (. . .)?

"Accurately judge?" That is a hypothetical that cannot be answered nor would anyone try, legally, to do so, I dare say. However, courts are meant to "reasonably judge" such hypotheticals and given that the property, LotR, had a bit of a following over the years, one might conclude that it should do fairly well in open bidding. What it could reasonably be expected to do likely falls somewhere between what was paid in pre-emptive bidding and one would find if one looked toward what other similar blockbuster trilogies managed to garner in open bidding and set a figure commensurate with those.

 

[Vocenoctum]

"Accurately judge?" That is a hypothetical that cannot be answered nor would anyone try, legally, to do so, I dare say. However, courts are meant to "reasonably judge" such hypotheticals

That's really just semantics, reasonably judge accurately, whatever. My point was, they're going to look back and make up some number.

and given that the property, LotR, had a bit of a following over the years, one might conclude that it should do fairly well in open bidding. What it could reasonably be expected to do likely falls somewhere between what was paid in pre-emptive bidding and one would find if one looked toward what other similar blockbuster trilogies managed to garner in open bidding and set a figure commensurate with those.

and that made up number will almost assuredly be more than what it was, therefor New Line loses money. Should they lose money? Sure, but by the same token, this should have been debated long ago. It's understandable perhaps that Jackson didn't get into the intricacies of the bidding arrangements, but at the same time if the contract left that up to New Lines sole discretion, then frankly Jackson signed on the dotted line and should take it like a man.

And, anyway, it wasn't a "blockbuster trilogy" before it's release. I can think of a few trilogies through the years, but how many that were filmed & made AS a trilogy?

For instance, I'm sure add-on licenses for LotR were a lot more lucrative than for Kill Bill. Could you judge which was worth more before the releases though?

Most trilogies evolved over time. Spiderman 1, Star Wars, even Raiders of the Lost Ark were successful movies before evolving into trilogies. The success of the first movie played a large part in the licensing rights for the second movies. LotR was one movie in three parts, and the rights were decided (I'd imagine) up front of the entire thing.

 

[Mark]

That's really just semantics

Not really, not just semantics. It is like the difference between a reasonable doubt and a doubt. Courts and their rulings are meant to be reasonable, not infallible. The standard you espouse would never allow for reasonable closure to most issues. As to why it is coming to a head, I suspect it is because of the limitations of the licensing and how that situation gives Jackson added leverage.

 

[Vocenoctum]

Not really, not just semantics. It is like the difference between a reasonable doubt and a doubt. Courts and their rulings are meant to be reasonable, not infallible. The standard you espouse would never allow for reasonable closure to most issues. As to why it is coming to a head, I suspect it is because of the limitations of the licensing and how that situation gives Jackson added leverage.

I say semantics, because I doubt anyone reading my post would think when I typed "accurately" I meant "without error" as opposed to "with some reasonable amount of accuracy".

Reasonable doubt is a different thing, it's closer to the difference between innocent and not-guilty. If someone had posted saying "So & So found innocent", it wouldn't be needed to point out that they were just found not-guilty...

 

[Steel_Wind]

Because the stuff they're argueing about is not as cut & dry as it may seem. This is not about hidden money, it's about stuff like whether they took a contract that earned them less money than if they'd done more shopping around.

No, it's often both.

The hidden money is in form of double expense recovery, or improper expense recovery. You use another film's expenses to offset revenue against the one that made money. This excludes income from being passed to the corp that is required to share it.

Example: You use Foreign distribution company #1. It's distributing 4 films that year. It has expenses. You charge off the same expense, multiple times, against each film.

You do the same in foreign distribution corp #2, #3, #4 etc.

You oppose complete disclosure of all expenses charged to all four films, on the basis of relevancy and privacy in respect of the other three films' expenses. And you force motions and resist disclosure like hell.

"Nothing to see here - just normal defence tactics"

Sh'yeah. Right.

I'd like to say the practice is rare; my professional experience indicates otherwise.

Companies operating on the level do not oppose audits when the plaintiff pays for them. Such audits do not cost the defence much if anything, and the plaintiff proves it has no case. Courts order them routinely.

The fight is over scope of the audit and who pays for it, and who pays for admin expenses and document gathering and assembly.


The fight comes down to:

1) "audit us - hell no!" when they are guilty; and,

2) fights over who pays for it in all cases, guilty or not.

Scope is simply an adjunctive battlefield in 1& 2 above.

 

[Vocenoctum]

No, it's often both.

The hidden money is in form of double expense recovery, or improper expense recovery. You use another film's expenses to offset revenue against the one that made money. This excludes income from being passed to the corp that is required to share it.

Quite possibly, but I haven't seen this mentioned in any of the Jackson / New Line stuff.

I assume New Line expects to pay more, and Jackson expects to get less than he's asking. The case is just figuring out where they meet.