Tolkien heirs sue Lord of the Rings studio for $150m

[Neil D]

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Staff and agencies

Tuesday February 12, 2008

guardian.co.uk

Getting away with Mordor ... Tolkien's estate claims studio New Line has not paid it a penny in profits owed

JRR Tolkien's estate is suing the studio behind the Lord of the Rings trilogy and threatening to block production on the planned prequel, The Hobbit over claims it has not been paid its share of profits from the massively successful fantasy series.

The suit, filed yesterday in Los Angeles by the Tolkien Trust, a UK charity which manages the writer's estate, and HarperCollins, the novels' original publisher, alleges that New Line failed to pay "even one penny" from profits generated by the three films, which have amassed close to $6bn (£3bn) since 2001.

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In the complaint, the plaintiffs accuse the studio of "unabashed and insatiable greed" and of engaging in the "infamous practice of creative 'Hollywood accounting'."

Perhaps more worrying for Tolkien fans looking forward to seeing the planned Lord of the Rings prequel, The Hobbit, hit the big screen, the suit also calls for "a declaration from the Court that the plaintiffs have a right to terminate any further rights New Line may have to the Tolkien works under the agreements, including The Hobbit, due to the serious and material nature of the breach of the agreements".

"I cannot imagine how on earth New Line will argue to a jury that these films could gross literally billions of dollars, and yet the creator's heirs, who are entitled to a share of gross receipts, don't get a penny," Bonnie Eskenazi, the plaintiffs' US-based lawyer, said in a statement.

The plaintiffs are asking for at least $150m, representing 7.5% of gross revenues, after deduction of certain costs. They claim New Line excluded certain revenues from its calculations, and artificially inflated costs so that it did not have to pay the money owed to it.

New Line has yet to comment on the case.

The case is the second court case brought against New Line. Three years ago, director Peter Jackson started legal proceedings again the studio over profits from the three films.

The parties came to an agreement last December, paving the way for Jackson to serve as producer on New Line's forthcoming adaptation of The Hobbit, the novel that precedes the Lord of the Rings trilogy.

[fccool]

Ahahahaha. They probably formerly agreed to a higher percentage of the Net rather than Gross! I don't know, but I suspect that is the case because they are blaming creative accounting. In Hollywood there is virtually no net income as those accountants are indeed extremely creative.

If that's the case... most likely they won't get a penny.

[CyberGuy]

I was looking forward to the Hobbit. Now it may never be filmed. A percentage of the gross seems kind of steep to me as well.

The problem with the net is a corporating can pad a film with all sorts of accounting costs that are not really valid to make it seem less profitable. That is why they go with the gross.