Some actors have pointed out the opacity in the income that the production company obtains in the new era of streaming.
After years of losses and disappointing performance, movie studio Paramount Pictures has posted its best box office results in a decade. The first five films released in theaters this year opened at No. 1, culminating with Top Gun: Maverick, the highest-grossing film of the year so far.
But not everyone is celebrating. Many of the stars and producers of these films, including Tom Cruise, Sandra Bullock, and the creators of Jackass, believe they will miss out on millions of dollars due to a deal involving Paramount, its streaming service Paramount+, and the cable channel.
What about Paramount Pictures?
Epix, owned by Amazon.com Inc. Movie stars, producers, and filmmakers often take a cut of the profits from their films, including a cut from digital sales and third-party licensing. Those paydays can amount to tens of millions of dollars on a big movie like Top Gun: Maverick, starring Cruise, or millions on a smaller-scale hit like The Lost City, starring Bullock.
Participants in profits from Paramount films believe their profits are lower than they should be because the studio receives less from Epix than other studios in similar deals, according to several people familiar with the conversations. Talent representatives have met with Paramount to ask for extra money, said the people, who asked not to be identified because talks are ongoing.
Would actors sue Paramount Pictures?
While no one has threatened a lawsuit yet, attorneys are weighing their options. One possibility is that Hollywood unions will take action. The guilds also collect scraps on these films, and Paramount's deal with Epix means they too may have lost millions of dollars relative to what they get from other studios. The unions declined to comment.
Representatives for Cruise, Bullock, and Jackass star Johnny Knoxville did not respond to requests for comment. In a statement to Bloomberg News, Paramount said it has not had a stake in Epix for five years and that “our agreements are entered into at market prices.”
Lawyers and agents have long complained about “Hollywood accounting,” in which studios overstate costs and disguise profits so as not to share profits with financial partners. Both sides would prefer to avoid a lawsuit, but there have been some notable cases in the last decade. AMC Networks Inc. was forced to pay $200 million to one of the creators of The Walking Dead, while Fox settled a multimillion-dollar dispute with the contestants of the show Bones.
Workers worry that the rise of streaming services has made it even easier for studios to hide their profits from talent through proprietary businesses. Most studios used to license their movies to premium cable networks like HBO, but now they license them to streaming services, often owned by them.
Warner Bros. puts its movies on HBO Max, Walt Disney Co. sends its movies to Disney+ and Universal has a deal with its corporate sibling, Peacock.
Universal also reached an agreement with Amazon. Streaming services generally do not license their original movies to others. Instead of giving talent a piece of ownership of a project, Netflix Inc., Amazon, and Apple Inc. buy their rights in advance.
The Writers Guild has already obtained $42 million in arbitration from Netflix for what the union called “self-negotiation” and $4 million from Amazon in residuals.
