"Spinal Tap" Gang, Sylvester Stallone Independently Suing Hollywood to End Abuse of "Hollywood Accounting"

I don't know how they do it, or how they get away with it, but Hollywood is notorious for claiming that films which plainly made a profit did not make a profit. They seem to invent new costs to charge against a film as its revenues rise, so that the the film supposedly never actually gets into the black.

One big and famous scam is "net points." Net points (I think each point is a quarter of a percent) are shares of the profits, net, after costs (and also "costs") are deducted. Net points are widely regarded as a scam because almost no films ever have any net profits -- supposedly.

I remember reading Hit and Run, about Sony Columbia, where the original producers of Batman, the 1989 film and one of Hollywood's biggest money makers, had net points in the production.

As of the publication of Hit and Run, years and years after Batman had made lots of money in theaters and video sales and TV broadcasts, Sony Columbia was still telling these guys Batman had failed to make a net profit, so they were owed no money.

People are advised to accept only gross points, shares of revenues before costs are deducted.

But I guess even when you have a gross point profit share, studios have a way of keeping from paying you.

Or so Stallone alleges.

On Wednesday, through his loan-out company Rogue Marble, Stallone filed contract and fraud claims against the studio. In a complaint lodged in Los Angeles Superior Court, Stallone alleges that the participation statement doesn't make sense while demanding a fuller accounting on Demolition Man, which also starred Wesley Snipes and Sandra Bullock. The film made about $58 million upon its theatrical release and much more in home video sales.

In taking on Warner Bros., Stallone is fighting the same studio that distributed Creed, which earned the actor an Oscar nomination. But the 70-year-old actor believes the time is right and is making a stab at doing something about "Hollywood Accounting" with the stated intention of helping others in the creative community.

"The motion picture studios are notoriously greedy," states the complaint. "This one involves outright and obviously intentional dishonesty perpetrated against an international iconic talent. Here, WB decided it just wasn't going to account to Rogue Marble on the Film. WB just sat on the money owed to Rogue Marble for years and told itself, without any justification, that Rogue Marble was not owed any profits. When a representative of Rogue Marble asked for an accounting, WB balked and then sent a bogus letter asserting the Film was $66,926,628 unrecouped. When challenged about this false accounting, it made a double-talk excuse, then prepared an actual profit participation statement for the same reporting period, and sent a check for $2,820,000 because the Film had in fact recouped its deficit."

According to the lawsuit, Stallone got 15 percent of defined gross once the picture earned $125 million. When Demolition Man earned more than $200 million, his take would escalate to 17.5 percent, and when it surpassed $250 million, his profit participation would climb to 20 percent.

Demolition Man, states the complaint, achieved at least $125 million, so Stallone asserts he's entitled to at least 15 percent.

Stallone says that after 1997, he got no profit participation statements until his agent reached out to Warners in 2014 to inquire.

In January 2015, he received a short summary which noted an alleged deficit for the film and stated that no payment was due.

Harry Shearer is likewise suing Vivendi for $125 million, because Vivendi is apparently claiming Spinal Tap -- one of the most enduring and forever-selling movies -- it only just became slightly profitable, and apparently there haven't been any profits from This is Spinal Tap merchandise.

Shearer mentions a couple of other flops which haven't turned a profit:

The well-known science-fiction "flop" of a film, Return of the Jedi, has apparently never gone into profit despite earning almost $500 million worldwide. Harry Potter and the Order of the Phoenix, apparently "lost" almost $170 million.

At his site Fairness Rocks, he makes these points (among others):

It appeared Vivendi had wilfully concealed and manipulated years of accountings to retain monies due to the film’s creators. The failure to provide accounting and the gaps in statements coincided with the years where activity would have enhanced revenue.

Millions of dollars in undocumented marketing and promotional expenses were allegedly incurred years after release, as were undocumented charges for "freight and other direct costs". All this, almost 20 years after the film's initial launch.

According to Vivendi, TIST took 27 years to recoup.

On merchandise profits:

The creators have always been entitled to revenues from sale of TIST merchandise. But according to Vivendi accounting, no merchandise revenue has been generated worldwide in over 20 years.

Shearer's representatives have informed Canal on numerous occasions of the existence of unlicensed items using the trademark or third party products branded in association with the film/band. Thousands of TIST-branded items are offered for sale online.

Harry discovered that not only has Canal failed to enforce the trademarks, it had actually abandoned its registrations in 2011. Yet Canal still claims rights against the creators if they want to use the Spinal Tap name. Harry has now filed trademark applications to reclaim creative rights to use the names "Spinal Tap" and "Derek Smalls" without interference from Vivendi.

I realize no one really cares that much about well-paid Hollywood stars, but it would be nice to punch the Hollywood studios in the face. Matter fact, I'd like to see them sent to Bitch School.

Conincidentally, I was just watching Red Letter Media's Re:View of Demolition Man, where it was mentioned (claimed by Denis Leary) that Stallone had a driving range and a golf pro on the set so he could strike balls between scenes.

It's very extravagant, but I guess when you take into consideration that people know their only opportunity to get paid comes from the up-front payment and whatever else they can extract from the studio via silly demands, maybe it kind of makes sense to just ask for really stupid shit upfront. What do you care if the movie budget winds up stupid-bloated with your dumb contract riders?

You know you're not getting paid a part of the movie's profits either way. Might as well make dumb demands up-front.

Thanks to Herbert.

posted by Ace at 06:04 PM

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