Bloomberg News

Miramax, Weinsteins Sue Time Warner Over ‘The Hobbit’ Share (2)

December 11, 2013

Miramax LLC and its founders, Harvey and Bob Weinstein, sued Time Warner Inc. (TWX:US) for $75 million over claims they were deprived of their share of revenue from the movie adaption of J.R.R. Tolkien’s book “The Hobbit” after it was split into three different films.

Time Warner units New Line Cinema Corp. and Warner Bros. Entertainment Inc. are accused in the lawsuit, filed yesterday in New York State Supreme Court in Manhattan, of using their decision to split the screen adaptation of the book into three films to keep revenue due Miramax and the Weinsteins.

“Warner’s position is simply an improper attempt to deprive the people originally responsible for hugely successful films being made from the works of J.R.R. Tolkien of their right to share in revenue from two out of the three filmed installments of Tolkien’s ‘The Hobbit,’” the plaintiffs said in the complaint.

Time Warner and Metro-Goldwyn-Mayer Inc. are set to release “The Hobbit: The Desolation of Smaug,” the second of three films planned from the 1937 novel, on Dec. 13. Time Warner filed for arbitration in the dispute last month with JAMS, a private alternative dispute resolution provider, said Paul McGuire, a spokesman for Warner Bros.

“This is about one of the great blunders in movie history,” Warner Brothers said today in a statement. “Fifteen years ago Miramax, run by the Weinstein brothers, sold its rights in ‘The Hobbit’ to New Line. No amount of trying to rewrite history can change that fact. They agreed to be paid only on the first motion picture based on ‘The Hobbit.’ And that’s all they’re owed.”

Rights Sold

The plaintiffs said they sold the film rights to “The Hobbit” and Tolkien’s three “Lord of the Rings” books to New Line in 1998, after they had already spent $10 million adapting the works.

In exchange, New Line promised 5 percent of the gross receipts for the “first motion picture based on the books,” excluding remakes, Miramax and the Weinsteins said in their complaint.

The “Lord of the Rings” books were made into separate films. “The Hobbit” was split into three films, and Warner Bros. says it doesn’t need to pay the 5 percent fees for the second and third ones because they are, in effect, remakes, according to the complaint.

Weinsteins, Baggins

The Weinstein brothers founded Miramax in 1979 and sold the company to Walt Disney Co. (DIS:US) in 1993. The brothers left to start the Weinstein Co. in 2005. Filmyard Holdings LLC, an entity that includes Colony Capital and investor Ronald Tutor, bought Miramax from Disney for $663 million in 2010.

In “The Hobbit,” Bilbo Baggins is recruited by the wizard Gandalf to join an expedition of dwarfs seeking to reclaim their homeland and a treasure lost to the dragon Smaug. The book was published in 1937, almost two decades before the first of Tolkien’s “Rings” novels, which pick up the story of Middle Earth following Baggins’s journey.

The three “Lord of the Rings” movies, released from 2001 to 2003, generated worldwide ticket sales of $2.91 billion, according to Box Office Mojo, an industry researcher. “The Hobbit: An Unexpected Journey” produced $1.02 billion in worldwide revenue.

The case is Miramax LLC v. New Line Cinema Corp., 161383/2013, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at

cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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