TSG Entertainment is in the midst of suing Twentieth Century Fox and Disney for alleged breach of contract, claiming it was deprived of millions after helping finance ‘Avatar: The Way of Water’ and the ‘Deadpool’ franchise.

A lawsuit recently filed alleges the studio intentionally withheld profits, and cuts deals in order to boost its own streaming platforms, Hulu and Disney+, at the expense of TSG.

It also claims the actions had deprived TSG of cash it needed to exercise options to invest in individual films, and efforts to sell stakes in other films were hindered.

TSG have claimed spending $3.3 billion over the last decade, co-funding over 140 movies, which included ‘Hidden Figures,’ ‘Jojo Rabbit,’ ‘The Shape of Water,’ and ‘The Banshees of Inisherin.’

TSG have claimed Disney and Twentieth Century Fox “have tried to use nearly every trick in the Hollywood accounting book” to deprive it “of hundreds of millions of dollars.”

Public battles between entertainment companies, actors and writers are quite common, however its rare for a film financier and a studio to end up in court, as disputes are usually resolved behind the scenes.

The terms of a deal between TSG and the studio state any dispute gets filed in court firsthand, before the two agree on a private judge.

TSG is known for its longstanding relationships with Warner Bros. and Sony Pictures. The partnership with Fox Studios was slashed in 2012, but has been amended multiple time since.

Typically, a financier (such as TSG) will invest in a range of films, and can subsequently invest in more individual titles within a time frame determined in the terms of a deal.

Recently TSG requested an audit after it noticed a decline in profits, and after examination, the company alleges it found “rampant self-dealing” and “accounting tricks” showcasing it was underpaid by $40 million.

The company also claim it wasn’t credited with revenue that should have been received, and claimed it was charged tens of million for distribution fees not part of its revenue participation agreement.

In some senses, this lawsuit is similar to the one filed in 2021 by Scarlett Johansson against Disney, when the company put ‘Black Widow’ on Disney+ at the same time of the theatrical release.

It was argued this breached her contract, which had guaranteed an exclusive theatrical release, which factored into her salary.

TSG is being represented by John Berlinski from Bird Marella, which is the same lawyer used by Scarlett.

TSG have also alleged a recent renegotiation of the deal with Fox Studios and Warner Bro. Discovery’s HBO channel, and Max streaming service also had a similar effect of profits.

The terms of the original agreement state, HBO paid a premium for an exclusive window to carry its movies on the service.

Back in 2021, the deal changed to give Disney the right to put films on Disney+ and Hulu, at the same time as HBO, which gives up exclusivity, and the license fees were reduced.

It was alleged the revised deal cost Fox “many millions of dollars,” some of which TSG would have received.

TSG have also claimed it tried to exercise a right to sell stake in other films that were funded back to the movie studio or to a third party. This was refused by Disney challenging what films TSG believed it had the rights to sell off.

This meant TSG didn’t have the resources to invest more in certain films including ‘Avatar: The Way of the Water.’