Lawsuit Filed over Accounting for Hollywood Films

Movie production company Nu Image has filed suit against a former subsidiary of Starz Media over the accounting for three of its movies, starring actors such as Al Pacino, Robert De Niro and Diane Keaton.

The lawsuit was filed last week by Nu Image and another plaintiff, Brooklyn’s Finest Distribution, against Overture Films, a movie production company that has now closed, according to the blog Deadline Hollywood. It involved three movies on which the companies had partnered: “Brooklyn’s Finest,” a 2009 police movie starring Richard Gere, Don Cheadle and Ethan Hawke; “Righteous Kill,” a 2008 crime movie starring Robert De Niro and Al Pacino; and “Mad Money,” a 2008 comedy starring Diane Keaton and Queen Latifah.

According to the complaint, starting in 2010, after “Brooklyn’s Finest” was released, Starz Media LLC provided the plaintiffs on behalf of Overture Films with “participation statements” that “purportedly reflected the gross receipts and distribution expenses incurred by the defendants,” but the statements “were extremely sparse and oblique, and provided virtually no breakdown as to how such reported figures were calculated.”

Similar charges were made about the participation statements provided by Starz about “Righteous Kill.” Despite grossing over $16 million in its opening weekend and eventually earning approximately $40 million at the box office in the U.S. and Canada, Starz indicated to Nu Image that “this title is in a significantly unrecouped position, and based upon anticipated activity, we do not expect that any profit participation sums will become due in the foreseeable future.” Similarly, Nu Image said it didn’t receive a percentage of net proceeds from “Mad Money.”

The plaintiffs’ auditors requested financial information and transactional details from Starz to substantiate the information in the “participation statements,” but the lawsuit claims that much of the requested information was never provided to the auditors. The lawsuit does not name Starz Media or Starz Entertainment as a defendant, but the plaintiffs reserved the right to amend the complaint at a later time. Starz did not immediately respond to a request for comment.

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