After years of losses and poor performance, Paramount Pictures posted its best box office results in a decade. The first five films released in theaters this year all took the top spot, culminating in Top Gun: Maverick, the highest-grossing film of the year.
But not everyone is celebrating. Many of the stars and producers of those films, including Tom Cruise, Sandra Bullock and the creators of “The Madman,” believe they will lose millions of dollars in the deal involving Paramount, its Paramount+ streaming service and the cable channel. Epix, owned by Amazon.com Inc.
Movie stars, producers and directors often receive a share of the profits from their films, including a share of digital sales and licensing to third parties. Those payouts can be in the tens of millions of dollars for a big movie like “Best Shot: Maverick,” starring Cruise, or millions for a smaller hit like “The Lost City,” starring Bullock.
According to several people familiar with the talks, profit-sharers at Paramount’s films believe their pay is lower than it should be because the studio is getting less from Epix than other studios in similar deals. Talent representatives have met with Paramount to ask for more money, said the people, who asked not to be named because negotiations are ongoing.
So far no one has threatened a lawsuit, lawyers are assessing their options. One possibility is that Hollywood unions will take action. The guilds also collect the residuals from these films, and Paramount’s deal with Epix means they may also have lost millions of dollars compared to what they get from other studios. The guilds declined to comment. Reps for Cruise, Bullock and “Crazy” star Johnny Knoxville did not respond to requests for comment.
In a statement to Bloomberg News, Paramount said it has not had an ownership interest in Epix for five years and that “our agreements are at market rates.”
Lawyers and agents have always lamented “Hollywood bookkeeping,” in which studios overstate costs and disguise profits to avoid sharing revenue with financial partners. Both sides would prefer to avoid a trial, but there have been several major cases over the past decade. AMC Networks Inc. was forced to pay 200 million dollars to one of the creators of “The Walking Dead”, and Fox settled a multimillion-dollar dispute with the participants of the “Bones” show.
Workers worry that the rise of streaming services has made it even easier for studios to hide their profits from talent through self-service. Most studios used to license their movies to premium cable networks like HBO, but now they license them to streaming services, often ones they own. Warner Bros. places its films on HBO Max, Walt Disney Co. sends its movies to Disney+, while Universal has a deal with its corporate sibling, Peacock. Universal also made a deal with Amazon.
Streaming services generally do not license their original films to others at all. Instead of giving talent an ownership stake in a project, Netflix, Amazon, and Apple buy their rights upfront. The Writers Guild has already won $42 million in arbitration from Netflix for what the union called “self-dealing” and $4 million from Amazon in unpaid balances.