Tom Cruise thinks ‘High Gun: Maverick’ studio Paramount is reducing him out of hundreds of thousands: sources

However not everyone seems to be celebrating. Lots of the stars and producers of those films, together with Tom Cruise, Sandra Bullock and the creators of “Jackass,” imagine they’re going to miss out on hundreds of thousands of {dollars} due to a deal between Paramount and the cable channel Epix.

Film stars, producers and filmmakers typically get a minimize of the income from their films, together with a share of digital gross sales and licensing to 3rd events. These paydays can quantity to tens of hundreds of thousands of {dollars} on a giant film like “High Gun: Maverick,” starring Cruise, or hundreds of thousands on a smaller-scale hit like “The Misplaced Metropolis,” starring Bullock.

Revenue contributors in Paramount films imagine their earnings are under what they need to be as a result of the studio is receiving much less from Epix than different studios are getting in related offers, in response to a number of individuals accustomed to the conversations. Representatives for the expertise have met with Paramount to ask for extra cash, mentioned the individuals, who requested to not be recognized as a result of the talks are ongoing.

Whereas nobody has threatened a lawsuit but, legal professionals are assessing their choices. One risk is that Hollywood labor unions will take motion. Guilds additionally gather residuals on these films, and Paramount’s cope with Epix means they too might have additionally missed out on hundreds of thousands of {dollars} relative to what they get from different studios. The guilds declined to remark. Representatives for Cruise, Bullock and “Jackass” star Johnny Knoxville didn’t reply to requests for remark.

In an announcement to Bloomberg Information, Paramount mentioned it hasn’t had an possession curiosity in Epix for 5 years, and that “our agreements are entered into at market charges.”

Attorneys and brokers have at all times bemoaned “Hollywood accounting,” during which studios overstate prices and disguise income in order to not share proceeds with monetary companions. Each side would reasonably keep away from a lawsuit, however there have been some large instances over the past decade. AMC Networks Inc. was compelled to pay $200 million to one of many creators of “The Strolling Useless,” whereas Fox settled a multimillion greenback dispute with the participants within the present “Bones.”

Staff fear that the rise of streaming providers has made it even simpler for studios to cover their income from expertise by self-dealing. Most studios used to license their movies to premium cable networks like HBO, however now they license them to streaming providers, typically ones they personal. Warner Bros. places its films on HBO Max, Walt Disney Co. sends its films to Disney+ and Universal has a cope with its company sibling, Peacock. Common additionally struck a cope with Amazon.com Inc.

Streaming providers usually don’t license their authentic films to others in any respect. Moderately than give expertise a share of the possession in a undertaking, Netflix, Amazon and Apple Inc. purchase out their rights up entrance. The Writers Guild has already secured $42 million in arbitration from Netflix Inc. for what the union referred to as “self-dealing” and $4 million from Amazon in unpaid residuals.

Paramount and Epix aren’t owned by the identical firm, however they was once. Paramount, Lions Gate Leisure Corp. and Metro-Goldwyn-Mayer created Epix in 2008 as an outlet for his or her films. Whereas these firms hoped that Epix would flip right into a viable participant, it by no means reached the stature of HBO, Showtime or Starz. To generate extra cash, Epix sub-licensed films to Amazon. Expertise didn’t squawk on the time as a result of Epix was paying related charges to different streaming providers and cable networks, the individuals mentioned.

In 2017, MGM took full management of Epix, shopping for out its companions. As a part of that deal, Paramount agreed to resume its film output cope with Epix for an additional 5 years. That grew to become an issue in 2020 when Paramount ready to relaunch its CBS All Entry streaming service as Paramount+. Paramount is greatest often known as a film studio, and but none of its new films can be obtainable on its flagship streaming service for years to return. It wanted to convey these films to Paramount+.

So early final yr, Paramount and Epix negotiated a brand new deal beneath which Paramount bought the rights to indicate most of its films on Paramount+ after a shortened window of simply 45 days in theaters, and Epix prolonged its deal for Paramount films by a yr.

Shortly after that, Common and Sony Group signed new licensing agreements as nicely. Netflix paid Sony about double what Epix paid Paramount, mentioned the individuals. Peacock and Amazon additionally paid Common greater than Paramount bought from Epix, despite the fact that Peacock and Common are a part of the identical firm. 

No one thought an excessive amount of about this on the time. However then expertise began to note the distinction between the Common and Sony paychecks and the Paramount paychecks. Paramount’s Epix deal expires on the finish of 2023. 

Join the Fortune Features electronic mail record so that you don’t miss our greatest options, unique interviews, and investigations.