Studio, Melrose II investors end back-and-forth over accounting
Paramount has settled a massive lawsuit with its investors, ending more than a year of back-and-forth litigation that underscored some of Wall Street’s frustration with Hollywood.
An attorney for the investment group, dubbed Melrose II, confirmed that the suit had been settled last week. Terms were not disclosed.
The investors, who poured $375 million into 29 pics including “Mission Impossible III” and the “Transformers” films, sued Par in 2011, claiming they had never seen profits from movies which had grossed billions of dollars worldwide.
The suit accused Paramount and parent company Viacom of an opaque accounting process that withheld money from the investors. Financiers originally sued for an audit before naming their dollar amount.
Par’s legal woes aren’t helping the studio in its quest for more cash, as every major except for Disney looks for off-balance sheet production capital to reduce risk.
In 2008, several investors from Par’s Melrose I co-financing vehicle sued the studio for securities fraud. In 2010, investors in Marathon Funding filed a suit over profits from “No Country for Old Men.”
Conflicts exemplify some of Wall Street’s irritation with Hollywood, after financiers pumped billions of dollars into slate financing deals between 2005 and 2008 that produced disappointing returns.