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Studiocanal Sues Universal After Working Title Partnership Audit

Studio accused of under-reporting, double-charging

Studiocanal filed suit against Universal on Thursday, claiming that they are owed tens of millions and “likely much more” after doing an audit of their partnership to make movies under the Working Title Films banner.

The suit, filed in Los Angeles Superior Court, seeks unspecified damages, as well as a private arbitration Studiocanal said is required through its partnership agreement.

Studiocanal claims that U “intentionally hid from the partnership and kept for itself” returns from off-balance-sheet financing arrangements, that the studio reported “negligible” amounts from ancillary revenue like music publishing; retained for itself the financial benefits from vendors and “double charged’ the partnership for producing and other fees paid to Working Title. In addition, Studiocanal claims that U deducted millions in “unsubstantiated expenses” before reporting results to its partner.

Studiocanal said that it filed suit after conducting an audit, but that it only covered six of the joint venture’s 44 movies and focused on only a few territories. The suit said that its efforts to resolve the situation with U execs has been rebuffed, with the studio failing to provide requested documents and having halted sending accounting statements. “In short, Universal is behaving as if its partner Studiocanal does not even exist.”

The partnership produced movies ranging from “About a Boy,” “Billy Elliot, “Pride and Prejudice” and “United 93.” For a part of the time, U and Studiocanal were corporate siblings owned by French conglom Vivendi.

As an example. Studiocanal says that when Studiocanal declined to fund “The Interpreter,” Universal failed to refund the overhead and development costs for the movie. It also said that it charged development costs to Studiocanal for movies made after their joint venture ended.

The suit claims breach of fiduciary duty, constructive fraud, breach of contract and breach of the implied covenant of good faith and fair dealing, among other claims.

Studiocanal is represented by a legal team led by Robert Schwartz at O’Melveny & Myers.

A spokeswoman for Universal did not immediately respond to a request for comment.

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