Harvey Weinstein Sues Over ‘Hobbit’ Profits

Harvey Weinstein

Suit filed with second 'Hobbit' film about to open

Bob and Harvey Weinstein have sued New Line and Time Warner over the companies’ decision to split the “Hobbit” movies into three parts and the studio’s refusal to pay them profits for the second and third films — eliciting a bitter  rebuke from New Line’s parent Warner Bros.

“This case is about greed and ingratitude,” the brothers asserted in the suit, filed in New York State Court on Tuesday on their behalf by Miramax LLC.

New Line parent Warner Bros., which took the dispute to arbitration last month, fired back by stating that the case is without merit — adding that the brothers goofed when they sold the rights in 1998.

“This is about one of the great blunders in movie history,” Warner Bros. said. “Fifteen years ago Miramax, run by the Weinstein brothers, sold its rights in ‘The Hobbit’ to New Line. No amount of trying to rewrite history can change that fact. They agreed to be paid only on the first motion picture based on The Hobbit. And that’s all they’re owed.”

The Weinsteins issued a statement blasting Warner Bros., saying that they are “surprised and frustrated” by the position Warner Bros is taking.

“Since the beginning, Miramax, Harvey and Bob Weinstein have been a force in getting these books to the screen,” the brothers said. “In fact, they funded the initial technology for the films at Peter Jackson’s WETA. Without these early investments, none of these pictures would have been made. We are shocked that New Line and Warner Bros don’t recognize that fact.”

The Weinsteins are seeking $75 million in damages. Their suit said that they had invested $10 million into developing “The Hobbit” as a film when New Line acquired the film rights in 1998 and agreed to pay 5% of the profits from the first film to the Weinsteins.

“The position they have taken, in our view, is not in line with the contract we signed,” the Weinsteins said of Warner Bros. “That contract stated that the story of The Hobbit was to be told over three movies. Thus, Miramax and The Weinstein’s have the rights to all three. We will let the courts decide and feel confident we will ultimately prevail.”

The lawsuit filing comes on the eve of the worldwide launch of “The Hobbit: The Desolation of Smaug,” Peter Jackson’s second “Hobbit” movie, co-financed by Warner’s New Line Cinema division and MGM.

The studio filed for arbitration last month in New York with JAMS Inc., formerly Judicial Arbitration and Mediation Services.

The Weinsteins participated in the profits from New Line’s “The Lord of the Rings” trilogy due to part of the rights being controlled during the 1990s by Miramax when the brothers were in charge of the minimajor but and unable to convince Disney to finance more than a single film. New Line took over and made three films with Jackson, grossing  nearly $3 billion worldwide.

Warner Bros. has paid the Weinsteins more than $100 million in profits for “The Lord of the Rings” trilogy and for “The Hobbit: An Unexpected Journey.”

Warner Bros. has asserted that, under the 1998 agreement, Miramax and the Weinsteins are entitled to profits on “The Hobbit: An Unexpected Journey,” which grossed $1 billion worldwide, but not on the two sequels.

Besides Warner Bros., Miramax and the Weinsteins, the participation agreement on the first Hobbit film included MGM, the estate of author J.R.R. Tolkien and producer Saul Zaentz.

Warner Bros. has engaged Evan Chesler at Cravath Swaine & Moore in New York and John Spiegel at Munger Tolles & Olson in Los Angeles. Miramax and the Weinsteins are represented by New York-based David Boies.

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  1. gary s. says:

    Harvey, you of all people accusing someone of “greed and ingratitude”? Here’s an anecdote from my book to remind you to look in the mirror before you speak!:

    “The smartest guy I ever met in my time consulting for entertainment companies was probably Harvey Weinstein, now one of the most powerful execs in the movie business. I said “smartest”, I DIDN’T say “nicest”! Harvey and his brother, Bob, entered my office in early 1985 wearing sweat suits with hoods (I swear!). Their start-up company, Miramax, had yet to have its first film shown in a movie theater. They didn’t even have a written business plan. But man, Harvey sure could articulate his vision, and it was indeed brilliant and creative. I initiated, and then escorted them to, a meeting with the most prominent lending banker in the industry back then, Credit Lyonnais.

    At meeting’s end, Harvey committed to me that if I were to quit my job at the investment banking firm and work as exclusive consultant to Miramax, I would be granted a substantial slug of stock options to make the speculative nature of the assignment worth my while. Stupid me. I trusted his handshake.

    The next week, I quit my cushy job and showed up at Miramax’s offices. “Okay Harvey, I’m all yours”, I said. With a demeanor as cold as ice, Harvey replied, “Sorry Gary, it’s a no-go on our agreement. Bob and I are selling control of the company for $5 million.” I was stunned and angry and I didn’t hold back. “I’m glad this happened, Harvey!”, I shouted. “Selling out for only five million? I obviously felt more strongly about the business plan than YOU did!” I stormed out and slammed the door.

    The next week, I read in Variety that the proposed sale of the Miramax stake was terminated. Seven years later, Harvey and Bob sold their stake to Disney for 10 times that price. And in 2010, Disney sold Miramax to a group of investors for $660 million!”

    P.S. I have no such ill-feelings toward Bob.

  2. Based on this account of a dinner with Harvey Weinstein – they obviously need the money…

  3. Joe Dod says:

    Seems pretty obvious that the Weinsteins made a mistake when they signed over the rights to The Hobbit. Who cares how much work or money they put into making the movie happen or Warner Bros ingratitude. What’s written in the contract is what matters. They blundered. They got outsmarted. Suck it up. They should be embarrassed to even mention it. The Weinsteins aren’t even the estate of JRR Tolkien. Acting like they’re being robbed as if someone else is profiting from their work. Hello, it’s not your work either.

  4. Agent Provocateur says:

    How much is enough money? When you already have more than you can spend AND you did NOTHING to get your last $100 million out of someone else’s hard work…does it really matter?

    • Carl R White says:

      That is not the point, not everyone works or seeks success for just the money, though it is a nice bonus. If you are going to be respected and think you are right you can not back down simply because you already have enough money.
      Lets say you were a rich person and then inherited more money should I be able to steal your inheritance from you without a fight simply because you have enough money and did nothing for what I am trying to steal?
      Unfortunately this is a big part of how our society works, do not pay someone something they are owned until they come get it or take it from you, if they forget, are scared of you, can not afford a lawyer, are too lazy, whatever, then you get to keep it. Its literally a part of the business plan of some companies and many thugs, often they are one in the same.

  5. AW says:

    Hard to maintain interest in a story of the rich and greedy arguing with the rich and greedy over amounts of money that if not tied up in these machinations, could sustain entire cities.

  6. I have noticed in a fairly long life now, that verbal assaults hurled by an accuser, are OFTEN (not always) more true of the accuser than the accused.

    IS IT POSSIBLE that “W” & Company are bewailing some of their own business practices?

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