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Harvey Weinstein Sues Over ‘Hobbit’ Profits

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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