An arbitrator has sided with Warner Bros. in the dispute with Bob and Harvey Weinstein over the profits from “The Hobbit” movies, a source confirmed on Friday.
The Weinsteins sued New Line and Time Warner last December, 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.
But Warner Bros. fired back, saying that the case was “about one of the great blunders in movie history.” They contend that the Weinsteins, then running Miramax, sold their rights to “The Hobbit” to New Line for $11.7 million.
“No amount of trying to rewrite history can change that fact,” the studio said at the time. “They agreed to be paid only on the first motion picture based on ‘The Hobbit.’ And that’s all they’re owed.”
The proceedings were confidential, but word leaked out of the ruling and was first posted on Deadline.com.
The Weinsteins filed their suit in New York State Court, but the proceedings went into arbitration.
The Weinsteins sought $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 percent of the profits from the first film to the Weinsteins. But the Weinsteins contend that, with the contract stating that Miramax is entitled to 5 percent of the gross receipts from “original pictures,” they should be paid for all three films because they collectively tell the entire story from J.R.R. Tolkien’s book “The Hobbit.”
“The position they have taken, in our view, is not in line with the contract we signed,” the Weinsteins said of Warner Bros. at the time their suit was filed. The studio said in court documents in January that Miramax has been paid $25 million for their share of the returns from the first movie, “The Hobbit: An Unexpected Journey.”
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 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. New Line and Warner Bros. say that Miramax was paid more than $90 million from the “Lord of the Rings” trilogy.
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.
A Weinstein Co. spokeswoman did not immediately respond to a request for comment.