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STX Weighing Legal Action Over Netflix Deal for Martin Scorsese’s ‘The Irishman’ (EXCLUSIVE)

Martin Scorsese’s upcoming mob movie “The Irishman” looks to be running into trouble as distributor STX is weighing legal action over Mexican producer Gaston Pavlovich’s pending deal with Netflix. STX bought all non-U.S. distribution rights to the Robert De Niro-starring movie last year in a $50-million deal that was the talk of the Cannes Film Festival.

But STX’s role in distributing the film was cast into doubt after Pavlovich and his Fabrica de Cine outfit tried to switch instead to a worldwide deal with Netflix. Meanwhile, “The Irishman” production budget is quickly ballooning to $125 million from its originally estimated cost of $100 million.

The studio released a terse statement through a spokesman.

“As a policy, STX does not comment on rumors or matters related to litigation,” the statement reads.

News of Netflix closing in on a global distribution deal for “The Irishman” has set off alarm bells with international distributors who had bought rights to the film from STX.

As of late Thursday in Europe and Asia, STX had not notified the distributors that their agreements were liable to be canceled. The silence makes sense given the company’s possible choice to pursue legal remedies.

But the reports of an imminent deal between Pavlovich and Netflix have alarmed – and angered – some of those distributors, who feel they have been kept out of the loop and are waiting for answers.

“It’s like you selling me an apartment and then saying someone else is going to move in,” said Stefano Massenzi of Italy’s Lucky Red, which purchased “The Irishman” for Italy.

Olivier Van den Broeck of Belgian distributor The Searchers, which also struck a deal with STX, said he expected his contract to be honored.

“We have a legally binding and fully executed contract re all exclusive rights in Benelux for ‘The Irishman,’” Van den Broeck wrote in an email. “The chain of title as of today allows to my knowledge no opening for Netflix to even negotiate international rights with these deals in place.”

Hong Kong-based Media Asia, which bought the rights for mainland China, issued a similar statement. “We are still clarifying with STX,” a spokesman said. “But as far as we are concerned, we have a legally binding distribution contract on hand.”

Netflix declined to comment.

Contrary to some reports that he himself was out of the picture, Pavlovich insists that he remains on board to produce “The Irishman” and that he is in final negotiations with Netflix.

The scramble to put together a new deal – and the confusion it has spawned – comes after Pavlovich and Fabrica de Cine, along with other backers, lost tens of millions of dollars on Scorsese’s “Silence.” The religious drama cost $46.5 million to make, as well as millions more to promote and distribute, but grossed just $7 million in the U.S.

At the same time, the budget for “The Irishman” has risen by at least $25 million because of the complexity of the visual effects work needed to make De Niro look much younger in the film, sources say. The all-star cast also includes Al Pacino and Joe Pesci.

Those factors apparently prompted Pavlovich to change the way the production is being mounted. “I’m a very passionate filmmaker, but I’m very aware that this has to work business-wise,” he told Variety in a recent interview. “I do understand that this is a risk-oriented industry, so the best I can do is mitigate that risk.”

Sources say that Paramount, which had reportedly paid $15 million for U.S. rights to “The Irishman,” has now sold them back to Fabrica to enable Pavlovich to pursue a worldwide deal with Netflix. The studio is dealing with its own turmoil with the forced exit of its chief Brad Grey.

“The Irishman” is based on the Charles Brandt memoir “I Heard You Paint Houses,” which recounts mob hitman Frank “The Irishman” Sheeran’s deathbed confession that he had been involved in the killing of Jimmy Hoffa on the orders of mob boss Russell Bufalino.

Patrick Frater in Hong Kong and Elsa Keslassy in Paris contributed to this story.

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