Avatar 2 Lands Disney In Hot Water With A Developing Lawsuit

TSG Entertainment Finance is suing Disney over what representatives for the former company are alleging to be financial misconduct. Prior to Disney's acquisition of Fox, TSG produced a number of projects released by the then-titled 20th Century Fox, now renamed 20th Century Studios under Disney's proprietorship. Disney therefore inherited a deal with TSG, which this lawsuit is claiming Disney undermined according to a summary by The Hollywood Reporter.

One film at the center of the suit is "Avatar: The Way of Water." TSG claims that Disney superseded an existing deal between the company and FX Networks to determine licensing fees and landed on a metric that would net less than what was previously agreed was fair for "Avatar 2." Furthermore, TSG alleged that losing out on a significant sum of money Disney owed for past projects meant it was enticed to agree to a worse "Avatar 2" deal than it would have otherwise. In short, TSG is arguing that it would have made more money from the second "Avatar" film if Disney hadn't circumvented prior agreements between it and 20th Century Studios.

"Avatar 2" isn't the only movie implicated in the lawsuit, however — TSG is claiming that it's entitled to a sum of what might amount to hundreds of millions of dollars in total.

Prior to filing its lawsuit, TSG hired an independent auditor to determine whether or not Disney owed unpaid profits. This audit looked at a sample size of three films, including Guillermo del Toro's "The Shape of Water," and determined that from these alone, TSG was entitled to an additional $54.5 million on top of shouldering $35 million in unnecessary charges. Encompassing the 100+ films TSG produced could raise this sum to somewhere in the hundreds of millions.

Also at the core of the lawsuit is an allegation that Disney attempted to devalue a deal between TSG and 20th Century Studios for the sake of increasing the successes of Disney+ and Hulu. Through 20th Century Studios releases landing on HBO, TSG earned a certain sum of money that suddenly dissipated when 20th Century Studios renegotiated its HBO deal, supposedly at the behest of Disney. TSG claims that this renegotiation lost them significant profits while increasing the value of Disney's flagship streaming services.

Since TSG's accusations are wide-ranging, it might be some time before this lawsuit resolves.