July 16, 2009
The Lord of the Rings encounters The Lord of Accounting
by Dennis Johnson
“J.R.R. Tolkien sold movie rights to his ‘Lord of the Rings‘ novels 40 years ago for 7.5 percent of future receipts. Three films and $6 billion later, his heirs say they haven’t seen a dime from Time Warner Inc.,” according to a Bloomberg News report by Brett Pulley.
As result, Tolkien’s heirs, a charity they run called the Tolkien Trust, and Tolkien’s publisher HarperCollins, have all sued Time Warner’s New Line Cinema for more than $220 million and a look at the books, says the report. The family also says the original contract gives them the right to terminate or revoke rights, meaning the litigation could hold up two films based on The Hobbit currently in the works — “films that, if their predecessors are a guide, could generate $4 billion in sales.”
New Line says its “accounting included 20 percent of home- entertainment revenue, instead of the 100 percent called for in the contract, the heirs say,” because “The studio excluded foreign revenue, saying Warner Bros., not New Line, received those sales for distributing the films abroad.”
But the Tolkiens’ attorney says, “The agreement says ‘all.’ All does not mean 20 percent. All means all.”
The case will go to trial in Los Angeles Superior Court in October if New Line does not reach a settlement with the Tolkiens by then … the way it reached a settlement with director Peter Jackson when he sued them for not paying them what they owed him … and the way it reached a settlement with the previous studio that owned the rights before Warner ….
Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives