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SO The
Lord of the Rings made no money. Let me amend that. The
film trilogy, which grossed $2.96 billion worldwide at
the box office and $3 billion or so more in DVD and
ancillary markets, has not made any money for the heirs
of J.R.R. Tolkien, author of the famous books.
Tolkien
obviously isn’t Peter Jackson, who directed the
franchise, or Liv Tyler or Viggo Mortensen, who starred
in it, or New Line Cinema, the studio that financed it,
or Miramax, which owned the film rights for a second but
couldn’t get the movie made, or producer Saul Zaentz,
who bought the rights in 1976. He’s just the guy who
dreamed up the cosmology, the whole shebang of hobbits
and dwarfs, orcs, ents, wargs, trolls, whatnot. “Three
rings for the Elven-kings under the sky, Seven for the
Dwarf-Lords in their halls of stone, Nine for Mortal Men
doomed to die, One for the Dark Lord on his dark
throne.” Those were old John Ronald Reuel Tolkien’s
words.
But he’s
dead, so why should Hollywood share any of the dough?
I
wondered if that’s what the Time Warner empire must be
thinking when I waded through the lawsuit filed against
New Line in February by Tolkien’s children on behalf of
two Tolkien trusts. There are only two Tolkien children
still living—Christopher, age 83, and Priscilla, age
79—and the case is not scheduled to be heard until
October 2009. Days after the filing, New Line folded and
became a division of Warner Bros.—some might call that
karma.
Maybe
I’m naïve, but I find it hard to believe that not a
sliver of gold could be found in all of Middle-earth for
not only the aged Tolkiens but also the charitable trust
that gets 50 percent of their fortune and distributes
money to such causes as Save the Children, the Darfur
Appeal, the National Campaign for Homeless People and
Unicef.
According to their lawsuit and lawyer Bonnie Eskenazi,
Tolkien licensed motion picture rights to United Artists
back in 1969 for a low six-figure sum and 7.5 percent of
the “gross receipts.” Gross receipts are the money the
distributor actually gets from the theaters and
ancillary markets. (In the case of theatrical income,
it’s usually about 50 percent of the box-office take.)
“This is a deal under which we get a percentage of the
gross once an artificial break-even is reached. The
artificial break-even is essentially 2.6 times the
negative cost of the film,” says Eskenazi.
New
Line, which eventually secured the rights, was allowed
to deduct some costs from its Lord of the Rings income
such as taxes, but not the big-ticket expenses that
studios like to take—such as distribution fees or
overhead, according to Eskenazi. So even with all the
loot that New Line has pocketed on the films, there is
not a shekel, a ducat, a baht, a euro or a dollar for
some elderly Tolkiens? Eskenazi estimates the family is
owed $150 million, but even that number is a little
fuzzy, because according to the lawsuit the family has
never been allowed to audit the second or third films.
I guess
they’re supposed to just trust the studio.
Eskenazi
explained that the family tried to settle their dispute
with New Line for years, to little avail. “There were
meetings and discussions out the wazoo, but New Line was
entrenched....We literally have gotten not a single
penny of participation. New Line has said to us that,
based on their reading of the contract, it doesn’t
matter how much money the films make, they’ll never have
to pay us anything, which is impossible.”
Multiple
lawsuits
THE
Tolkiens are hardly the only ones who’ve had to take New
Line to court to get what they see as their fair share.
In 2005
writer-director Jackson sued the studio, claiming he’d
been underpaid by as much as $100 million because the
company sold ancillary rights to other divisions of
Warner Bros. at discounted prices, meaning there was
less gross for gross-profit participants like Jackson.
He also claimed he hadn’t been allowed to audit the
books. That suit flared into an ugly personal battle
between Jackson and then New Line chieftain Bob Shaye,
and at one point the judge angrily fined the New Line
legal team $125,000 for failing to produce (and
potentially even destroying) relevant documents and
e-mails. Still, that case was ultimately settled, as
everyone wanted to get back to the serious business of
making the double-film LOTR prequel, The Hobbit, with
Jackson on board as producer.
Producer
Zaentz also sued New Line—twice. The first time he
claimed the studio cheated him out of $20 million in
royalties received from foreign investors. That suit was
settled, and last December he sued again, claiming New
Line wouldn’t let him audit their books.
“It’s
Lord of the Lawsuits,” jokes attorney Pierce O’Donnell,
who famously represented humorist Art Buchwald in his
victorious Coming to America lawsuit against Paramount.
“How much have these movies grossed? Hundreds of
millions of dollars? You know what they say: The most
creative people in Hollywood are accountants.”
Personally, I think Jackson deserves whatever he’s owed,
although my tears stopped flowing down my cheek when I
read in the New York Times that he’d already received
$200 million from New Line even before the lawsuit
started. And Zaentz, who did produce Ralph Bakshi’s
animated LOTR, holds the record for biggest payday
earned for movies he didn’t produce—$188 million and
counting.
According to the Tolkien lawsuit, part of the reason the
Tolkien family has received no kwan from the films is
that New Line has had to shell out so much money to
previous rights holders Zaentz and Miramax (who both had
5 percent of the gross). New Line is including their
fees in the cost of the negative, much as “a salary paid
to the film’s editor or gaffer.”
Respectful disagreement
ALL of
New Line’s litigation has been assumed by its corporate
owner, Warner Bros., which is making pains to at least
sound more conciliatory. A spokesman gave us the
following statement: “The Tolkien estate is currently
auditing New Line’s books and records for the Lord of
the Rings films and we are working closely with the
estate’s accountants and lawyers to facilitate and
expedite this process. While we respectfully disagree
with some of the estate’s positions, we are hopeful that
the dispute can be amicably resolved once the audit has
been completed.”
Recently, the judge in the case made a ruling that the
Tolkien plaintiffs had not presented enough evidence to
warrant their fraud and fiduciary claims but has given
the Tolkiens a limited time to present more facts. Both
sides are spinning the decision as a victory, and New
Line is still on the hook for a potential $150 million
in damages. I wonder if the studio would have dared to
treat Tolkien in such a cavalier manner if the author
were still living. But those wiser in the ways of
Hollywood explain that it’s unusual for an author to
share profits in the first place. “Authors and estates
rarely have the leverage and status to get a gross
deal,” says agent Michael Siegel, who represents Elmore
Leonard and the estate of author Roald Dahl (which does
get profit participation on film adaptations of his
books). “It takes an extraordinary property with the
right representation, and it’s very rare. Even in 1969,
this was the kind of property that deserved it.
“That’s
where the studios have wreaked havoc on the system,”
says Siegel, explaining that studios like to include
nonnegotiable clauses, which can make it hard for “this
profit threshold to have been achieved. There’s a
tendency for authors and people around authors to feel
they’re especially bullied, but authors don’t have the
leverage that an actor or director has in a negotiation,
so actors and directors are getting better definitions
of gross and arrangements than authors.”
Of
course, the Tolkiens do have one giant club in their
arsenal. Part of the remedy they’re seeking is to
terminate New Line’s rights to Tolkien’s books,
including the two Hobbit films, which are now in the
works with Pan’s Labyrinth director Guillermo del
Toro.
“I think
they have every right to terminate,” says Eskenazi. “If
New Line engaged in gross misconduct, which I believe
they did in this case, are you forced to continue in
business with them?”
Still, I
bet you Warner Bros. isn’t treating Harry Potter’s J.K.
Rowling this way. |
