Actress Scarlett Johansson filed a lawsuit in Los Angeles Superior Court on Thursday that alleges Disney breached her contract by releasing the highly anticipated superhero film Black Widow on its streaming service, Disney+. The film was released simultaneously on the service and in theaters, which the suit claims broke an agreement between the star and the company. The suit alleges that Johansson agreed that her salary for the film would be based, in large part, on the film’s box office haul.

Shortchanged by a Loophole?

“Disney intentionally induced Marvel’s breach of the agreement, without justification, in order to prevent Ms Johansson from realizing the full benefit of her bargain with Marvel,” the suit, which was filed on 29 July, read.
Johansson claims that her salary was based on the box office performance of the film, which opened strong with $80m in the US but suffered the steepest second week decline of any entry within the Marvel Cinematic Universe, dropping 67%. Exhibitors later criticised Disney, blaming the hybrid release for the drop.

The National Association of Theatre Owners, which represents about 30,000 screens in the US, sent out a press release saying that the performance “demonstrates that an exclusive theatrical release means more revenue for all stakeholders in every cycle of the movie’s life”.

Disney announced in March that the $200m-budgeted film would go to cinemas while also being available to rent on Disney+ for $30. The studio claimed that it made $60m via rentals in its opening weekend. Its global haul currently stands at $319m, one of the lowest-performing Marvel films to date.

That is the short version of the news which broke out yesterday all over the internet. But what is it all about?
The complaint claims that Johansson’s lawyers reached out in 2019 to Disney with concerns about the film being given a multi-platform release. They later tried to renegotiate her contract after the release strategy was changed.
“This will surely not be the last case where Hollywood talent stands up to Disney and makes it clear that, whatever the company may pretend, it has a legal obligation to honor its contracts,” said John Berlinski, an attorney at Kasowitz Benson Torres LLP who represents Johansson, in a statement.

Disney’s CEO, Bob Chapek, defended the decision in May on an earnings call. “One of the things we learned is that flexibility is good,” he said. “We’re really celebrating that flexibility … we’re trying to offer consumers more choice.
In a new statement, Disney has fired back at Johansson. “There is no merit whatsoever to this filing,” it read. “The lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.”

This week also sees Disney’s adventure Jungle Cruise heading to cinemas and Disney+ with its opening box office in the US predicted to be about $25m. The budget for the film is estimated to be about $200m.

The news comes after a difficult year for relationships between talent and studios as the shuttering of cinemas led to many films being given hybrid releases. Warner Bros announced that all of their 2021 releases would premiere at both cinemas and on HBO Max which led to anger and threats of legal action.

The director Denis Villeneueve, whose big-budget fantasy Dune will premiere later this year, slammed Warners in an op-ed for Variety. “Warner Bros’ sudden reversal from being a legacy home for film-makers to the new era of complete disregard draws a clear line for me,” he wrote. “Film-making is a collaboration, reliant on the mutual trust of team work and Warner Bros. has declared they are no longer on the same team.” These days most actors and directors that carry a movie don’t negotiate a fixed payment for their services, but opt for a smaller fixed amount and for a percentage of the box office gains.? But as the channel of distribution shift toward VOD platforms, box office gains drop – sometimes significantly. 

More and more distributors (Warner Bros’, Disney) shift their releases to a simultaneous release in theaters and on their streaming platforms (HBOmax, Disney+).

There was already some furor over this earlier, with Warner’s decision to release Dune on HBOmax.

At the moment, in contract negotiations, stars usually go for the gamble of box office percentage, where they get paid more if the movie attracts  more people to the theaters. But as the pandemic made it impossible or impractical for movies to to be widely released theatrically, that part of their income took a large hit, not because of their performances or the quality of the movie itself, but because movies don’t go to the theaters.

Production times are long, and most of the movies coming out now in these limited theatrical runs, or hybrid theatrical and VOD releases had their contracts signed before the pandemic, when movies were supposed to be in a wide theatrical release. 

But they weren’t. And the contracts signed had no mention of VOD sales and simultaneous VOD releases.
Distributors chose to distribute those movies differently and that is the point of  this lawsuit.

The contract says that the actress is entitled to a percentage of box office income. The distributor limits the box office release by releasing the movie on VOD.

On the paper, everything is in order, because the actress didn’t include VOD sales in her contract negotiations, but the point of this is principle. There was a major shift in the way movies are released in the time before the contract was signed and the time of the release. So it’s up to the court to decide if this was an unfair practice on the side of Disney.?

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