Thursday, September 10, 2009


So, thanks to various people's postings or sending me links (thanks to David, Douglas, Yvette, & Jessica), earlier this week I heard the latest news about the new Peter Jackson HOBBIT movie(s). Specifically, the lawsuit the Tolkien family brought against New Line a year and a half ago (February 2008) seems to have been resolved. 

Here's the basic story (Associated Press):


Along with the main facts, among the many interesting details here is the major news that "One of the main beneficiaries of the settlement is The Tolkien Trust" -- a group that doesn't get nearly the attention you'd expect, given the good works they do. Also, it names the Estate's lawyer in this case (Bonnie Eskenazi) and asserts that the Estate was "due 7.5 percent of the gross receipts", of which they'd only been paid $62,500 upfront money before production of the first film began.  Quite a discrepancy. 

Seven and a half percent. Of the gross. Wow. 

By contrast to the journalese of the AP piece, a more carefully worded piece (the first, in fact, to announcement the news) is the one by Douglas Kane on The One, which stressed that the settlement still needed to be reviewed and signed off on:


The Reuters news story, also linked off the OneRing.Net site, has an edge over the AP one in one respect, in that it gives the quotes from Christopher Tolkien and Warner Brothers' President, Alan Horn, in full. While Christopher is extremely careful and polite in his phrasing, as we would expect, I was startled by Horn's comment that the studio "deeply value[s] the contributions of the Tolkien novels to the success of our films". Well, I suppose "contributions" is one way to put it.


Finally, though their webmaster seems to be incapable of spelling the word "Tolkien", The Guardian has its own piece similar to the Reuters one but with additional details, such as the Tolkien Trust's being one of the beneficiaries of the settlement, HarperCollins being a co-plaintiff, and the amount originally sued for being 133 million pounds.


So, as usual, by reading a number of different reports you can learn more than from an single story. There's a good deal of disagreement among all these sources about just how much money the films have made (from what Kristin Thompson wrote in THE FRODO FRANCHISE, they're all understating it a good deal). Nor is it clear if the settlement is for the full amount originally asked for or not, since the details are quite properly confidential. But if there's any truth to the AP story about 7.5% gross, then the good causes supported by The Tolkien Trust should get a big boost from this, which is a Good Thing.

And, of course, this means the major obstacle in the way of making the film is no longer in play, so the chances of its being made go from good to excellent. Jackson is said to have recently finished the script (of part one, at least), so we'll probably be coming out of the holding pattern and hearing lots of news about it on a regular basis from here on out.

--John R.


Anonymous said...

Hi John!

The 7.5% figure is correct, but with a couple of caveats. First of all, it is 7.5% of the gross after what is called the "Artificial Payment Level" which is defined as 2.6 times the final cost of production. So the big issue that the parties were arguing about was what actually constituted the final cost of production. The other caveat is that the way the agreements were written, New Line argued that only 2.5% was due on the TTT movie, not 7.5%.

As for the settlement amount, it is highly unlikely that it was for the full $220 million that the plaintiffs contended they were owed. There would have been little reason for New Line/Warner to agree to the settlement if so. I'm guessing that it probably was in the range of $100-150 million - still a very tidy sum. That, of course, is just a guess. I also assume that part of the settlement was a clear agreement on how royalties will be paid for the Hobbit films, so that we don't just go through this again in a few years.

John D. Rateliff said...

Thanks for the clarification, Doug. Not only are the Tolkiens entitled to the money, but I know they'll put it to good use. A happy ending, which is not always the case with every lawsuit involving Hollywood accounting.

--John R.