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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Partner Claims Universal Juggled the Books

LOS ANGELES (CN) - Studio Canal claims in court that Universal Studios owes it "tens of millions of dollars" for work on films that include "Bridget Jones' Diary" and "O Brother Where Art Thou."

Studio Canal sued and Universal Studios and NBCUniversal, in Superior Court.

Studio Canal, a California subsidiary of a French corporation, claims it entered a joint venture agreement with Universal in 1999 to develop, finance, and produce movies, splitting the distribution in assigned territories.

Studio Canal claims that an audit in 2012 discovered that Universal had been misreporting revenue and expenses.

"Universal deducted millions of dollars in unsubstantiated expense before reporting the results to its partner Studio Canal," the complaint states.

Studio Canal claims Universal double charged for producing fees, "intentionally hid" and "kept for itself" money it got from "off-balance-sheet financing arrangements," failed to report revenue from other sources such as music publishing "only to somehow 'find' several million dollars in such revenues after receiving the audit reports," and used other tricks of Hollywood accounting.

Studio Canal executives flew from Paris to Los Angeles in October 2012 to meet with Universal executives for a prearranged meeting to discuss the issues discovered in the audits. But when the Studio Canal executive arrived, the Universal team said "they had not been told of any such plans, and confessed to being unprepared to even respond to any claims, much less attempt to resolve them," the complaint states.

Since then, Universal has stopped communicating with Studio Canal and has stopped issuing accounting statements and payments, the complaint states.

Studio Canal seeks an accounting and actual, compensatory, and punitive damages for fraud, breach of contract, breach of faith and breach of fiduciary duty.

It is represented by Robert Schwartz with O'Melveny & Myers.

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