Bogus budgets spur pic partners' spat
German outfit, L.A.-based co. sue each other
But a pair of Christmastime lawsuits by Munich's Intertainment and U.S.-based Franchise Pictures is casting shadows on the recent influx of German capital in Hollywood.
In a futile attempt to patch things up last week, Intertainment and Franchise execs met in Munich but were unable to reach an agreement.
Intertainment exec Jan Vocke said he turned down a $30 million settlement from Franchise, calling the amount insufficient. Intertainment then filed suit against Franchise in U.S. District Court in Los Angeles, charging the company with fraud. Franchise also filed suit in L.A. County Superior Court, charging fraud and breach of contract.
Intertainment accuses Franchise of illegally inflating production budgets that were being covered in part by Intertainment in order to drive up licensing fees. In all, the German outfit contends it overpaid by $75 million.
The most egregious examples cited in Intertainment's suit include:
- "The Big Kahuna," repped by Franchise at $7 million but with a bonded budget found by Intertainment to be $2.4 million
- "Get Carter," $63.6 million vs. $44.7 million
- "The Whole Nine Yards," $41.3 million vs. $23.6 million
- "3,000 Miles to Graceland," $61 million vs. $40 million
- "Battlefield Earth," $55 million vs. $44 million.
The two companies inked a five-year output deal last year. Intertainment is seeking $75 million in damages resulting from the allegedly fraudulent budgets.
Franchise execs want to dissolve the agreement, maintaining that they, not Intertainment execs, terminated the settlement talks.
Promises unfulfilled?
Among other things, Franchise contends that Intertainment CEO Barry Baeres failed to fulfill a promise to give Franchise 50,000 shares of Intertainment stock, to provide some $7 million in minimum guarantees on the pics "Tracker" and "Auggie Rose" and to pay for several other titles. Franchise's suit also claims that Intertainment backtracked on its agreement to buy an equity stake in Franchise for between $300 million and $500 million.
Vocke has denied that concrete negotiations regarding an acquisition in Franchise ever took place.
Intertainment execs say the agreement with Franchise, which accounts for about 80% of Intertainment's revenues, remains valid despite the ongoing litigation.
"We retain a first-look right for their product," said Vocke.
The pact is viewed as vital to Intertainment, which has seen its stock tumble since the dispute reached the courts. Company relies on Franchise product to help it fulfill two major pan-European distribution deals, with Fox and Warner Bros.
