After years of losses and disappointing performances, film studio Paramount Pictures delivered its best box office results in a decade. The top five theatrically released films this year all opened the top spot, culminating with “Top Gun: Maverick”, the highest-grossing film of the year so far.
But not everyone celebrates. Many stars and producers of these films, including Tom Cruise, Sandra Bullock and the creators of “Jackass”, believe they will miss out on millions of dollars because of a deal between Paramount and cable channel Epix.
Movie stars, producers, and filmmakers often get a share of the profits from their films, including a share of digital sales and third-party licensing. Those earnings can amount to tens of millions of dollars on a big movie like “Top Gun: Maverick,” starring Cruise, or millions on a smaller-scale hit like “The Lost City,” starring Bullock.
Profit participants from Paramount films believe their income is lower than it should be because the studio receives less Epix than other studios receive similar deals, according to several people familiar with the conversations. Talent reps have met with Paramount to ask for additional money, said the people, who asked not to be identified as talks are ongoing.
Although no one has yet threatened legal action, lawyers are weighing their options. One possibility is that Hollywood unions are taking action. The guilds are also collecting residuals on these films, and Paramount’s deal with Epix means they too may have also missed out on millions of dollars compared to what they’re getting from other studios. Guilds declined to comment. Reps for the Cruise, Bullock and “Jackass” Johnny Knoxville star did not respond to requests for comment.
In a statement to Bloomberg News, Paramount said it hasn’t had a stake in Epix for five years and that “our deals are made at market rates.”
Lawyers and agents have always bemoaned “Hollywood accounting,” in which studios overstate costs and disguise profits so as not to share profits with financial partners. Both sides would prefer to avoid a trial, but there have been some big cases over the past decade. AMC Networks Inc. was forced to pay 200 million dollars to one of the creators of “The Walking Dead,” while Fox settled a multi-million dollar dispute with the participants on the show “Bones”.
Workers fear that the rise of streaming services has made it even easier for studios to hide their profits from talent by processing themselves. It used to be that most studios licensed their movies to premium cable networks like HBO, but now they license them to streaming services, often the ones they own. Warner Bros. puts its movies on HBO Max, Walt Disney Co. sends its movies to Disney+, and Universal has a deal with its corporate sibling, Peacock. Universal has also entered into an agreement with Amazon.com Inc.
Streaming services generally do not license their original movies to others. Rather than giving talent a piece of ownership in a project, Netflix, Amazon, and Apple Inc. buy out their rights up front. The Writers Guild has already won $42 million in arbitration from Netflix Inc. over what the union called “insider dealand $4 million from Amazon in unpaid residues.
Paramount and Epix are not owned by the same company, but they used to be. Paramount, Lions Gate Entertainment Corp. and Metro-Goldwyn-Mayer established Epix in 2008 as an outlet for their films. While those companies hoped Epix would become a viable player, it never reached the stature of HBO, Showtime, or Starz. To generate additional money, Epix sub-licensed films to Amazon. The talent didn’t scream at the time because Epix was paying similar rates to other streaming services and cable networks, the people said.
In 2017, MGM took full control of Epix, buying out its partners. As part of the deal, Paramount has agreed to renew its movie release deal with Epix for another five years. This became a problem in 2020 when Paramount prepared to relaunch its CBS All Access streaming service as Paramount+. Paramount is best known as a movie studio, and yet none of its new movies would be available on its flagship streaming service for years to come. These films had to be brought to Paramount +.
So early last year, Paramount and Epix brokered a new deal under which Paramount won the rights to show most of its films on Paramount+ after a shortened window of just 45 days in theaters, and Epix extended its deal for Paramount Films for another year.
Soon after, Universal and Sony Group also signed new licensing agreements. Netflix paid Sony roughly double what Epix paid Paramount, the people said. Peacock and Amazon also paid Universal more than Paramount got from Epix, even though Peacock and Universal are part of the same company.
No one thought too much about it at the time. But then talent started noticing the difference between Universal and Sony paychecks and Paramount paychecks. Paramount’s Epix deal expires at the end of 2023.
Sign up for the Makeshift Features mailing list so you don’t miss our biggest features, exclusive interviews and surveys.