Paramount Pictures has delivered its best box-office results in a decade. The first five movies it released in theaters this year all opened in the top spot, including the highest-grossing film of the year so far.
Not everyone is happy. Many of the stars and producers of these movies, including Tom Cruise, believe they will miss out on millions of dollars because of a deal between Paramount and Epix.
Movie stars, producers and filmmakers often get a cut of the profits from their movies. It can amount to tens of millions of dollars on a big movie like "Top Gun: Maverick", starring Cruise, or millions on a smaller movie like "The Lost City", starring Costner.
Several people familiar with the conversations said that profit participants in Paramount movies believe their earnings are below what they should be because the studio is getting less from Epix than other studios are getting in similar deals. People who asked not to be identified said that representatives for the talent met with Paramount to ask for more money.
Lawyers are assessing their options because no one has threatened a lawsuit. Paramount's deal with Epix means they may have missed out on millions of dollars compared to what they get from other studios. The guilds didn't say anything. Representatives for the stars of the movie didn't respond to questions.
According to Paramount, it has not had an ownership interest in Epix for five years.
Lawyers and agents don't like Hollywood accounting, in which studios overstate costs and disguise profits so that they don't share proceeds with partners. There have been some big cases over the last 10 years. AMC Networks was forced to pay $200 million to one of the creators of "The Walking Dead", while Fox settled a multimillion dollar dispute with the participants of "Bones"
The rise of streaming services makes it easier for studios to hide their profits from talent. Studios used to license their films to premium cable networks, but now they license them to streaming services. Warner Bros., Disney and Universal all have deals with Disney+. Universal struck a deal with Amazon.
Most streaming services don't license their original movies to other people. Instead of giving talent a share of the ownership in a project, they buy out their rights up front.
The companies used to be owned by the same company. Epix was created in 2008 by Paramount, Lions Gate Entertainment Corp. and Metro-Goldwyn- Mayer. The companies hoped that Epix would become a viable player, but it never became a household name. Epix sub-licensed movies to Amazon in order to make more money. The people said that talent didn't protest because Epix was paying the same rates as other services.
Paramount renewed its movie output deal with Epix after MGM took full control of the company. It became a problem in 2020 when Paramount decided to change its name to Paramount+. None of Paramount's new movies would be available on its flagship streaming service for years to come. Those movies need to be brought to Paramount+.
Paramount got the rights to show most of its movies on Paramount+ after a shortened window of just 45 days in theaters, and Epix was able to extend its deal for Paramount movies by a year.
New licensing agreements were signed by Universal and Sony. The people said that Sony was paid more than Epix. Even though Peacock and Universal are part of the same company, Amazon paid Universal more than Epix did.
At the time, nobody paid attention to the difference between the Universal and Sony paychecks. The Epix deal ends at the end of the year.
Thomas Buckley assisted with the project.
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