Wednesday, July 29, 2009

New Line Could Lose Right to Release Jackson-del Toro's 'THE HOBBIT': Deciphering Tolkien Heirs' Lawsuit

Ian Holm and Ian McKellen in "Lord of the Rings."
New Line Cinema

The worldwide take for Jackson's LOTR trilogy, from box-office receipts, home-video sales and associated merchandising is $6 billion. Yet according to a lawsuit filed recently in Los Angeles by Tolkien's children and other interested parties, New Line Cinema and its parent company Time Warner (which produced and distributed the films) haven't paid them a cent.

Tolkien's heirs are likely motivated by a sense of injustice and a desire to reclaim their father's patrimony, as much as by the prospect of a huge payday, but other, more shadowy factors are at work as well. Hypothetically, this case could shut down New Line's forthcoming production of The Hobbit, or turn it over to the Tolkiens, for resale to the highest bidder.

J.R.R. Tolkien sold the movie rights to his “Lord of the Rings” novels in 1969 for 7.5 percent of future receipts. In poor health and facing a big tax bill, Tolkien came away with $250,000, which comes under the heading of It Sounded Like a Good Idea at the Time. According Eskenazi, New Line is allowed to deduct 2.6 times its production costs plus a certain amount of advertising expenses before it begins to pay the family its 7.5 percent royalty.

The company is taking the position that its production and promotional expenses were so enormous that no royalties are due to the Tolkiens out of those 6 billion dollars, either now or in the foreseeable future. As Pierce O'Donnell, a lawyer who represented Buchwald in his suit against Paramount, told Bloomberg reporter Brett Pulley, Hollywood accounting is "an esoteric world where black doesn't mean black, and white doesn't necessarily mean white."

Purely based on the history of these things, it seems unlikely that New Line/Time Warner can escape without paying the author's children, Christopher and Priscilla Tolkien (who are 84 and 80 years old, respectively), or their heirs a substantial pile of cash, $220 million.

The Tolkien family's claim that New Line's byzantine accounting practices amount to a breach of the contract Tolkien originally signed with United Artists 40 years ago. If such a finding were made, the remedy would be clear. All rights to Tolkien's work would presumably revert to his heirs, and New Line's planned two-part production of "The Hobbit," a pair of LOTR prequels to be produced by Peter Jackson and directed by Guillermo del Toro, would be thrust into legal limbo. "Should this case go all the way through trial, we are confident that New Line will lose its right to release 'The Hobbit,'" Eskenazi told Pulley.

This does not mean the Jackson-del Toro "Hobbit" won't get made as some LOTR buffs and reporters have stated.

No one at the table is foolish enough to want to shut down a production that promises to yield, at a conservative estimate, an additional $2 billion to $3 billion in worldwide revenue. What the Tolkiens and Time Warner are fighting over is who controls that production and who will reap the enormous benefits. In that regard, it's worth noting that the Tolkiens' principal co-plaintiff is Rupert Murdoch's News Corp., the parent company of HarperCollins, which publishes the Tolkien books. Another News Corp. subsidiary, of course, is Fox, a studio that would be well positioned to take over production and distribution of the "The Hobbit" movie if the rights reverted to the Tolkien family.

Is the Murdoch empire using the Tolkiens to wage a proxy war against Time Warner? There is an intriguing convergence between this case and the long-running rivalry between those two huge entertainment conglomerates. The likeliest outcome is a last-minute settlement that pads the lawyers' pockets and leaves everything else pretty much status quo. Failing that, Christopher Reuel Tolkien v. New Line Cinema Corp. is scheduled to go to trial in October, around the same time as del Toro's "Hobbit" production begins to roll in New Zealand.

Empireonline caught up with Peter Jackson at Comic-Con and collared him on progress with The Hobbit which, although still awaiting official greenlighting and casting, is only a few weeks from having its first script draft signed, sealed and delivered.

So could he tell us what the first line of dialogue in part 1 of The Hobbit would be? Video clip: "The film begins in very much the same way as the book begins," says Jackson. In case you haven't consigned the entire book to memory, that means the first words uttered by Bilbo will be "Good morning!"

According to the LA Times Peter Jackson really does own his own Stormtrooper costume. Unfortunately, he opted not to bring it with him to his very first Comic-Con International in San Diego -- meaning he probably didn't get the chance to wander the convention floor incognito and do some shopping, though he really wanted to. "It's very frustrating because I am the sort of guy who'd love to go and buy stuff. I do buy models and collectibles, and it's frustrating not being able to do that."

I'll be so bold as to predict Jackson-del Toro fans will be treated to The Hobbit teaser trailer at San Diego Comic Con 2010. Oh, and be on the lookout for a Stormtrooper roaming the convention floor.

The first 'Hobbit' installment is scheduled for release Dec 2011.

LA Times

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