Lord of the Rings financing deals challenged

An investment syndicate has filed proceedings in the High Court at Auckland over earnings it says should have been paid from financing deals during the filming of The Lord of the Rings movie trilogy.


Time Warner said yesterday its New Line Cinema and New Line Productions units had been named in lawsuits alleging the syndicate had not received proceeds from the transactions.


The media and entertainment company disclosed the information in its quarterly report with the Securities and Exchange Commission in the United States.


The complaints alleged breach of contract, breach of duties of good faith and fair dealing and other common law and statutory claims under California and New Zealand law.


The investment syndicate said that it had not received proceeds from certain financing transactions they entered into with New Line for the three motion pictures: The Lord of the Rings: The Fellowship of the Ring; The Lord of the Rings: The Two Towers; and The Lord of the Rings: The Return of the King.


Time Warner said it intended to defend the lawsuits "vigorously", but was unable to predict their outcome.


The Lord of the Rings trilogy was reported to have grossed US$2.9 billion ($4.2 billion) worldwide.


Separately, director Peter Jackson is suing New Line Cinema in the United States for allegedly withholding profits from The Fellowship of the Ring.


Jackson has alleged in court documents that his company, Wingnut, was not paid enough for the first film in The Lord of the Rings trilogy.


One of the principal claims of the suit is that New Line engaged in various forms of "self-dealing" with affiliated companies.


He has sought unspecified damages, and restitution in the case, which stems from a 1998 written agreement for Wingnut and New Line to jointly produce and distribute the three films.


Wingnut accused New Line of allowing its sub-distributors to charge a higher fee than would be expected from non-affiliated companies.


New Line was accused in papers filed on behalf of Jackson of improperly deducting some home video costs that were not spelled out in the agreement, paying an incorrect royalty rate for DVD sales, delaying the reporting of certain licensing revenue and failing to audit sub-distributors, including those affiliated with New Line.


- NZPA


* An earlier version of this story was withdrawn by NZPA.