New Line Cinema, which produced the highly profitable "Lord of the Rings" trilogy, has settled a $20 million lawsuit brought by movie mogul Saul Zaentz, who owned the licensing rights to the J.R.R. Tolkien classics upon which the movies are based.
The amount of the settlement was undisclosed.
Zaentz filed suit last year in Los Angeles Superior Court, claiming that the studio deprived him of unpaid royalties stemming from the first movie in the trilogy, "The Lord of the Rings: The Fellowship of the Ring." That feature, released in 2001, grossed more than $314 million in the U.S. and $556 million overseas.
In court papers, Zaentz argued that New Line owed him royalties outlined in a licensing contract he had signed with Miramax Film Corp. in 1997. The contract became part of a 1998 agreement between Miramax and New Line Cinema when that studio agreed to make the trilogy.
Under the contract, Zaentz allowed Miramax to make movies from "The Lord of the Rings" books as long as he received a share of the profits based on "adjusted gross receipts." According to Zaentz, "adjusted gross receipts" meant money received by the studio directly from the theaters that rent the film.
In court papers, New Line claims that the studio already paid Zaentz $168 million under his contract with Miramax and that "adjusted gross receipts" meant money received by the studio from the theaters after expenses and distribution costs were deducted.
New Line spokesman Richard Socarides declined comment, other than to say "the parties have resolved their dispute." A lawyer for the studio, Robert Schwartz, a partner at O'Melveny & Myers LLP, declined comment, as did Zaentz's lawyer, Mark Block, a partner at Christensen Miller Fink Jacobs Glaser Weil and Shapiro LLP.
*This story is from the August 29 edition of the Business Journal.
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