Entertainment & Arts

Village Roadshow Agrees To Arbitration With Warner Bros. In ‘Matrix’ Streaming Strategy Lawsuit – Update

UPDATED with latest: Looks like Warner Bros. got its way.

The Matrix Resurrections co-producer Village Roadshow Films has agreed to arbitrate its claims alleging Warner Bros.’ decision to release the film simultaneously on HBO Max and in theaters was a breach of contract.

Lawyers for Village Roadshow filed papers on Thursday with Los Angeles Superior Court Judge David Cunningham indicating the company would no longer be pursuing its claims in court, an outcome that Warners has been pursuing for months.

“Upon review of the court’s tentative rulings, Village hereby waives its right to the May 27 hearing on Warner Bros.’ motion to compel arbitration…and accepts the court’s tentative rulings on the motion to compel arbitration …as final,” Roadshow attorneys stated in their court papers.

In the original suit filed February 7, Village Roadshow alleges that Warner Bros. moved the release date of the film to 2021 from 2022 to help HBO Max attract more subscribers, purposely harming the film’s box office receipts as a result.

Village Roadshow then filed an amended complaint on March 25, adding Warner Media LLC as a defendant.

Warners’ attorneys alleged in April that the revised complaint was brought in violation of a February 15 court order imposing a stay on the case. They also maintained that the plaintiff’s lawyers indicated only a few weeks earlier that they planned no such amendment.

Warner Bros. also maintained that all but Village Roadshow’s added claim for breach of the state’s Unfair Competition Law were a rehash of its original complaint and it also was subject to arbitration along with the declaratory relief cause of action.

PREVIOUSLY on February 15: Looks like Village Roadshow won’t be getting their breach of contract and more lawsuit against Warner Bros fast tracked through the courts.

One day after the film financier company submitted paperwork to expedite the process over the dispute over The Matrix Resurrections and other movies, a Los Angeles Superior Court this morning said Nope. Ruling that there was no basis to support ex parte relief, the Judge denied Village’s Kirland & Ellis lawyers desire to lift the stay on the litigation in court; allow a motion to be filed for a preliminary injunction; and expedited discovery.

As WB try to get the matter into arbitration, today’s DTLA hearing means that everything pretty much slows way down until at least mid-March – which is to say, this show isn’t getting on the road for almost a month

UPDATED, Feb 14 12:18 PM: A week after hauling Warner Bros into open court in a battle over the bucks from box office disappointment The Matrix Resurrections and other movies, Village Roadshow now wants a judge to put pedal to the metal on the whole thing.

“Village Roadshow respectfully requests that the Court expedite this action, granting Village Roadshow leave to file a Motion for Preliminary Injunction, partially lifting the complex litigation stay with respect to the Motion, and scheduling all briefing, expedited discovery, and hearings,” said the company’s Kirkland & Ellis lawyers in a not unexpected filing Monday in Los Angeles Superior Court. “Village Roadshow requests leave to file its opening Motion for Preliminary Injunction with this Court by March 7, 2022,” they added.

In fact, hoping to hit the road harder and faster than a Mad Max movie, Village wants a hearing on the order Tuesday morning in downtown L.A. in front of Judge Ana Maria Luna.

Making it clear previously that it believes the whole dust-up should be settled behind closed doors in arbitration, Warner Bros did not respond to request for comment on Village’s latest legal move today. If and when it does, we will update this story.

While WB didn’t directly respond to this morning’s filing, the studio was very direct earlier Monday in calling out what it referred to as Village Roadshow’s “duplicitous” actions and calling “this dispute …contrived.”

PREVIOUSLY, February 7 AM: Warner Bros, which managed to evade litigation in 2021 despite a hail of protests over parent WarnerMedia’s aggressive tactics with streaming service HBO Max, has been hit with a lawsuit by Village Roadshow.

The longtime financier of tentpole movies sued the studio in Los Angeles Superior Court today, alleging breach of contract. The 50-page complaint (read it here) does not mince words, blasting “the deliberate and consistent coordinated efforts of WB to eviscerate the significant value of Village Roadshow’s intellectual property.”

In a statement, Warner Bros responded, “This is a frivolous attempt by Village Roadshow to avoid their contractual commitment to participate in the arbitration that we commenced against them last week. We have no doubt that this case will be resolved in our favor.”

At the center of the complaint is The Matrix Resurrections, the fourth installment in the franchise, which has limped toward the $150 million mark at the worldwide box office after its December release. Village Roadshow contends that WarnerMedia hobbled the film’s commercial prospects by favoring streaming.

Over the course of a 25-year relationship with Warner Bros, Village Roadshow has paid $4.5 billion to produce and distribute nearly 100 films, the suit maintains. Over that quarter-century, there has not been a previous legal tangle, a fact described as “unique in the entertainment industry.”

Not only has the Matrix franchise generated some $2 billion in box office, the lawsuit notes, but other Village Roadshow properties similarly took flight financially after successful theatrical runs. The suit names Joker, the Ocean’s series, Charlie
and the Chocolate Factory and Edge of Tomorrow.

With traditional box office reporting less of a factor in the consideration of a property’s overall value in driving streaming subscriptions, production partners are left holding the bag, according to Village Roadshow. “As the distributor and co-copyright owner, WB has a fiduciary duty to account to Village Roadshow for all earnings from the exploitation of the films’ copyrights, not just those it cannot hide,” the suit says.

The broadside from Village Roadshow comes after a tense year, as WarnerMedia set plans for a $43 billion merger with Discovery, a deal that is still pending.

Another key production partner, Legendary Entertainment, initially made rumblings last year about the fate of Dune and Godzilla vs. Kong, as did many other stakeholders in 2021 releases. Legendary had sought to sell GvK to Netflix, but WarnerMedia intervened, reaching an agreement to provide Legendary with downside protection and retain the film. No party had previously brought a legal claim, in part because WarnerMedia spent in the range of $200 million to compensate dozens of partners for foregone box office revenues.

Disney, of course, faced a public blow-up last summer with star Scarlett Johansson, who sued over the release of Marvel’s Black Widow. The case settled weeks later but exposed tensions between talent and distributors amid the boom in streaming and dramatic alterations of the movie release model.

With Covid altering the landscape and shuttering theaters for months in 2020, media companies already engaged in a battle to close the gap with Netflix made a number of dramatic moves. With HBO Max off to a sluggish start after its May 2020 launch and former Amazon and Hulu exec Jason Kilar at the controls of WarnerMedia, the company was looking to stir the pot more than most. While other companies proceeded in more of a case-by-case fashion, Warner Bros embarked on what was known internally as Project Popcorn. With no advance notice to any of its partners, the studio put all 17 of its 2021 releases on HBO Max at the same time they hit theaters.

The move, unveiled at the tail end of 2020, was decried by filmmakers like Christopher Nolan, major agency chiefs and others. Soon, though, the uproar died down and the company has indicated it will make decisions on individual releases, rather than the entire slate, in 2022.

Village Roadshow’s suit ripped Project Popcorn as a “clandestine plan to materially reduce box office and correlated ancillary revenue generated from tent pole films.”

While Disney put Black Widow and a few other films out as Premier Access titles, charging Disney+ subscribers an extra $30, other distributors have gone day-and-date with no extra charge. Some films have even skipped theaters entirely in favor of streaming.

By not attaching any charge for a slate of films with budgets upwards of $200 million, WarnerMedia and WB “effectively enticed movie-going audiences away from the theaters,” the suit said. That move is “completely inconsistent with ‘industry standards’ and ‘customary commercial practices in the motion picture industry.’ Additionally, WarnerMedia benefits by driving up the value of its subsidiary, just as WarnerMedia prepares to spin off and merge with Discovery, all while providing zero benefit to Village Roadshow, talent and other partners.”

City News Service and Tom Tapp contributed to this report.

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