Disney Allegedly Uses “Home Video” Classification To Keep More Money From Streaming

(Photo of Bill Nye- CNN)

Disney has been under fire and in legal battles yet again. This isn’t a new one, but it’s yet another reason Disney has been questioned about recently. It seems Disney is keeping about 80% of the revenue from streaming shows and only passing on 20% to the “stars and profit participants” by leveraging the wording “Home Video” in older contracts. They are clinging to a “formula dating from the introduction of the VCR, Disney subtracts an 80% royalty to its in-house distributor to cover the costs of distribution” according to Variety.

This all ties into one of the lawsuit Disney has been facing lately, this one involving Bill Nye from “Bill Nye the Science Guy.”

Mr. Nye has been calling out the “Hollywood accounting” and he filed a lawsuit in the Los Angeles Superior Court over the issue.

In his claim he pointed out that the distribution costs involved in streaming are much lower compared to the old contract usage of “Home Video.” The 80% justification from decades ago hasn’t adapted or been updated to reflect the current consumption platforms for content.

However, it seems the court is upholding Nye’s original contract with Disney, from 28 years ago. Judge David Cowan ruled in Disney’s favor saying that the contract does allow them to mark it as “home video” since the contract wording stated “video devices” and keep the 80% royalty.

Lawyers representing similar cases against large studios feel that this law is outdated and argues that their clients contracts should be updated to match the current technology that their years old programming is still being streamed to.

Variety quoted Johnson & Johnson LLP, managing partner Douglas Johnson and indicated that he believes that “..all of the streaming and download revenue should be allocated to “gross receipts.” In his experience, that is how most studios — 75% to 80% — handle streaming and download revenue on older contracts.

Disney lawyers allegedly argued that since the audience sees it as “home video” it’s still “home video” and that streaming is simply “evolution” of technology.

Nye’s attorney, Raymond Hamrick, stated in a brief that Nye had argued his point by pointing out that the wording “video devices” indicates that they are manufactured as a physical object and a digital file is not the same thing.  Even though the Judge admitted that was a “credible” defense it was “unreasonable” to assume that Disney would not take a fee for distribution at all.

I’m no lawyer but if this involves royalties Disney could take a smaller cut and still have their “distribution fees” covered. It isn’t like when they had to manufacture and sell physical media. They digitize it and upload it to a service.

The real issues seems to be  on of precedent.

If Nye won, other old contract content creators or “profit participants” across the entire streaming industry could demand more money and it would open the floodgates against Disney and other streamers. By the sheer number of individuals potentially impacted, one can see why these companies want to keep the status quo.

Just throw it on the pile of lawsuits and alleged crappy behavior exhibited by “the Disney difference” lately. They were always militant in regards to legal cases, but I’m sure it’s worse now that they are trying to keep every penny they can. I mean those multi-million dollar executive performance bonuses aren’t cheap.

What do you think? Comment and let us know.

Source: Variety, MK on Twitter (you know who you are)

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