20th Century Fox to sue Russian distributor for non-payment

Analysis

US film studio 20th Century Fox plans to sue its Russian partner for alleged failure to pay revenue from films distributed in Russia and other CIS states in 2000-2006, a business daily said on Monday.

The studio is demanding at least $3 million from Gemini Film International (GFI), Fox’s exclusive distributor in the post-Soviet Commonwealth of Independent States (CIS), and its German chief Mihael Schlicht and key shareholder Bodo Scriba, accused of failing to hand over revenues from distributing movies including Star Wars and X-Men, Kommersant said.

Fox, a subsidiary of Rupert Murdoch’s News Corporation, used Gemini from 2000 until April 2006, but says the company signed its distribution agreement "without ever having the intention of performing its obligations thereunder." Hearings on the suit will begin in the US District Court in Los Angeles next week, the paper said. Films distributed by GFI in 2003-2005 made a total of over $150 million at the box office, the daily said, citing the Russian journal Kinobiznes Segodnya (Film Industry Today). Movies shown in the period included blockbusters Star Wars Episodes 1-3, X-Men, Fight Club, and Ice Age.

Analysts said the distributor failed to pay around $65 billion in 2003-2005 alone, according to the paper. Movie theaters are entitled to 50% of box office intake, and a distributor gets no more than 10-15% of the other 50%. Fox lawyer Richard Stone and GFI General Director Michael Schlicht said they were aware of the suit, but declined to comment on the case. German-born media magnate Scriba has not been available for comment. Russian film industry players have expressed surprise over the dispute. “We have never before witnessed disputes on such a scale between film majors and their Russian partners,” Dmitry Shmulevich, head of the Luxor chain of movie theaters, told the newspaper. “I suspect the agreement between Fox and Gemini was made up improperly as the studio continued to provide films without receiving any revenue.”

On March 21, Gemini lodged a bankruptcy request with the Moscow Arbitration Court in a bid to avoid debt payment, Kommersant said. The company has also been plagued by internal wrangling between Schlicht and Scriba, who are both trying to shift responsibility for the debt, the paper said. Scriba had refused to pay his part of the debt to Fox, saying he had not been closely engaged in Gemini’s activities, the daily said, citing a source close to the situation. Schlicht, in turn, went to court to prove his partner was the main debtor, Kommersant said. (rian.ru)

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