A lot has been written about the changes within the film industry due to the covid-19 pandemic. The first wave of stories involved productions being shut down in early 2020, naturally, the second wave of stories involved productions opening back up, with some being plagued with covid-19 outbreaks. Later in 2020 the big stories involved how films were going to be released during the pandemic, with the announcement that HBOMax would be streaming all of Warner Bros 2021 lineup on the same day and date of their theatrical release. Disney opted for a more individualized approach, pushing some releases to Disney+ only (Luca), some releases to streaming with $29.99 Premier Access only (Mulan), some releases to streaming and Premier Access simultaneously (Black Widow, Raya, and the Last Dragon, and Jungle Cruise) and some films to theatrical only releases (Free Guy, Shang Chi and the legend of the Ten Rings).
While the main stories seemed to be production delays and creative changes to release schedules, the real stories were happening in the background and it did not take long for some of these fights to come stumbling into the spotlight.
Many players involved in a film have complicated payment structures. These agreements usually involve high-priced talents, such as an A-List Actor or a well-known Director. These can be complex and they often involve some flat-fee compensation upfront, followed by additional payment tied to the film’s box office success.
This structure makes sure the talent has some initial compensation but also continues to pay them if the film is a box office success. This is good for the talent, as it dips its toes into both flat-fee and commission-based payouts. The talent still gets paid (although not much) if the film bombs, due to the flat fee, but they also get to reap the benefits if the film is a massive hit.
The film studios like this agreement too, it allows them to ensure they have a hugely successful film before they’re forced to pay large payouts. It has become a good way to structure agreements for the past decade or so, however, the pandemic has completely turned this process on its head.
The oversimplified version of the issue is this: a studio sees that the pandemic has severely limited the box office receipts due to lockdowns and a hesitancy to visit public places, so, to make as much money as they can from these films, they release them to a wounded box office and to their growing streaming service. So the film’s benefit to the studio is both the box office receipts and the boost in new streaming subscribers. And, in Disney’s case, the $29.99 Premier Access fee. All of this sounds fine, but, these films are paying their higher-end talent with an initial flat fee plus percentages of the box office receipts. No agreement about percentages tied to streaming subscribers or extra fees.
Call in the lawyers!
Earlier in the year, Warner Bros renegotiated a number of contracts with their bigger stars to keep them from suing and causing a public uproar. While the creative community was initially very upset with Warner Bros decision to stream their entire 2021 calendar, the renegotiated terms seemed to placate most of the players.
Disney, on the other hand, was not so lucky. The Walt Disney Company had just come off a string of the most successful box office years ever. With huge hits and massive box office receipts year after year. They were, and are, the undisputed Kings/Queens of the industry, so all eyes were on the Mouse House.
While we heard some murmuring from folks at Disney Pixar studios regarding their decision to move Soul and Luca to Disney+ without any up-charge, things were relatively quiet early this year. That is until Black Widow was released in theaters and on Disney Plus (with Premier Access) and the film’s star Scarlett Johansson sued Disney for breach of contract.
We have covered this specific dust-up in previous articles, but it is important to this story.
The Johansson lawsuit brought a lot of negative attention toward both players, ScarJo and Disney. Disney CEO Bob Chapek was being ripped apart in the media for being unwilling to come to an agreement with Johansson and the actress was being framed as a poor rich actress not content with her $20+ million payouts. The case is still pending and may end up in arbitration, as stipulated by her contract with Marvel studios, which is owned by Disney.
However, Johansson was not the only person on Disney’s payroll that had their take-home pay severely impacted by the pandemic and the dual release strategy. The three biggest stars, other than Johansson, were Emily Blunt and Dwayne Johnson (from Jungle Cruise) and Emma Stone (from Cruella).
Allegedly Johansson’s legal team reached out to these actors to get them to join their cause and make this less about Scarlett vs Disney, but rather a united group of talent vs Disney. Emily Blunt and Dwayne Johnson turned down the offer and stayed in Disney’s good graces. Which left the Academy Award-winning Emma Stone to make a move.
Friday evening, August 13th, it was reported that Emma Stone will be returning for the Disney live-action sequel for Cruella later next year. This followed a round of negotiations between Stone and Disney, to come to an agreeable settlement regarding her compensation for the Memorial Day released Cruella.
While these types of agreements are strictly confidential, with massive penalties if either party leaks the contents, it is understood that the negotiations between Stone and Disney was a huge win for Stone. And, in these types of situations, it was also a win for Disney. It kept a highly respected and beloved actress within the Disney family, it allowed them to move forward on a sequel to the highly successful Cruella, it did wonders for Disney’s CEO Bob Chapek’s image, showing that the shrewd executive could negotiate an amicable end that both parties, creative and business, were agreeable to.
In the complex world of contract law, there are many different avenues one can take to resolve alleged issues. Here we see two different tactics, Johansson filed a very public lawsuit, pitting a beloved actress against a beloved media company, and Emma Stone settling behind the scenes, avoiding headlines, and sticking with the Walt Disney Company for future projects.
Obviously, the negotiations between Disney vs Johansson and Disney vs Stone were different. Their initial contracts were likely very different, their films had different levels of box office success, and they have different track records and future plans with Disney. So, one cannot simply conclude that Stone caved in to pressure and Johansson is fighting harder, nor can one simply conclude that Johansson is being unreasonable and Stone took the high road. Two different sets of facts, two different outcomes.
It is unclear how Johansson’s lawsuit will be resolved and we likely never know, as the matter will certainly eventually be settled and those are private and undisclosed. We also do not know if this will damage the reputation of Scarlett Johansson among moviegoers and also within Hollywood, this has divided many industry insiders and could affect her with future non-Disney projects. At the same time, there is no way to know the reputational damage being done to Disney. The company has always been known to be overbearing, litigious, and not afraid of a public fight, so the company will likely not see much harm as this entire episode is par for the course at Disney. The only caveat would be the reputation of Disney CEO Bob Chapek, he’s been in a weird middle-ground at Disney since the pandemic began, as former Disney CEO Bob Iger handed the reigns over to Chapek in February 2020, but remained on as Executive Chairman. While Chapek has been with Disney for three decades, this public fight may not be the way Chapek wanted to start his reign.
While the Johansson fight continues, it is very clear that the Emma Stone situation is over with a large payout for Stone, no bad press for Stone, a new movie announcement, and a softening of Disney CEO Bob Chapek’s image, showing that he can work to negotiate fair and reasonable compensation for an A-list Hollywood Actress.
Emma Stone can sleep well knowing that she got paid what she deserved and has some exciting projects still lined up with the world’s largest media company. Johansson, on the other hand, has many weeks and months ahead of her, with nasty legal and PR maneuvers likely to continue, an outcome that is unclear, and a reputation that is strengthening among some who see her as an advocate for creative talent and crumbling among others who see her as another multimillionaire unhappy with a $20million+ payday.
Regardless of the outcome, on this day, Emma Stone is sleeping better than anyone.
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