In many respects, investment in an entertainment project is similar to investment in an oil and gas well. Often, individuals involved in putting together such a project negotiate “sweat equity” in the form of a “back-in working interest” — i.e., an interest in the net profits of the project after payment of all expenses of creating and maintaining the project.
The agents involved in putting together the popular Paramount Pictures’ television sitcom Frasier cut such a deal with Paramount and, after the show ran for 11 seasons and grossed over $1.5 billion, it looked like they had made a pretty good deal. When the agents demanded an accounting from Paramount regarding their back-in interest, Paramount responded by asserting that the show had never reached profitability and had actually lost $200 million. Lawsuit ensues, as this L.A. Times article reports.
This type of lawsuit is becoming increasingly common in Hollywood, as reflected by this earlier post about Peter Jackson’s lawsuit over the Lord of the Rings movies. And you thought the oil and gas business was hard-knuckled?
Hat tip to Craig Newmark for the link to the LA Times article.