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Old 02-14-2008, 06:35 AM   #35
Sauron the White
Ghost Prince of Cardolan
 
Join Date: Mar 2007
Posts: 903
Sauron the White has just left Hobbiton.
WCH - This is getting very interesting. Of course, it is difficult to understand this without the legal papers in front of all of us. So I am depending on you and your inside knowledge here.

According to what you are saying, let us say that the expenses on the film were $1 billion dollars. Times 2.6 would equal a figure of $2,600,000.00. Once the gross receipts hit that level, then the Tolkien Estate gets their 7.5% of that figure and everything after that figure. Is that correct?

So if the receipts were only 2.5 billion, the Estate gets nothing because that threshold was not reached.

So no expenses are deducted from the total but are only important in figuring if the threshold to pay royalites has been reached.

Is that correct?

One more question: is there an agreement or specified listing of what constitutes both income and expenses for New Line?

Is that not what this is going to come down to? It is in the interest of the TE to get the income figure as high as possible while keeping the expense figure as low as possible. It is in the interest of NL to get the income figure as low as possible while keeping the expense figure as high as possible.

If NL can show that their end of that $4 billion revenue stream was actually only half of that in their pocket, and can demonstrate expenses that when multipled by 2.6 fall short of that threshhold, can't they make the case that there is not breach and no royalties are owed at this time due to JRRT making "a bad deal"?

from THE HOBBIT by JRR Tolkien

Quote:
In ancient days they had wars with some of the dwarves, whom they accused of stealing their treasure. It is only fair to say that the dwarves gave a different account, and said they only took what was their due, for the elf-king had bargained with them to shape his raw gold and silver, and afterwards had refused to give them pay.

Last edited by Sauron the White; 02-14-2008 at 08:14 AM.
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