Viacom is objecting to a proposed settlement between The Weinstein Co., its buyer, Lantern Entertainment, and Netflix, arguing the agreement would leave it essentially holding the bag on money it advanced to complete production of the television series Scream.
As the Weinstein Co.’s business deteriorated last fall, Viacom stepped in to provide $9 million in emergency funds to finish production of the third season of Scream. To secure this investment, The Weinstein Co. said Viacom would receive the proceeds from Netflix’s international distribution of the TV show.
Now, Viacom is raising objections to a deal between Lantern and Netflix that traded off its collateral without so much as involving it in the discussions. That leaves Viacom standing in line with unsecured creditors — a group that includes Harvey Weinstein’s accusers — looking to collect payment.
“The net result is a huge windfall for Lantern at the expense of Viacom, the debtors’ estates and unsecured creditors,” attorneys for Viacom argue (read the filing here).
Netflix initially objected to Lantern Entertainment taking over its output deal with The Weinstein Co., arguing it had terminated that agreement because of violations of “key man” provisions tied to Harvey and Robert Weinstein.
The streaming giant lifted its objections after Lantern agreed that Netflix would no longer be obligated to accept delivery of any movies or TV shows after July 11, 2018, (with exceptions for certain titles, such as the Spy Kids animated series and the film Chronicle of an Escape, which details a soccer player’s ordeal in an Argentine prison).
The Weinstein Co. told the court that the settlement enabled it to avoid the cost of litigating the issue with Netflix. The streaming service also agreed to waive a $326,000 claim.
But Viacom said it’s been left in the dark about key aspects of an agreement that directly hits its bottom line (the media company says it is owed $50 million in the bankruptcy).
“The motion lacks any explanation whatsoever with respect to (i) why certain programs, such as Spy Kids and Chronicle of an Escape, are being picked up by Netflix, while others, such as Scream Season 3, are being rejected,” Viacom writes in its legal filing.