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Scarlett Johansson’s Disney Lawsuit Could Shape the Future of Talent Compensation

A major actress sues a major studio: It may be the first, but it also may not be the last until the "artificial back end" becomes standard practice.

Black Widow/Natasha Romanoff (Scarlett Johansson) in Marvel Studios' BLACK WIDOW, in theaters and on Disney+ with Premier Access. Photo by Jay Maidment. ©Marvel Studios 2021. All Rights Reserved.

Scarlett Johansson in “Black Widow”

Disney

With a $1.15 billion worldwide gross in 2016, “Captain America: Civil War” was one of the highest grossing films of all time. When Scarlett Johansson, aka the MCU’s Black Widow, negotiated the following year for a film dedicated to her own character, her reps pushed for a backend deal that would see most of the actress’ compensation come from a cut of the box-office receipts.

Three weeks after its release, “Black Widow” has earned a comparatively paltry $319.45 million worldwide. The pandemic is partly to blame, but so is Disney’s decision to offer the film to Disney+ subscribers for $30, which netted the studio an additional $60 million in its opening weekend alone.

The result? Johansson earned far less than expected, while Disney’s stock price rose in response to Wall Street’s excitement over the streaming success. Disney execs were rewarded for their streaming-centric management of the company: executive chairman Bob Iger’s compensation totaled $21 million in the most recent fiscal year.

That’s the narrative outlined in the lawsuit filed by Johansson against Disney on Thursday, the first to pit one of Hollywood’s best-known earners against such a dominant studio. It also represents a major breaking point in tension that has been simmering over the last year — one where labor is fighting for compensation that falls in line with a business driven by the box office rather than studios’ accelerated embrace of streaming.

A rich actress deprived of millions is not the typical poster child for a labor dispute, but streaming is having a major impact on compensation for writers, directors, producers, and others with less stature than Johansson. With few, if any, publicly released viewership statistics for streaming projects, it’s hard for talent representatives to even know how much a project to worth to a streamer.

“It goes back to the challenge that entertainment lawyers are facing all the time now: trying to negotiate deals when there is no backend anymore,” said Nicole Page, partner at the New York firm Reavis Page Jump. “It’s all confidential, it’s all in this black box.”

Page said she is in the midst in negotiating with a streamer on behalf of a talent client whose last project was released theatrically. “The money is a fraction of what they made on the theatrical release,” she said.

Some streamers have embraced so-called cost-plus or premium deals, ones that pay talent a percentage of the project’s overall budget as well as a flat fee for their work. Others are refusing that route, resulting in murky and frustrating negotiations.

Streamer-talent tension heated up in December, when WarnerMedia announced that the entire Warner Bros. 2021 slate would premiere day-and-date on HBO Max. Parent AT&T had amandate: Grow subscribers as fast as possible. It was an expectation so severe that Warners was willing to risk its reputation as the most talent-friendly studio when it declined to consult, or even inform, many of the directors, stars, and producers and the 17 movies before announcing the HBO Max news.

While many affected enjoyed renegotiated compensation following massive blowback, it was the beginning of a messy, painful reorientation of how Hollywood does business.

In her suit, Johansson alleges that attempts by her reps to renegotiate her compensation in light of the “Black Widow” Disney+ release were “ignored.”

If that’s true, it marks a departure from precedent Disney set with its first streaming experiment, “Mulan.” Disney announced in August that the film would premiere on Disney+ in the U.S. the following month. One source said that plan included negotiations with talent.

Johansson alleged in the suit that her reps were concerned about “Black Widow” ending up on Disney+ way back in 2019, shortly after the launch of the platform. Marvel’s chief counsel allegedly wrote the following in response:

We totally understand that Scarlett’s willingness to do the film and her whole deal is based on the premise that the film would be widely theatrically released like our other pictures. We understand that should the plan change, we would need to discuss this with you and come to an understanding as the deal is based on a series of (very large) box office bonuses.

One potential point of contention in the suit is that the Johansson’s contract may have only stipulated that the film get a “wide release” — which it did — and said nothing about a simultaneous streaming debut. But Devin McRae, partner at Los Angeles firm Early Sullivan Wright Gizer & McRae who specializes in entertainment contract litigation, said the alleged message from Marvel portends well for Johansson.

“That does go a long way for the plaintiff,” he said. “It appears that she’s got a strong case of liability and the only kind of issue really appears to be her ability to prove damages.”

The changing tide toward streaming has now prompted lawyers and agents to make sure they cover in negotiations the once unlikely scenario that a tentpole could end up on a streamer, eroding potential backend and ancillary income.

That includes creating a kind of artificial back end — call it a Hollywood butt lift — in which a certain percentage on top of a star, director, or producer’s compensation tries to model what profit participants would get in a medium-case scenario for a theatrical release. WarnerMedia, for example, gave “Wonder Woman 1984” director Patty Jenkins and star Gal Gadot each $10 million payout as part of the HBO Max release.

In response to Johansson’s suit, Disney fired back in a statement arguing the case was without merit and that the suit represents a “callous disregard for the horrific and prolonged global effects of the COVID-19 pandemic.”

That included Disney’s decision to lay off 32,000 workers last year, while announcing that it plans to spend between $14 billion-$16 billion on streaming content in 2024.

Disney in the statement said that Johansson has already received $20 million for “Black Widow” and that the Disney+ release “significantly enhanced her ability to earn additional compensation.”

McRae said Johansson has a unique ability to pursue a suit against Disney.

“The calculation is there’s money at stake and your future career path and whether you’re comfortable enough that Disney can’t bury you,” he said. “Obviously she has the financial wherewithal to fund the litigation. I don’t see it as too bold for a star of this caliber. Individuals like this have to function like they are a sophisticated business in their own right.”

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