When it filed for bankruptcy earlier this year, Village Roadshow pointed to the souring of its longtime partnership with Warner Bros. for its financial woes. At the heart of the falling out that was years in the making: A legal battle over the studio’s decision to release Matrix Resurrections simultaneously on HBO Max and in theaters, eating away at box office returns.
That lawsuit went dark shortly after it was filed, with a judge moving it to arbitration.
A year later, an arbitrator found in favor of WBD and awarded the studio roughly $125 million, The Hollywood Reporter has learned of the previously unreported figure. It was found in 2023 that Village Roadshow breached a series of deals involving the Matrix films by failing to pay its $107 million share of the cofinancing arrangement, according to a person familiar with the situation who was granted anonymity because the matter is confidential. The debt remains unpaid.
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In March, Village Roadshow filed for bankruptcy protection. The move from the company — once one of the most prolific behind-the-scenes financiers in Hollywood that backed TheMatrixandOcean’s franchises— came after a costly endeavor aimed at creating content in-house and the 2022 lawsuit, which “irreparably decimated the working relationship” with WBD, wrote Village Roadshow chief restructuring officer Keith Maib in a court document. Matrix Resurrections wasn’t the only film at issue in that legal battle. Village Roadshow alleged that it was shut out of cofinancing sequels and remakes to key franchises based on movies it shares the rights to with WBD, including Wonka, Joker and I Am Legend.
One example that predated the Matrix feud: Village Roadshow wanted in on a TV series that was being developing based on Edge of Tomorrow but was told the project wouldn’t move forward if it didn’t relinquish its rights, according to court filings. WBD ended up abandoning the show.
Responding to claims over The Matrix Resurrections, WBD maintained in public statements and court filings that it offered Village Roadshow the opportunity to cofinance the film, which was accepted. The financier later refused to pay its share on the movie, which cost roughly $200 million to make and $100 million to market, according to a court document. WBD prevailed on claims Village Roadshow advanced for unfair competition, breach of contract and breach of implied covenant of good faith and fair dealing, which covers bad faith dealings, said the person familiar with the arbitration.
An arbitrator sided with WBD that Village Roadshow breached the co-ownership and distribution agreements, added the person, who confirmed that the studio was awarded over $107 million in damages plus $17 million in interest.
That ruling has been confirmed on appeal, though damages will be recalculated to account for a would-be day-and-date license for the movie and other distribution revenues that WBD had already received and would’ve had to pay, according to a court document. The studio remains confident that the award will stand, a source says. Interest on the outstanding co-financing obligation has ballooned to nearly $32 million.
Village Roadshow incurred over $18 million in legal fees over the course of the litigation, while WBD spent roughly $8 million across arbitrations related to the Matrix sequel and Wonka, which involve allegations that the studio refused to recognize the financier’s rights to partner on the movie by claiming that it’s not a prequel to Charlie and the Chocolate Factory — a film co-owned by the two sides, per the court document.
The studio is looking to collect on the debt as Village Roadshow looks to sell most of its assets. Last month, the court approved a $417.5 million offer from Blade Runner 2049 producer Alcon Media Group for Village Roadshow’s film library, including stakes in The Matrix and Ocean’s franchises. The stalking horse bid, which sets a price floor for the assets, will be tested at auction. Rival offers, including from Warner Bros. Discovery and investment firm Content Partners, may still surface ahead of the deadline May 16.
Also up for sale: the derivative rights to proven tentpoles, among other movies, and Village Roadshow’s studio business. Since 2018, the company has had 99 feature films and 233 television series in development, though only six movies and seven television shows went into production at a price tag of $47.5 million. None of them were able to turn a profit indicating sustainability of the endeavor aimed at creating content in-house.
WBD and Village Roadshow declined to comment for this story.
