Village Roadshow Entertainment Group has filed for bankruptcy protection in the United States, citing financial difficulties stemming from a legal battle with Warner Bros. The company’s debts are estimated to be between $500 million and $1 billion. The dispute with Warner Bros. has not only strained their professional relationship but also impacted Village Roadshow's financial stability, leading to this significant development.
Village Roadshow alleges that Warner Bros. excluded it from its rights to any sequels or prequels of films they had previously collaborated on. This legal contention has severely damaged what was once deemed "the most lucrative nexus" for the company’s historic success. The fallout from this legal battle has resulted in Village Roadshow proposing to sell its extensive film library for $365 million in an attempt to alleviate some of its financial burdens.
The challenges faced by Village Roadshow extend beyond its legal issues with Warner Bros. The company has also been adversely affected by a decline in demand during the pandemic and disruptions caused by strike action from Hollywood actors and writers, which began in May 2023. Furthermore, Village Roadshow's decision to launch a costly studio business in 2018 did not yield the anticipated returns, as none of the films or television series independently produced under this venture generated profits.
The relationship between Village Roadshow and Warner Bros. began to deteriorate in early 2022 following the release of "The Matrix Resurrections" on HBO Max. The two companies have a long history of co-producing and co-owning numerous films, but the current legal battle has "irreparably decimated" their working relationship.
"The WB arbitration has caused the company to incur more than $18 million in legal fees, nearly all of which remain unpaid," stated Keith Maib, highlighting the financial strain imposed by the ongoing dispute.