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Watchmen Payoff Nears

Warner Bros. and producer Larry Gordon have set a date to figure out who's responsible for the legal problems that led to Fox getting a chunk of the Watchmen movie box office gross.

Attorneys for both sides have agreed to meet on May 13 in a confidential, nonbinding mediation before showbiz mediator Daniel Weinstein.

They will be discussing how much money, if any, Gordon will have to pony up to Warners after a judge ruled that Fox — which initially developed the property with Gordon — owned a distribution right to the film.

The highly publicized legal battle between Fox and Warners came to resolution last January in a settlement that gave Fox a cash payment and up to 8.5% of the film's proceeds, depending on how well it did. The Watchmen movie, which The Hollywood reporter claims cost $138 million, has grossed $180 million worldwide.

There is some good news for Warners, as this weak box office take means that the studio will likely have to pay Fox a paltry 5% of the film's earnings. However, the May 13 mediation will determine whether Warner or Gordon have to write that check.

Warners, who will be represented by attorney Steven Marenberg at the mediation, is said to be seeking a full reimbursement from Gordon for failing to secure proper rights to Watchmen from Fox before setting it up at Warners.

Sources say that Gordon's attorneys will likely counter that he is blameless because Warners was on notice of Fox's claims on the property and decided to go ahead with the film anyway.

Gordon also has argued that his transactional attorneys at Jake Bloom's law firm are in part at fault for the chain-of-title issue. During the Warners-Fox litigation, Gordon's attorney admitted that he negotiated the producer's 1994 separation from Fox without knowing about a 1991 agreement on which Fox based its lawsuit.

The Bloom firm is said to have a $15 million insurance policy that both Warners and Gordon likely will seek to tap for the settlement. Given the film's performance — and the fact that sequels and derivative works are likely dead — that amount could cover everything that will be owed to Fox. Some believe, however, that a global settlement will require Warners, Gordon and his attorneys all to contribute.

4.21.09 Source: The Hollywood Reporter

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