Published On: Thu, Oct 20th, 2016

Netflix Sued By Relativity for $1.5 Billion Over Breach of Contract

Ryan Kavanaugh Relativity Media

 

Netflix is being sued by Ryan Kavanaugh‘s Relativity Media for $1.5 billion. The suit accuses Netflix of having engaged in a smear campaign against Relativity.

Boy is this a strange way for a financially troubled company like Relativity to try and raise the money which it needs to stay afloat. And is going after Netflix really the best way for Relativity to improve its reputation after all of the bad press which it has gotten in the past year?

The Wrap got the scoop when it reported that Ryan Kavanaugh‘s company is making the claim that it was somehow “used” by Netflix.

Relativity wishes to take credit for helping Netflix transform from a movie rental business into the first live streamer of original programming on line. The suit claims, “In choosing Netflix as its pay television or SVOD partner, Relativity single-handedly converted Netflix from a DVD mail-order company into a pay television business.”

Relativity’s law suit centers on a 2010 deal over new movies “Masterminds” and “The Disappointments Room.” While the company was in receivership after filing for bankruptcy, Netflix as a judge to release the two movies but the judge declined to do so.

This was not enough for Relativity, however, as it feels that the request alone hurt its image. The suit states, “This misrepresentation of the License Agreement caused investors to question Relativity’s ability to make money.”

The claim is that since Netflix renegotiated with Relativity to lower the fees it had agreed to pay for content produced by the company it allowed other companies to also ask for reduced fees thereby harming Relativity’s ability to turn a profit. Never mind the fact that Relativity Media was forced to delay the production and release of many projects due to its financial woes which sent the company into bankruptcy in the first place.

Now Relativity Media is out of bankruptcy and is trying to raise its value ahead of an attempted sale of the company.

A spokesperson for Netflix stated, “We find this lawsuit baseless and ironic.”

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