Sony Pictures, MGM Prepare for Court Battle By Barry Willis February 14, 1998 — All it will take is $20 million to make things right between Metro-Goldwyn-Mayer and Sony Pictures Entertainment. A suit filed on February 8 by MGM's Orion Pictures Corporation in Los Angeles Superior Court charges Sony and its subsidiaries, Columbia TriStar Home Video and Columbia Pictures Entertainment, with "substantially underreporting revenues" and "failing properly to account for monies received" for distributing Orion's films on video outside the US. Orion had an exclusive distribution contract with Columbia/Sony from 1985 to 1992.

The lawsuit launches some serious accusations of embezzlement and financial mismanagement at Sony. In one of the more pointed charges, Sony is said to have reported only $203 in revenue from Mexican sales of Silence of the Lambs, despite the fact that over 30,000 copies were sold. Where were Orion's accountants? Two hundred bucks for thousands of videos is a "rounding error" too big to miss. Is this a case of a mysteriously shifting decimal point?

The charges state that Columbia/Sony made "huge 'adjustments' to previously issued accounting statements, including reducing receipts by millions of dollars, without providing documentation to support such reductions, despite Orion's repeated requests." Nor were Orion executives allowed to examine sales records, the company's lawyers claim.

Sony also purportedly overcharged Orion for taxes paid in other countries. Orion has been stonewalled in its attempts to correct the situation, and the company had no choice but to "seek legal remedies," according to Robert Brada, MGM executive vice president and general counsel. Was this really a case of malfeasance and embezzlement, or was it simply incompetent accounting? Can accounting goofs add up to millions of dollars? Or has somebody further up the food chain absconded with the cash? This little imbroglio ought to be fun to watch.