Netflix Loses Court Bid to Stream Relativity Films ‘Masterminds,’ ‘Disappointments Room’ Early

Contentious court battle has been playing out for months post-bankruptcy

Last Updated: May 27, 2016 @ 10:29 AM

A New York Bankruptcy Court judge has dealt another blow to Netflix’s ongoing struggle with their Relativity Studios output deal.

The platform lost a bid that would force the studio to hand over Kristen Wiig‘s “Masterminds” and Kate Beckinsale‘s “The Disappointments Room” for streaming ahead of their 2016 theatrical releases, media reports said Friday.

Netflix has been locked in a contentious court battle with Relativity — who emerged from bankruptcy earlier this year — in no small part thanks to their exclusive output deal that guarantees Ryan Kavanaugh‘s company millions in licensing for their films and serves as collateral for more loans.

In early 2016, attorneys for Netflix argued to Judge Michael Wiles that Relativity was leveraging their rare output agreement in bad faith, and had voided their agreement by failing to deliver films held hostage by the Chapter 11 process (including Halle Berry‘s “Kidnap” and Kate Bosworth‘s “Before I Wake”).

After Judge Wiles sided with Relativity, Netflix changed its approach and instead demanded the strictest enforcement of the contract — and asked for the film titles immediately to offer on their platform.

Attorneys for Relativity argued a streaming premiere before “Masterminds” and “Disappointments Room” hit theaters would be fatal for their box office and ultimately diminish the “lifetime” earnings potential of both films, each estimated at $200 million according to court transcripts of testimony. “Masterminds” is set to open in theaters on September 30, 2016, while “Disappointments Room” has a release date of  November 18, 2016.

Netflix indicated they would seek immediate appeal in court, which comes as no surprise — their legal team has consistently objected to the matter playing out in bankruptcy court. Their contract calls for arbitration over such matters, but Wiles has been overseeing the case since its Summer 2015 start.