Fox & Warner Settle 'Watchmen' Lawsuit: Warner Will Distribute; Fox Gets 8 1/2% Gross + Cash + Piece Of Sequels/Spinoffs

BREAKING NEWS! (keep refreshing) The deal is finally done, and Warner Bros' highly anticipated Watchmen -- based on the comic book series/graphic novel written by Alan Moore and illustrated by Dave Gibbons -- won't be held hostage. I'm hearing that in tonight's settlement, Fox will not be an active distributor of the pic, but will receive up to 8 1/2% gross participation in the pic, and a piece of everything going forward including a sequel or spinoff, and a cash payment upfront including recoupment of its development costs and attorney fees, and god-only-knows what else. Because neither Fox nor Warner Bros would comment on the terms. But Legendary Pictures already owns a chunk of Watchmen. So cutting Fox in now as another partner really plays havoc with Warner Bros' economics on the movie. Studios hate when that happens.

[FYI, The Hollywood Reporter jumped the gun on this settlement story and got it wrong. Twice in one week for the two trades. Though THR posted at 5:25 PM PT that the deal was done, the fact is that my sources said important issues had yet to be resolved. Only at 7:15 PM was the studios' settlement concluded. Also THR claimed at first that Fox didn't get a piece of Watchmen going forward in a sequel or spinoff. But the trade corrected this at 8:30 PM.]

The settlement will be presented on Friday at 9:30 AM to federal judge Gary Feess who set this in motion in the first place by letting all sides know in December that he intended to side with Fox's claims against Warner Bros for copyright infringement and distribution rights on Watchmen. This is a case where producer Larry Gordon's hot property changed hands again and again since the late 1980s from Fox, to Universal, to Paramount, until finally to Warner Bros and Legendary Pictures which together went forward with the $130 million film despite knowing that Fox had claims which led to the lawsuit. The next legal step might have been an injunction against Watchmen's March 6th release. Initially, Warner Bros said it would fight Feess' intention to side with Fox and appeal.

But then, according to my sources, Warner Bros boss Barry Meyer stepped up and stopped that, and his studio finally started talking settlement with Fox last week. So now, Warner Bros can release Watchmen domestically as planned, and Paramount (which also had to sign off on the settlement) play it internationally, and Fox reap the rewards, and fans of the comic book series/graphic novel can rejoice -- or find something else about the movie to bitch about...

Need I remind that this isn't the only controversy in which Watchmen has been embroiled. Though the film's footage that has been shown has garnered high marks from fans, director Zack Snyder's admission that he's changed the ending has rankled many -- and he's also been dismissive of anyone who considers that a big deal. And Watchmen fans appreciated the irony of Warner Bros being hit with a lawsuit over the rights to the movie because it was DC Comics’ screwing of Watchmen writer Alan Moore over both the merchandising rights and a rights-reversion clause to his comics that resulted in his putting a curse on the movie. 

UPDATE:  Here is the statement by the two studios purporting to show that all is forgiven between them after months and months of nasty back-and-forth battling:

"Warner Bros. and Twentieth Century Fox have resolved their dispute regarding the rights to the upcoming motion picture Watchmen in a confidential settlement.  Warner Bros acknowledges that Fox acted in good faith in bringing its claims, which were asserted prior to the start of principal photography.  Fox acknowledges that Warner Bros. acted in good faith in defending against those claims Warner Bros. and Fox, like all Watchmen fans, look forward with great anticipation to this film's March 6 release in theatres."