Buchwald Lays Claim to Chunk of ‘Net Profit’ on ‘Coming to America’ : Movies: The humorist says the Eddie Murphy film earned $39.8 million even by Hollywood’s unique definition. He and his producer want up to $14.6 million.

Preliminary audit figures released Wednesday by attorneys for columnist Art Buchwald and producer Alain Bernheim suggest that, far from losing $18 million on the hit Eddie Murphy comedy “Coming to America,” Paramount Pictures Corp. earned a “net profit” of $39.8 million as of last December.

Buchwald and Bernheim’s share of that net ought to range between $6.9 million and $14.6 million, Pierce O’Donnell, their attorney, asserted in documents filed Wednesday in Los Angeles Superior Court.

“You’ve got to misread the agreement to get to those figures,” said Robert Schwartz, an attorney with O’Melveny & Meyers, which represents Paramount in the case. “The studio’s reaction is that their claims are baseless and unfounded. The studio is confident that (the trial judge) will see this as a transparent attempt by Mr. Buchwald and his attorneys to walk away from an agreement negotiated by his agent who, by the way, was the head of the William Morris Agency.

“As to the auditor’s claims regarding ‘Coming to America’ expenses, they’re meritless.” The humorist and his producer blamed the $58-million gap between what Paramount says the picture earned and what they believe that it earned on radically different methods that Paramount accountants and Buchwald’s own auditor, Philip Hacker & Co., used to compute production costs, interest expense and income on the motion picture.

Paramount, for example, puts a $58.5-million price tag on the production, or so-called negative, cost of the movie, while Buchwald’s calculations allocate only $22.9 million to make “Coming to America.” Payments of $1 million for Eddie Murphy’s entourage, $900,000 for excessive fringe benefits and a uniform 15% “overhead” charge assessed to the entire production budget--amounting to $8 million of the negative cost all by itself--should not be included in the cost of making the movie, O’Donnell said.

The brief points out that $1.65 million of the $8 million in overhead “was merely for writing gross participation checks to Eddie Murphy and (director) John Landis.”

Paramount has maintained for months that, contractually, it owes nothing to Bernheim or Buchwald because the movie has earned no “net profits,” as those profits are defined in their contract.

Until last January, Paramount executives held that neither Buchwald nor Bernheim had any contractual claim at all to the 1988 box office hit. Buchwald sued, charging that the movie was based on an eight-page treatment that he sold to the studio in 1983 about an African king who comes to the United States.

In the film’s credits, the screenplay for “Coming to America” is said to be based on a story written by Eddie Murphy, not Buchwald.

In the first phase of a two-phase lawsuit tried in December, the 63-year-old humorist proved to the satisfaction of Judge Harvey Schneider that he, not Murphy, wrote the story upon which “Coming to America” is based. As a result, the 1983 contract--which calls for a payment of between 19% and 40% of net profits to Buchwald and Bernheim--is binding, Schneider ruled.

Paramount has said it will appeal Schneider’s decision, but in the meantime Buchwald’s auditing team has been poring over the Paramount books to prepare for a July 9 trial on the accounting for “Coming to America”--the second phase of Buchwald vs. Paramount. Wednesday’s brief is the opening salvo in a barrage of charges and countercharges that the studio and the Pulitzer Prize-winning columnist are expected to level at each other in the weeks leading up to that trial.

Buchwald auditor Hacker said the studio continues to withhold details of key expense and income items, such as a breakdown of foreign box-office revenue and videocassette sales. Given those figures, according to O’Donnell, his estimates on the net profit total for the $300-million box-office winner could be even higher.

But the biggest disparity between Buchwald’s and Paramount’s bottom line lies in how the humorist and the studio define the term “net profit.” O’Donnell’s 114-page brief, which outlines a full-scale legal attack on the studio’s accounting procedures, didn’t confine himself to criticism of Paramount’s bookkeeping. The brief took on the entire Hollywood studio accounting system, as it has evolved over more than half a century.

The seven major film studios--Columbia/Tri-Star, Disney, MGM/UA, Paramount, 20th Century Fox, Universal and Warner Bros.--have employed a “take-it-or-leave-it standard profit participation agreement” that makes it nearly impossible for most creative personnel involved in a film’s production to share in the profits, according to the brief.

“These agreements are ‘standard’ because you cannot negotiate them, you cannot get better terms elsewhere and your guild has been unable to get the studios to make them a subject of collective bargaining,” the brief reads. “Literally, you can take it or leave it.”

Such agreements, which writers in particular must sign as their entree to Hollywood, define net profit participation in such a manner that even the most successful motion picture rarely goes into the black because of expenses that the studio purposely charges to the movie to maximize its own bottom line while minimizing the writer’s, director’s, actor’s or producer’s return, according to the brief.

The studio “exploits . . . ambiguities (in its own standard profit participation contract) to the great financial detriment of profit participants” and “abuses its awesome power and unconscionable contract terms to manage the venture by making hidden profits, charging exorbitant interest and utterly destroying any hope of ‘net profits’ by self-interested acts,” according to the brief.

“Is Paramount right that Buchwald and Bernheim get only the leftovers--a worthless share of an $18 million deficit--while Paramount reaps a financial bonanza of at least $55.3 million?” the brief asked.

“Is Paramount right that under the applicable law, the court is powerless to look behind the words of the form contract, which is the same one used by every studio, to scrutinize how it was unilaterally imposed upon Buchwald and Bernheim on a take-it-or-leave-it basis?”

DUELING AUDITORS

Auditors for Art Buchwald claim that the Eddie Murphy hit “Coming to America” had a $39.8-million net profit, not an $18-million loss as Paramount Pictures claims.

ITEM PARAMOUNT BUCHWALD/BERNHEIM Income $125,300,000 $160,600,000 Distribution fees 42,300,000 54,800,000 Distribution expenses 36,200,000 43,100,000 Interest 6,300,000 0 Production costs (“negative cost”) 58,500,000 22,900,000 NET PROFIT (LOSS) ($18,000,000) $39,800,000

Source: Buchwald attorney’ brief