A Centennial-based company that manages pre-movie pre-show advertising and is mostly owned by megachains Regal and Cinemark has been accused of using shady accounting tricks to steal at least $15 million from an ESPN analyst.
In 2017, National CineMedia bought a two-year-old company called Kinetoplay that made movie-related video games. As part of the purchase, Kinetoplay co-founder Matthew Berry would receive bonuses if the games generated significant sales.
Berry, who was born in Denver, is a former television and film writer (Married…with Children, Crocodile Dundee in Los Angeles). He has been a fantasy sports analyst for ESPN since 2007. He had a brief cameo in the 2019 film Avengers: Endgame.
In 2015, Berry and his Kinetoplay co-founders created the Fantasy Movie League, in which players attempted to predict box office sales. After Kinetoplay was sold to National CineMedia, they helped develop a trivia game and arcade app that are now part of National CineMedia’s pre-show “Noovie,” which is shown in front of movie trailers on 20,600 screens in 1,600 theaters.
According to a lawsuit Berry filed May 13 in Denver District Court, National CineMedia, or NCM, has made tens of millions of dollars from Kinetoplay’s creations and boasted about it in earnings calls. NCM sells advertising through the apps and also sells customer data.
What NCM failed to do, according to the lawsuit, is pay Berry and other Kinetoplay co-founders so-called “earn-out” bonuses — portions of the revenue it earned from Kinetoplay’s creations. Berry’s lawsuit alleges that he is owed “at least $15 million” in earn-out bonuses.
“NCM breached its contract with Berry and committed theft,” his attorney David Olsky of Fortis Law Partners in Denver wrote in the lawsuit last week. “Put simply, NCM is benefiting from the business and assets it has acquired without complying with the terms of the agreement and engaging in fraudulent accounting to boot.”
Olsky and Berry accuse NCM of being involved in “Hollywood accounting,” a pejorative term for blurry accounting tactics in the TV and film industries.
“NCM’s improper intent is illustrated by the way NCM has twisted its accounting to make it appear that Berry is not entitled to bonuses,” Olsky wrote, “despite his public reporting making it clear that he is indeed.” entitled to his maximum bonus.”
Requests for comment from NCM and its spokesperson went unanswered this week.
This story was reported by our partner BusinessDen.