TV Tokyo Pulls Yu-Gi-Oh & Sues 4Kids

The TV Tokyo network has retracted 4Kids Entertainment’s distribution rights to the Yu-Gi-Oh anime franchise and filed a lawsuit, in partnership with Nihon Ad Systems (NAS), against 4Kids alledging “underpayments, wrongful deductions, and unmet obligations.” The lawsuit asserts that 4Kids owes TV Tokyo and Nihon Ad Systems $4,792,460.36.

According to the lawsuit, 4Kids was required to pay TV Tokyo and NAS 50% of all revenue generated by 4Kids’ handling of the Yu-Gi-Oh license. However, 4Kids deliberately obfuscated earnings and failed to appropriately and accurately report deals in order to maximize earnings while minimizing royalty payments. 4Kids is accused of hiding income earned from deals with companies including FUNimation, the Cartoon Network, and Majesco. 4Kids is also accused of consciously miscalculating taxes, production expenses, dubbing costs, and other fees to benefit itself. The plaintiffs assert that 4Kids “conspired with Funimation to fraudulently hide… more than 45% of the total income Funimation paid to 4Kids.” 4Kids also reportedly sub-licensed anime titles which it did not have authority to sub-license.

Allegedly 4Kids legitimately negotiated a home video distribution agreement with FUNimation under which FUNimation would pay 4Kids 20% of income generated by FUNimation’s home video distribution. Allegedly 4Kids and FUNimation also negotiated a “secret” advance of $1.3 million dollars and a “service fee” for each unit sale. 4Kids received $3.934 million in “service fees” and advances from FUNimation but did not classify this revenue as income and did not pay any percentage of it in royalties to TV Tokyo or NAS. Furthermore, 4Kids allegedly received a $366,667 advance payment from video game developer Majesco for the development rights to Yu-Gi-Oh games for the Nintendo Gameboy Advance but classified this income as “service fee” rather than “income” and did not pay any percentage in royalties to TV Tokyo and NAS. From 2001 to 2009, 4Kids reportedly earned over $152 million from the Yu-Gi-Oh brand.

FUNimation is not targeted as a defendant in the lawsuit.

Source: The Hollywood Reporter & Anime News Network