Warner, Fox end movie dispute

Warner Bros. and 20th Century Fox reached a settlement Thursday night on their copyright dispute over the superhero movie “Watchmen,” concluding a legal drama between two Hollywood studios that threatened to upend one of the spring’s biggest movies.

The agreement paves the way for Warner Bros. to release “Watchmen” as planned March 6. The companies had been urged by a federal judge, who made a preliminary ruling in December that Fox owned “Watchmen’s” copyright, to settle before a hearing next week when he would decide whether to block Warner’s distribution of the film.

“Warner Bros. acknowledges that Fox acted in good faith in bringing its claims, which were asserted prior to the start of principal photography,” the companies said in a joint statement. “Fox acknowledges that Warner Bros. acted in good faith in defending against those claims.”

Fox and Warner Bros., which will go before the judge this morning and ask for the case to be dismissed, had been battling for nearly a year over which studio controlled distribution rights to “Watchmen.”

Fox sued Warner Bros. in 2008, alleging that the studio and the movie’s producer, Larry Gordon, failed to obtain the rights from Fox, where the project had been in development.

The studios did not announce details of the settlement. But under the terms of an agreement hammered out over recent days, Warner Bros. agreed to pay Fox as much as 8.5% of the film’s gross receipts plus about $1.5 million to cover the movie’s development costs, according to a person familiar with the situation. The agreement extends to sequels and spinoffs, the person said.

“Watchmen,” adapted from the popular graphic novel series of the same name, is directed by Zack Snyder, the filmmaker behind Warner’s 2007 blockbuster “300.” The studio has similar high expectations for the $130-million budget “Watchmen,” which doesn’t have big-name stars but is targeted to the same young adult audiences that have made superhero movies such as “The Dark Knight “ and “X-Men” so popular at the box office.

Warner Bros., which is betting on a big score from “Watchmen,” will now have to share some of the anticipated proceeds with Fox.

Warner’s partners in the film include co-financier Legendary Films and Paramount Pictures, which will distribute the film overseas.

The surprise Christmas Eve preliminary ruling from U.S. District Judge Gary A. Feess that he probably would award copyright ownership in “Watchmen” to Fox gave the studio important leverage in negotiating a settlement with Warner.

Had Fox and Warner not settled, Fox could have pursued an order from Feess that would have blocked Warner from releasing the movie. Warner already has movie trailers playing in theaters and TV spots on the air promoting the upcoming release.

Fox is a unit of News Corp., and Warner Bros. is owned by Time Warner Inc.

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claudia.eller@latimes.com