Despite The Lord of the Rings being the 7th highest grossing film franchise of all time, New Line Cinema claims it was a financial loss.
Peter Jackson’s The Lord of the Rings trilogy earned $2,947,978,376 in theatres, nearly 3 billion. Its production costs were less than 10% of its earnings, at $281 million. How exactly does New Line Cinema claim it suffered a loss then?
The details are a little sketchy. South Canterbury Finance had invested 30 million dollars in the trilogy, but New Line produced accounts showing the movies made “horrendous losses.”
According to Allan Hubbard, South Canterbury Finance’s CEO, “We found it surprising because it was one of the biggest box office successes of all time.” He’s right, because the films rank 5th, 18th, and 25th on the list of highest grossing movies of all time.
Evidence seems to point to shifty business at New Line Cinema, because over a dozen actors from the films sued New Line due to not getting their agreed upon share of profits from merchandising. This practice is known as "Hollywood Accounting" and it's not uncommon amongst movie studios.
The Tolkien estate also sued New Line for not receiving the right amount of money from the film series’ profits. Even Peter Jackson’s production company stepped in. Wingnut Films, Jackson’s company, brought in an auditor to New Line, and eventually filed a suit against them as well, once again over an incorrect amount of profits.