A Centennial-based company that manages pre-show advertising before movies and is mostly owned by the megachains Regal and Cinemark is being accused of using opaque 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 was to receive bonuses if the games generated a lot of revenue.
Berry, who was born in Denver, is a former television and film writer (“Married…with Children,” “Crocodile Dundee in Los Angeles”). Since 2007, he has been a fantasy sports analyst for ESPN. He made a brief cameo appearance in the 2019 movie “Avengers: Endgame.”
In 2015, Berry and his fellow Kinetoplay co-founders created Fantasy Movie League, in which players tried to predict box office sales. After Kinetoplay was sold to National CineMedia, they helped create a trivia game and an arcade app that are now part of National CineMedia’s “Noovie” pre-show, which plays before movie trailers on 20,600 screens in 1,600 theaters.
According to a lawsuit Berry filed in Denver District Court on May 13, National CineMedia, or NCM, has made tens of millions of dollars from Kinetoplay’s creations and boasted about that in earnings calls. NCM sells advertising through the apps and also sells customers’ data.
What NCM hasn’t done, according to the lawsuit, is pay Berry and other Kinetoplay co-founders any so-called “earn-out” bonuses — portions of the revenue it has made from Kinetoplay’s creations. Berry’s lawsuit claims he is owed “at least $15 million” in earn-out bonuses.
“NCM breached its contract with Berry and committed theft,” his attorney, David Olsky with Fortis Law Partners in Denver, wrote in the lawsuit last week. “Simply put, NCM is enjoying the benefit of the business and assets it acquired without honoring the terms of the agreement and engaging in deceitful accounting to boot.”
Olsky and Berry accuse NCM of engaging in “Hollywood accounting,” a pejorative term for hazy bookkeeping tactics in the television and film industries.
“NCM’s improper intent is evident from the way that NCM has twisted its accounting to make it appear as though Berry is not entitled to bonuses,” Olsky wrote, “even though its public reporting makes clear that he is in fact entitled to his maximum bonus.”
Requests for comment from NCM and its spokeswoman were not answered this week.