SUBMITTED BY pimpjoe_esb

June 1, 2007 — Variety reports that fifteen Kiwi actors who appeared in various installments of "Lord of the Rings" got a lesson in Hollywood accounting when they opened royalty statements from New Line and found that despite millions of dollars in sales of lunchboxes, T-shirts, caps and other LOTR gimcrack, there was -- gasp! -- zero "net merchandising revenue."

The actors contacted attorney Henry Gradstein, who filed a lawsuit on Wednesday in Los Angeles Superior Court to recover money the actors figured they are owed under paragraph 11 of their contracts.

Based on the paragraph, the actors believed they would receive 5% of "net merchandising revenue" split among all actors whose characters are portrayed on the merchandise.

What the actors didn't realize is that gross merchandising revenue apparently became "net merchandising revenue" after certain unexpected expenses were deducted.

The biggest of these was a 50% distribution fee that the actors had never seen mentioned anywhere in their contract, according to the lawsuit.

There were also other payments and fees that the actors felt were not "related to the generation of the relevant merchandising revenue."

After looking at all the fees that were being deducted from the gross revenues, the actors figured it would be impossible to ever have any "net merchandising revenue" no matter how much merchandise was sold.

Actors filing the lawsuit are: Noel Appleby, Jed Brophy, Mark Ferguson, Ray Henwood, Bruce Hopkins, William Johnson, Nathaniel Lees, Sarah McLeod, Ian Mune, Paul Norell, Craig Parker, Robert Pollock, Martyn Sanderson, Peter Tait and Stephan Ure.

A New Line rep said the company does not comment on pending litigation.