Any time Marvel Studios chooses to push a movie or series into development, Disney forms a new limited liability company to serve as the operating entity behind each respective production. It’s through the formation of these entities that some are alerted to new projects in the works, oftentimes trying to hypothesize which characters could be coming to life judging by the name of each company. Earlier this year, some begun to speculate that Disney’s new Blind Faith Productions, LLC could potentially be a Daredevil project and behold, months later a Daredevil Disney+ series was officially reported to be in the works.
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Why does a conglomerate like Disney want to operate dozens of separate companies, though? As one former Marvel lawyer says, it all involves separating the liabilities of one project from the next.
“Each project (motion picture, TV show, etc.) should ideally be set up through its own entity primarily to isolate any liability associated from that project from the company generally or its other projects,” attorney Paul Sarker tells ComicBook.com “The concept of these sorts of limitations of liability is the fundamental principle of corporate law. Corporations (and LLCs) exist as separate legal entities, in a legal sense, they are persons, and they can enter into agreements and be sued. To encourage people to invest in corporations, we limit the liability of investors to the amount of their equity in a corporation (or LLC). There are exceptions to this, of course, if the entities are being used as a sham or not following all legal requirements.”
Oftentimes, these limited liability companies are formed right at the onset of development, long before the project begins writing and casting in earnest.
“I would say when the LLCs are formed is somewhat flexible, but it’s generally at the start of the project, so before you hire a writer dedicated to that project,” Sarker adds. “Sometimes they will use the same LLCs for multiple projects or multiple seasons of a TV show, because there is a cost to forming and having each entity, so at a certain point that becomes a factor (e.g., a company like Disney wouldn’t want to manage 50,000 entities).”
Sarker hosts the podcast Better Call Paul, a weekly show covering the various facets of entertainment law.
