This was not the Christmas present Warner Bros. was hoping for.

A few months ago, a young law student I know insisted that based on his interpretation of the documents made public, Fox was justified in suing WB for distribution rights for the expected blockbuster “Watchmen.”  And if he could figure that out after six months of classes, imagine the panic the corporate types at WB must have been going through as they awaited the judge’s verdict.

How could this be? How many lawyers at Warner Bros., Paramount and Universal Studios, all who at one time were considering going into the production on the film, missed this while scouring through the agreements made by Fox and veteran producer Larry Gordon?  What Gordon and his production team knew and when is a story that will be grist for the rumor mill for months, but it’s clear he has some responsibility in this mess.

One thing is certain, Fox and Warner Bros. (and Paramount who holds international rights), are now under major pressure to make a deal.  The idea that the studio would push the movie’s release in order to fight this in court or on appeal is unrealistic.  The studio already has a busy slate and moving the release date is just too problematic. It’s clear that the film needs breathing room from the crowded summer and winter release schedules, just like Zack Snyder’s last success, “300.”

Exactly what Fox will receive from their legal maneuvering is the $100 million dollar question.  20, 30% of ownership?  How much can they demand having put zero dollars into the film’s actual production budget?  Additionally, how far is Fox prepared to take this when movie nerds are rolling up their sleeves for one good excuse to really boycott the studio? Trust me, the last thing they want is for an online community to seriously organize against them.  It would equal the Prop 8 vote reaction, but from a legion of net-savvy geeks.

If there is a silver lining to any of this, it's Warner Bros. decision to move “Harry Potter and the Half-Blood Prince” into 2009.  Now, a potential godsend.  The over-the-top success of “The Dark Knight” and less acknowledged, “Sex and the City,” puts pressure on the studio for another banner year.  Unfortunately, the studio has only a distribution agreement for it’s only other tentpole besides “Watchmen,” “Terminator: Salvation.”  At this point, it will need every cent of “Potter” profit to avoid a steep drop off in year-to-year and for Time Warner shareholders (who no doubt won’t great this news kindly).

Look from more on this story from HitFix’s Drew McWeeny soon.