Jeremy Sumpter plays the lead character in Peter Pan. (Reuters)

The Walt Disney Corporation pulled out of a new £60-million film version of Peter Pan after refusing to give a share of its profits to Great Ormond Street Children’s Hospital in London.

The Hollywood studio became embroiled in a row with its fellow producers when it rejected a deal that would have given the hospital a share of the royalties from lucrative merchandising deals linked to the film.

At the height of the dispute with two other studios, the company announced that it was withdrawing its £20-million investment from the project. The announcement comes just four weeks before the release of the now-completed film.

Directed by P.J. Hogan, the Australian filmmaker responsible for box-office hits including Muriel’s Wedding and My Best Friend’s Wedding, it is the first faithful, non-animated film adaptation of J.M. Barrie’s original 1904 play. It stars Jason Isaacs — who appeared in Harry Potter and the Chamber of Secrets — as Captain Hook, Richard Briers as Smee, and Olivia Williams, who appeared in The Sixth Sense, as Mrs Darling.

The film, which is being released to coincide with the 100th anniversary of the play’s first performance, has the full backing of the Great Ormond Street Hospital. Under the conditions laid down by Barrie in his will, the hospital is the legal owner of the play’s copyright. It has full control over all productions of the play and is supposed to benefit financially from each adaptation.

Despite these conditions, Disney believed it should be exempt from making any payment to the hospital from the sale of spin-off books, board games, soft toys and computer games, that are expected to generate tens of millions of pounds in their own right.

Disney argued that while it was right that its partners at Sony and Revolution Studios should hand over money from their share of the merchandising, it should be exempt because it had already made regular payments to the hospital to secure the animated rights to the story.

The decision to abandon the film could embarrass Disney, which jealously guards its image as the world’s most child-friendly corporation.

One producer connected to the film said: “We are very happy with the film and delighted that its success will benefit the hospital. Disney are trying to have their cake and eat it. They are trying to pretend that they left the project for all sorts of reasons. The bottom line is that they wanted a share of the merchandising but did not want to pay for it.”