LA Times (9/19/08): “Studio says no to Steven Spielberg, Peter Jackson”
There’s a headline you don’t see every day. LA Times entertainment business reporter Claudia Eller reports in this article that Universal refused to buck up $130M to finance the first of a proposed trilogy of “Tintin” movies:
Movie studios have long entered into financial arrangements with talent for reasons other than pure economic reward. Sometimes a deal is made for the prestige of associating with a famous actor or director; sometimes it is done in the belief that half a financial loaf from a proven hit maker is less risky than a whole one from an untested filmmaker; and still other times it happens simply to keep relations warm so the talent will want to work for the studio.
The particular problem for Universal with “Tintin” is that Spielberg’s and Jackson’s involvement comes with a huge price tag. The two filmmakers together would command such a large percentage of the movie’s revenue as part of their compensation — without putting up any of the capital themselves, as is typical in Hollywood — that it takes a substantial slice of the profit off the table for the backers.
Studios are increasingly concerned about cost containment on movie projects, especially with players involved who are gross profit participants:
But in a surprising move, when Spielberg and Jackson approached Universal, which has had a long-standing option to co-finance the picture, the studio decided that the deal made no financial sense. According to several people close to the project, “Tintin” would have to rake in $425 million worldwide in ticket sales before the studios could break even.
The reason: Spielberg and Jackson, who would also produce both movies, would together grab about 30% of the studio’s total gross revenue from box-office, DVD, television and other sales. Under that scenario, the pair would walk away with more than $100 million before Universal and DreamWorks could make a profit.
I remember sitting in pre-production meetings at Castle Rock discussing the project Alaska (1996) and then partner Alan Horn, current president of Warner Bros. Entertainment, saying that the rule of thumb was a movie had to gross three dollars in box office revenues for every dollar spent on developing, producing, and marketing a movie. “Tintin” budget: $130M. Universal figures to break even: $425M. So I guess that rule of thumb is still pretty accurate.
I hope the movies get made. Although the property is not well known in the U.S., both of my sons have read all the “Tintin” stories. They’re a lot of fun.