Chapter 326: Chapter 326: Hollywood Accounting
Burbank, Capet Pictures Headquarters, Evelyn suddenly burst into Charles' office.
"Phyllis, bring two glasses of champagne," Charles called out as he invited his mother to sit down, then asked, "Is this about James Wan?"
Evelyn shook her head. "I don't have time to handle contracts for small directors. I'm here to notify you about something not-so-good."
Evelyn took out a brief report from Warner Bros. about Harry Potter and the Order of the Phoenix from her bag and handed it to Charles.
"Take a look at this first," Evelyn said as she took the champagne handed over by Phyllis Jones and began to drink.
Charles glanced at it casually and was about to burst out with an expletive. "This year's Harry Potter and the Order of the Phoenix has a post-release revenue of 167 million dollars?"
"Warner Bros.' summer release of Harry Potter and the Order of the Phoenix grossed 292 million dollars at the North American box office, and globally it was 942 million dollars, making it the second-highest-grossing film worldwide after Disney's Pirates of the Caribbean: At World's End, which earned 961 million dollars globally."
"Sony's Spider-Man 3 only made 895 million dollars worldwide, Paramount's DreamWorks Animation Shrek the Third made 813 million dollars globally, my Transformers only made 711 million dollars globally, and Iron Man made even less, at 585 million dollars worldwide!"
Charles continued reading. "The movie's total revenue was 942 million dollars, with them taking a distribution commission of 30%.
The production cost was 150 million dollars, and together with promotion, replication, distribution, exchange settlement, and attorney fees, it's 350 million dollars.
The author of the novel and the commissioned production company get 60 million, plus there's another 60 million in interest costs.
Even billion dollars isn't enough. Warner Bros.' post-release revenue is indeed negative 167 million dollars!"
"This is so despicable," Charles said, looking at his mother.
Warner Bros. really overdid it this time.
Hollywood accounting was known for ensuring very few films have positive post-release revenues, but making Harry Potter and the Order of the Phoenix turn out like this was simply too much.
"The creators from the Harry Potter series have already commissioned their agencies to file a lawsuit against Warner Bros., demanding new sharing contracts for the subsequent films in the series to increase their revenue share," Evelyn said somewhat indifferently.
"What do you think about all this?" she asked.
Charles shrugged. "What can I say? Everyone's doing it, but Warner Bros. went too far this time. It's bound to cause panic among other Hollywood stars, and future negotiations for big-budget film actor contracts will definitely factor this in, increasing the share percentages for actors.
In two years, Warner Bros. Entertainment lent Warner Bros. Pictures money to produce Harry Potter and the Order of the Phoenix, collecting 60 million in interest. They're getting really good at high-interest loans.
It's fine for the production and distribution companies to be integrated, and a 200 million distribution commission isn't unreasonable. But adding promotion, the author's fee, and the commissioned production company totaling 200 million is over the top.
This kind of extreme measure to avoid paying creators their post-release revenue is just too much!
The main creators of the Harry Potter series can share in the marketing income of the movie. Theaters and DVDs are considered part of the movie's marketing revenue, and the DVD share ratio is usually very low. They primarily rely on box office profits for their share.
But now, with a post-release revenue of negative 167 million dollars, they get nothing.
As for future TV broadcasts, pay-per-view, and streaming internet, as well as derivative products, that revenue is considered part of the movie's rights income. The main creators of Harry Potter have no right to it.
Only those with the novel rights, like the British company Heyday Films, which partnered with Warner Bros. on the movie production, get a share."
"CAA, ICM, and our ETA's big-name actors are all keeping a close eye on Warner Bros.' actions. Future negotiations for actor revenue shares will probably get tougher," Evelyn specifically came to remind her son.
Charles waved his hand dismissively, "I've always believed in a win-win with actors. I won't shortchange them. Besides, Capet Pictures is now aiming for special effects blockbusters, where we don't rely much on actors.
If the movie's a huge hit, we won't skimp on pay. But it won't reach the level of Tom Cruise in Mission: Impossible or Johnny Depp in Pirates of the Caribbean.
Barry Meyer's maneuver here has definitely alerted most Hollywood actors. This guy even dragged us down."
Barry Meyer was the chairman of Warner Bros. Entertainment.
*****
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