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May 25, 2006

My Footnotes To The Used Guys Story

Good story by Sharon Waxman on the end of Used Guys, a very expensive high-concept comedy that SCREAMS The Cable Guy and Toys..

That is the first of a few things that were left out that probably should have been included.

1. The Cable Guy – Greenlit at about $40 million… ended up at near double that… all in 1996 Hollywood dollars. A true disaster. Just over $100 million worldwide.

2. Jay Roach hasn’t had a film that’s gone out of control, but then again, his entire directing career to date consists of 3 Austin Powers films, 2 Fockers, and Mystery, Alaska.

3. Jimmy Miller is the central figure in the cost of Hollywood comedies right now and talk to the media or not, there are a lot of stories about how he has pushed the envelope. The producer of Kicking & Screaming is his own story.

4. The #1 lesson in movie star value is that they are worth the price if the production cost is reasonable for a comedy. That’s why there is so much heat around the new comedians as they come up. But egos are making these projects more and more dangerous.

5. Jay Roach says it himself and it should have been the lead in the story instead of at the bottom – “"They'd made tremendous discounts on a big-budget movie. This is not some labor-of-love thing," he said. "This film is dead in our center strike zone." Exactly. So why not take all backend or upfront with a longer draw before getting points against gross?

It sounds like Waxman’s studio source was rounding figures, saying “the talent is making $60 million before the studio can recoup its costs,” means that he is arguing recoupment at a $200 million gross with 27% going to Carrey/Stiller/Roach. But that number is too small to get to recoupment on a $110 million production budget and at least $75 million in worldwide marketing costs, even with Home Entertainment. Just to cover the budget and marketing without a single point coming off the top, a $110 million film would need to gross about $175 million and do well in Home Entertainment.

Take 27% off the top and you’re looking at a $300 million - $350 million worldwide gross to break even. Carrey has done that kind of business three times in his career (Liar Liar, The Grinch, Bruce Almighty.). Stiller also has three times (the two Fockers and There’s Something About Mary). But it’s no cakewalk. And that would put talent’s take before recoupment at around $100 million, not $60 million. But what’s $40 million between friends?

But here’s the rub… based on these numbers, if the movie grossed $150 million worldwide, which is very possible, Fox would lose roughly $70 million on the deal while Carrey/Stiller/Roach would make a minimum of about $60 million.

6. How likely is it that there is no connection to Fox’s experience with Stiller on A Night In The Museum, which is said to be expensive and over schedule? Aside from his supporting role in Dodgeball, this is the first film that Stiller has starred in for Fox since There’s Something About Mary broke him out.

But aside from that...

Posted by poland at May 25, 2006 02:37 AM

Comments

For me, it´s Pluto Nash all over...

Posted by: Wrewre (Brazil) [TypeKey Profile Page] at May 25, 2006 04:47 AM

In Jay Roach's defense:
The fact that he did not let the sequels get out of control shows that he can control budgets and egos.

On the other hand, Mr. Poland, you're right when you say that this should have been the focus of the story: “"They'd made tremendous discounts on a big-budget movie. This is not some labor-of-love thing," he said. "This film is dead in our center strike zone."

Cheers.

Posted by: Aamir [TypeKey Profile Page] at May 25, 2006 06:04 AM

Ben Stiller feels really over to me.

Posted by: Rob [TypeKey Profile Page] at May 25, 2006 07:34 AM

Jim Carrey gives me the serious creeps, and this film sounded like a turnoff for a female audience. Misogyny anyone?

Posted by: hatchling [TypeKey Profile Page] at May 25, 2006 08:28 AM

Apparently, Roach is the one who made the studio nervous. His rep is that he cannot handle problems well when things get slightly out of control, that he shuts down.

Posted by: RoyBatty [TypeKey Profile Page] at May 25, 2006 09:08 AM

everything i've read about it sounded like a bomb or modest earner. VCarrey and Stiller are both money but this sounded like a bigger budget version of What Planet are You from. Which granted, made a ton of money. Oh, wait.

Posted by: martin [TypeKey Profile Page] at May 25, 2006 09:14 AM

Why not knock Stiller off the project and save some money there? Despite his grosses, he's NOT a huge box office draw - he's just had a good pick of mainstream scripts. Not a single one of his hits - "Focker" flicks, "Mary," "Dodgeball" - was a success because he was in it.

Posted by: Josh Massey [TypeKey Profile Page] at May 25, 2006 09:28 AM

Explain then the success of "Along Came Polly" Or "Starsky & Hutch?" I know Owen Wilson helped, but he's just as "lucky" as Stiller's been, and Jennifer Aniston has never proved to be box office gold. Hell, even "Zoolander" (a guilty pleasure) made a little money.

And "What Planet Are You From?" had a huge star like Gary Shandling. Oh wait.

Posted by: brack [TypeKey Profile Page] at May 25, 2006 10:02 AM

I don't get your maths Dave.

If it's 110 Million (budget) + 75 million (worldwide marketing) meaning total costs of 185 million, and the talent taking 27% of every box office dollar, then surely the studio has recouped its costs at approximately 255 million, with talent taking 68 odd million to that point?

Or what did I miss?

Posted by: Duc [TypeKey Profile Page] at May 25, 2006 10:22 AM

You missed the 45% the exhibitors get, Duc.

Posted by: David Poland [TypeKey Profile Page] at May 25, 2006 11:25 AM

D'Oh! Cheers.

Posted by: Duc [TypeKey Profile Page] at May 25, 2006 01:53 PM

"And "What Planet Are You From?" had a huge star like Gary Shandling. Oh wait."

Totally off topic, but does anyone know why subsequent seasons of The Larry Sanders Show were never released on DVD? It was easily one of the best shows of the 90's and perhaps the best show on the entertainment industry I have ever seen.

I have looked for info but cannot find it anywhere.

Does it have to do with the studio not being able to get the rights to all of the actors appearances who guest starred on the show?

If anyone knows the answer to this it would be greatly appreciated.

Posted by: Nicol D [TypeKey Profile Page] at May 25, 2006 03:57 PM

I've never heard of case where broadcast and home video appearance rights were not packaged all together. Music clearances, yes, but actors no.

Posted by: jeffmcm [TypeKey Profile Page] at May 25, 2006 05:15 PM

Nicol, Gary Shandling recently did an interview with one of the radio stations here in Milwaukee, to promote "Over the Hedge." They asked him what he was working on, and he said the next set of DVDs for "Larry Sanders."

So don't give up hope yet.

Posted by: Eric [TypeKey Profile Page] at May 26, 2006 04:28 AM

That tidbit just made my weekend!

Thanks for the hope!

Yes, I know most rights are worked out ahead of time, but since Sanders came out pre-DVD and many of the guest spots were his friends who were on the lot at the time (hence why thier appearances on Sanders would coincide with a real movie they were promoting), I thought maybe it was a rights issue.

Kind of like how it took so long for Heavy Metal or Rock and Rule to come to video because thier contracts were executed before the studios knew it would be an issue.

Glad to hear someone is moving on this. Sanders, not Sex and the City, is really the pioneer show for the wave of 'adult' programming on HBO and so forth.

It should get the recognition it deserves.

Posted by: Nicol D [TypeKey Profile Page] at May 26, 2006 08:03 AM

In terms of recouped costs, what about DVD, home video, pay TV, and paid downloads. The revenue stream typically more than doubles the box office, so the studio would make a huge profit if the film did say 300 worldwide (likely for these guys).

Also, when you say the studio loses money while the talent makes money, something's off. Both the talent and the studio invest something of great value. The studio invests only money, which is not that unique, while the stars invest their "brand", their performances, etc. The studios sell the movies and attract the audiences almost totally off the faces of the stars in their roles in those stories. No stars. No box office bonanzas.

Their "value" is what they could make on any other film. So BOTH studio and stars make money back to recoup their investment (equal to what the money or the performance could earn any where else -- it's called "opportunity cost".

Everybody earns back at the proportion the market determines they deserve, say a 27/73 split, let's say.

Might be better to forgo front end, but doesn't really matter for a film this commercial... The front end fee of the stars is only an advance against the value of what they invest (which is what they'd make on any other comedy film in this case -- could be 30 million each for both guys, easily) That's what's paid back.

If they draw huge crowds, don't they deserve their split?

Posted by: Wiggs [TypeKey Profile Page] at May 27, 2006 10:50 PM

First, "The studios sell the movies and attract the audiences almost totally off the faces of the stars in their roles in those stories. No stars. No box office bonanzas."

Who in the X-Men movie could open a movie to more than $3 million or $5 million, if that?

Next, I assume you mean the net revenue stream, since gross revenue stream would make you wrong. The numbers are changing as DVD evolves, but to net $300 million, they would have to sell at least 25 million DVDs. Not likely, much less sure these days. (Meet The Fockers sold $7.2 million units last year.)

Plus, a $300 million gross, given the back end, doesn't cover production. Net on ancillaries on something like this would likely be about $175 million. If the guys get their 27% on that, the studio has invested over $200 million (including P&A) to generate over $600 million in gross revenues, plus their enormous opportunity cost,do a little better than break even... maybe $20 million profit, while talent is making over $125 million. And that is assuming no production overruns.

I have no problem with these guys getting paid. I have a problem with them getting paid like that and eating so much of the gross before recoupment.

And let's add one more element missed by the NYT. Sony isn't picking the deal up off the ground. They were the ones who put it into turnaround in the first place. So now one-third of the studios have said, "Pass!" Are they crazy? Are the other four studios who aren't chasing the deal?

Posted by: David Poland [TypeKey Profile Page] at May 28, 2006 02:18 AM

"Who in the X-Men movie could open a movie to more than $3 million or $5 million, if that?"

Halle Berry... Hugh Jackman... probably Ian McKellen, too, if he had the right movie role

Posted by: EDouglas [TypeKey Profile Page] at May 29, 2006 04:27 AM

In a year or two, the Wolverine spin-off starring Jackman solo will open to at least $25m.

Posted by: jeffmcm [TypeKey Profile Page] at May 29, 2006 04:36 AM

Nicol D,

How do you know Sony isn't trying to pick it up? How do you know the other studios aren't trying, and Fox is refusing?

How do you know what Fox spends on advertising?
How do you know so much about the numbers?

Do you work for Fox?

Studios hide their DVD numbers? How do you have access to them?

You sound like you're part of an ongoing studio propaganda machine that paints the studios as poor struggling enterprises, and therefore deserving of sympathy and discounts.

If they're so poor, and so struggling to make a profit, why don't corporations divest themselves of studios, instead of gobbling them up? I think they're cash cows.

If this film made 300 hundred million on box office, 400 million on after-theatrical, you're saying it couldn't cover a cost of 116? Then why make movies? NIGHT AT THE MUSEUM is costing 120 million. Will you (the studio) go broke on that, too?

The answer, I believe is hidden profit. Huge sums of hidden profit. A vertically integrated corporation makes gigantic money off DVD's especially, but also off product placement, sweetheart TV license fees, PAY TV, and in the future, off Hi Def downloads. Not to mention merchandizing.

Remember, first dollar gross evolved to where it is now because studios' accouting practices cheated people who only got net, hiding profits and exaggerating costs to make hugely successful films seem like they were losing money. This is well known corruption, and still goes on. Only a sucker takes net particiapation.

The stars deserve a proportion of the revenue. You sell movies on their brand and faces and performances.

If you make fat profits, as you do on all but the worst bombs, because of long library life, huge hidden DVD profits, etc., why not share it with the people who attract the audiences for y ou?

Posted by: Wiggs [TypeKey Profile Page] at May 29, 2006 04:59 AM

SO your theory, Wiggs, is that the gross point talent is being victimized?

Posted by: David Poland [TypeKey Profile Page] at May 29, 2006 10:37 PM

If the conflict is am I making $10m in this film or $5m, you're not a victim.

Posted by: jeffmcm [TypeKey Profile Page] at May 29, 2006 11:20 PM

No, the stars are clearly paid well and not suffering.

I'm only trying to point out the flaws in your arguments, which are that Newscorp is the victim of overpriced stars. That reasoning seems off, given their vast, long-term revenue streams on even moderately successful star-driven films.

And that it's hard to buy the poor-pitiful-me argument that's coming from Fox execs, since Fox made more profit last year than any other studio, according to Fortune.

My other point is that any business equation that undervalues a key element in a transaction is a flawed equation, and leads to bad business decisions. If Fox continues to undervalue the stars, won't the stars drift to studios that do not?

Posted by: Wiggs [TypeKey Profile Page] at May 30, 2006 05:55 AM

No, the stars are clearly paid well and not suffering.

I'm only trying to point out the flaws in your arguments, which are that Newscorp is the victim of overpriced stars. That reasoning seems off, given their vast, long-term revenue streams on even moderately successful star-driven films.

And that it's hard to buy the poor-pitiful-me argument that's coming from Fox execs, since Fox made more profit last year than any other studio, according to Fortune.

My other point is that any business equation that undervalues a key element in a transaction is a flawed equation, and leads to bad business decisions. If Fox continues to undervalue the stars, won't the stars drift to studios that do not?

Posted by: Wiggs [TypeKey Profile Page] at May 30, 2006 05:57 AM

I just think it's a drag we don't get to see the movie, USED GUYS. The concept sounded hilarious. Much more original and interesting than your average big-budget comedy. Especially with these two hilarious guys and that director. Women run the world 100 years from now? Carrey and Stiller as obsolete pleasure clones, trying to figure out how to be real men? Come on, that sounds funny. I'd wait in line.

How did they screw this up? Seems like a slam dunk, and a likely gigantic success for everybody involved. Everybody knew what it was costing going in, according to the NYT article. And it would of course be expensive, given a sci-fi setting and a summer "tentpole" release in June 2007 (most of those big summer films cost 150 million these days, don't they?). And everybody knows what these guys get in their deals, 'cause they always get that on all their other movies. Plus, you say they took big cuts? Makes no sense. There must be something else going on they're not telling us?

It's the audience that loses, as usual. If it's not CHEAPER BY THE DOZEN GO ON VACATION or another comic book sequel or remake, the studios wimp out. Maybe it's not about back-end at all. OR it is, but only in that they were going to kill it anyway because it was too original. But now want to make it a poster child for the "poor-studios" case. I say, pay the stars their cut, make the film. SO I CAN GO SEE IT!

Posted by: Hackster [TypeKey Profile Page] at May 30, 2006 08:15 AM

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