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August 23, 2006
The Biggest Loser In Paramount/Cruise? Journalists
As the continuing spewing on Tom Cruise & Paramount continues, I have mostly been amazed by how the central issue has been endlessly misreported.
Cruise/Wagner was not fired. Their relationship with Paramount was not terminated. There was a negotiation for a new deal and the deal didn’t happen.
Sumner Redstone made it a much bigger story with his shocking statement… which was shocking because it was so ineptly handled. A.F.S.P. Anything for Stock Price.
Merissa Marr deserves all the credit for getting this comment from Redstone, however, there is zero question about the lack of honesty in Redstone’s comment. Even if Cruise had cost the studio $150 million in grosses ($75 million in net rentals… $7.5 million lot by Cruise himself) on M:I3, this unquantifiable figure is only relevant because of the overall gross on the film. Had the movie made $600 million worldwide and the studio expected $750 million, Cruise/Wagner would have been re-upped in June.
Furthermore, the lack of any reporting effort at all out there is a shocker. The simple math is: Redstone has had to cut a check to Tom Cruise of approximately $60 million dollars on a movie that cost at least $180 million (including the money written off for the three false starts) plus another $100 million in marketing and netted the company about $135 million in theatrical release (after Cruise’s cut was taken into account).
How much more will Cruise get paid as the movie goes into the Home Entertainment market?
How much will Paramount lose on the movie while Cruise gets another massive payday?
The idea of gross point deals was, from the studio perspective, always to be partners of a kind. If the movie does well, everyone does well. What has forced the studios to “pull back” – this year’s most overreported story, driven by agents who won’t shut up and who journalists forget… are AGENTS – is that the cost of production and distribution on these films has gotten so enormous that there is not enough money to share from dollar one. When studio breakeven is $500 million worldwide and only 44 films have ever made that much (about 4 a year lately), there is a serious problem.
Pixar’s deal with Disney was so much in Disney’s favor that there was no way for Michael Eisner to be responsible to his stockholders and to make the deal for Pixar to stay. And faced with losing Pixar, Bob Iger’s response was to buy the company. That was his only option. For $6 billion. Way overpriced. But the alternate was unpleasant, public, and the only amount anyone would have ever made on a Pixar movie again would be a $100 million distribution fee, as the company started self-financing.
Revolution Studios’ deal at Sony was so much in Revolution’s favor that re-upping was never an option for Sony. The quality or lack of quality or the politics between the companies was and is a secondary consideration. Revolution made a ton on that relationship and they weren’t dismissed… they just couldn’t suck the cream from big momma anymore.
Cruise/Wagner is no different. Expensive. High profile. Big money maker. But as soon as they crossed the line into being a risk, it was over with Paramount… unless they made concessions. It’s not f-ing complicated. The idea – hardy har – that this was an overhead issue is nutty on its face. C/W is getting going to make more than half a decade of that high overhead figure on M:I3 alone… make it for themselves. Paramount threw away – with due respect to the films – much more money on C/W/ produced films that never had a commercial chance than they ever did on overhead.
Think about it this way. If your cell phone carrier was still charging you $1 a minute and your contract came up and you noticed that there were other options that cost less than 5 cents a minute, would you change carriers? In that case, you might pay the $150 penalty for dropping service because you would save so much every month. But in this case, the contract was up. There are no penalties. All Paramount did was to switch companies.
And all Cruise/Wagner will do is switch how they package their product. No, they will never find a deal as rich as the one at Paramount. That was a sucker’s deal in the first place. But they could make a lot more money this way, self-financing. They will be far more compelled to keep their budgets down. And as a funder and a gross player, Cruise stands to make money on both sides if he can produce hits at a price. It doesn’t even need to be The Passion of The Christ. One $400 million worldwide hit that costs $100 million instead of $180 million and all of a sudden, Cruise taking 12% of the gross and half the profits is a $100 million-plus payday and not a $75 million one.
It is possible, however, that Paramount is getting out of the Tom Cruise business at just the right moment. Perhaps he has jumped the shark. But that is a completely different conversation.
And hey, the story “Tom Cruise fired for being a whacko” is so much more interesting than reality. Dredging up Oprah’s couch is more interesting than the facts that sit under our noses.
And Sumner Redstone knows this. And he played the fourth estate like a fiddle. Instead of being Eisner, falsely accused of making a terrible business call on Pixar, he is some sort of hero, standing up to Crazy Tom Cruise. More importantly, he is covering his ass for when Cruise starts making a ton of money elsewhere. “Well, it wasn’t really about money was it?”
It was.
And thus, it is a dark week for journalism.
Posted by poland at August 23, 2006 08:39 AM
Comments
This town makes me so dizzy.
Posted by: Kristopher Tapley ![[TypeKey Profile Page]](http://www.mcnblogs.com/thehotblog/nav-commenters.gif)
at August 23, 2006 09:50 AM
The C/W overhead alone was $10 million a year--for a company that averages one picture every two years. I know I'd sooner take that 20 mill and make a couple of small-budget films with it.
Posted by: Cadavra at August 23, 2006 09:51 AM
Getting out of the Tom Cruise business (at least at this level) is understandable, not a huge surprise. Well timed, in fact. But Redstone’s comments - the way he handled this - that was stunning. Where is the precedent for it? That’s a real story.
Redstone won’t come close to looking like a hero for standing up to Cruise because his comments are so laughable. No one old enough to read can possibly take them at face value. It’s like Comical Ali at the invasion of Baghdad.
His exact motives are not entirely clear. Is this the intentionally noisy first shot of studios going to war against the current paradigm of star compensation? Then again, we can’t rule out the notion that Sumner’s not all there anymore.
Posted by: JoeGreenia at August 23, 2006 10:54 AM
That $10 million overhead figure is being reported as way off. C/W were supposed to have $3 million, and PAramount wanted to move it down to $2 million. Big freaking deal.
Posted by: Tofu at August 23, 2006 11:00 AM
Finally got around to reading this, David... great analysis of the situation, and a lot of this makes more sense than what I've been seeing in the newspapers. I hate how things get spun by traditional media.
Posted by: EDouglas at August 24, 2006 06:00 AM
Trust me, it was $10 million. I used to work at Paramount. I still have friends there, and they confirmed the amount to me.
Posted by: Cadavra at August 24, 2006 09:25 AM
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