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September 19, 2008

And So It Ends...

DreamAmount No More.

"We congratulate Steven, David and Stacey, and wish them well as they start their newest venture. Steven is one of the world's great story-tellers and a legend in the motion picture business. It has been an honor working closely with him and the DreamWorks team over the last three years and we expect to continue our successful collaboration with Steven in the future.

To facilitate a timely and smooth transition, Paramount has waived certain provisions from the original deal to clear the way for the DreamWorks principals and their employees to join their new company without delay.

The acquisition of DreamWorks has been beneficial both creatively and financially for Paramount and accelerated our strategy of focusing on our world-class franchises and brands. It gave us a solid slate of films to fill out our lineup, a valuable catalog we were able to monetize, and a development pipeline that will bear fruit for us for years to come. The acquisition jump-started our rebuilding plans, which are now well underway and include promising upcoming releases such as Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2, among many others.

The NYT smartly points out that the "goodbye" note comes before DreamWorks has made an announcement. It is only fitting, as Brad Grey has done every major deal in his time at Paramount - even getting to Paramount - in the press before the ink was dry, always looking for leverage.

So... who is left at Paramount from DreamWorks who will be jumping ship? Distrib chief Jim Tharp is unlikely, as DreamWorks is unlikely to be self-distributing. Marketing and publicity are already out. There is no significant development crossover. COO Jeff Small will presumably go to the adobe (has probably lived there from the start). It's unlikely that Kelley Avery, head of Home Ent, formerly at DW, now at Par, will jump, given that the DreamWorks footprint will be tiny in comparison to Paramount... and again, likely that DW will just distribute through a bigger studio.

(And there are still rumors of another major defection from Par that has nothing to do with DW...)

Anyway...

As I have said many times, the biggest loss in this deal, which gave glorious life to the financially troubled DreamWorks, is that Paramount has still not built a legitimate major studio production infrastructure in the nearly 4 years teat Brad Grey has been in charge of the studio. Berman to Weston to Lesher... and still looking for someone who has made money making movies.

There is no real surprise today. The Lesher move, earlier this year, anticipated this situation, as did Lesher's choice to dump Gerry Rich for his own peeps, the illusion of Par Vantage reimagining in business past the first of next year though there will be no infrastructure beyond acquisitions. The ranks are being closed. The Huns are at the gate.

Brad Grey's Paramount will live or die in the next 15 months.

But do keep in mind what Par is trying to ride to success. From their press release: "Star Trek by JJ Abrams, G.I. Joe by Stephen Sommers, Transformers 2 by Michael Bay, David Fincher’s The Curious Case of Benjamin Button, and Jon Favreau’s Iron Man 2."

Star Trek - No Star Trek film has ever cracked $150 million worldwide. There is a good chance that this new, JJ Abrams, fun and gun Trek will break that number. But the film reportedly has gone past the $150 million budget mark, meaning that $300 million worldwide is about the lowest worldwide gross the film can do and get to profit. Double the best ever for the franchise. But hey, Batman did it.

GI Joe – A franchise that has not had the cultural significance of Transformers in recent decades, yet greenlit at $170 million.

Transformers 2 – $200 million-plus budget, co-owned by DreamWorks (without investment) and big dollar one gross points to Exec Producer Steven Spielberg.

The Curious Tale Of Benjamin Button - It may win best Picture, but with a $150 million-plus production budget and WB taking foreign, it will need Troy or Mr & Mrs Smith or Ocean’s domestic numbers for Par to get close to it being a money maker.

Iron Man 2 – Not owned by Paramount. Once again, a distribution fee only. But this too will be insanely expensive.


Get the picture? With marketing, you’re looking at an investment of over a billion dollars on four movies next year (not including Marvel’s Iron Man 2, a 2010 title). And there are 5 other Par-only pics on the sched for next year.

But counting the films that the studios didn’t make profit-on-production with this year (Iron Man/Indiana Jones IV/Kung-Fu Panda/Madagascar 2), their best grossing year ever, the studio might get to $1.6 billion domestic and about $1.5 billion overseas.

If they can match this year’s numbers with next year’s movies (starting with Ben Button), they will have some profit. But let’s give Transformers 2 its $700 million again. Can any of the other movies match that? Top that?

Taking post-theatricals into account, theatrical numbers to make breakeven on the four pictures is somewhere between $1.7 billion worldwide and $2.1 billion worldwide, depending on how big a chunk the points players take.

Racers, start your engines…

Posted by dpoland at September 19, 2008 12:59 PM

Comments

Re - Long-ass Star Trek rant (from a different thread, but on the same subject)

I have no idea if it’ll be any good, but I have to question the logic. Paramount is spending $150 million on a series that has never topped $109 million and has averaged $75 million. Does anyone else think it’s hilarious that Paramount is basically spending so much that it’ll have to triple the highest-grossing Star Trek movie in order to just break even?

Even if it grosses as much as JJ Abraham’s previous picture, the slightly overrated Mission: Impossible III, it’ll still struggle to stay in the black. That also cost $150 million, but topped out at $135 million and $398 million internationally, a solid hit but well below expectations and cost (although I assume Cruise won’t be taking his zillion-percent of the gross cut on this one).

And, that’s probably best case scenario. More likely we’re looking at Cloverfield numbers, a boffo $40 million opening followed by a quick exodus of all non-geeks and non-fans to the final tune of $90 million. And remember, Star Trek doesn’t do diddly overseas. At the end of the day, Star Trek is still Star Trek and the fan base is limited. To put this in perspective, the 1996 $30 million opening weekend of Star Trek: First Contact (the biggest opening in the series) was still $6 million less than the opening weekend for Star Wars: Special Edition, the 20th anniversary re-release just three months later.

I always say that you should never spend more on a sequel than the original made domestically (comparatively, Live Free Or Die Hard cost $110 million, about $10 million less than part II grossed back in 1990). I guess I should make a new rule: never spend $150 million+ on a sequel/prequel to a series where the highest grossing, by far, of ten films was $109 million.

Nothing would make me laugh harder if the film makes the same $90 million that Star Trek: First Contact made in 1996. It’s one thing to take a risk and spend $150 million on an unproven property that you hope can break out (Lord Of The Rings, Transformers, The Golden Compass). It’s quite another to spend $150 million on a series that you know doesn’t have the track record to deliver on that investment.

I like the franchise and I can’t imagine the movie will be any worse than Nemesis, The Search For Spock, or The Final Frontier. But even if it measures up to The Wrath Of Khan and The Undiscovered Country, that doesn’t mean Paramount should have spent Star Wars money on Star Trek.

Star Trek, like most franchises, has a specific fan base. Unless it can find away to build on that fan base, to draw in people who otherwise wouldn’t care, you have a ceiling. For Trek, that’s about $100 million max, even if it’s better than Wrath Of Khan. Now, if you want to toss in JJ Abram’s fan base, then go for it. But Cloverfield, sold more or less completely on his name, tapped out at about $90 million. Quite impressive for what it was, but not a number that Paramount would be happy with.

Basically, what you’re dealing with is a situation of Paramount needing JJ Abram’s Star Trek to basically triple the global business of any previous Trek film. On top of that, you have completely new actors taking on characters made iconic because of the performances of very specific actors in the first place. This isn’t Batman or James Bond, where the characters are legendary by themselves.

This would be the equivalent of Paramount spending $250 million on Indiana Jones And The Kingdom Of The Crystal Skull, but recasting all the main characters (say, Paul Rudd as Indiana Jones, Pierce Brosnan as his father, Rachel McAdams as Marion, etc).

Like I said, I’m a fan of Star Trek and I’m a fan of Abrams, but something needs to happen to make this more than just a Star Trek film, just like the stars aligned last summer to make The Dark Knight more than just a Batman sequel (hopefully, John Cho won’t OD on cocaine before the Oscars). Unless Paramount makes this a must-see film for people who don’t know Romulan Ale from Romaine Lettuce, they may be in for a world of financial hurt.

Posted by: Scott Mendelson [TypeKey Profile Page] at September 19, 2008 03:56 PM

Has no one asked where the money's going? I mean, it's not like they're giving out a big payday to Shatner and Nimoy; this is a B and C-list cast. And TREK was never about the visual effects, so they can't be so stupid as to blow it all on that. So again, tell me: where's the money going?

Posted by: Cadavra [TypeKey Profile Page] at September 19, 2008 04:28 PM

I'm guessing visual effects and expensive action set pieces in an effort to turn what was always a modest character and story-based franchise into an action tentpole franchise-starter.

I think it's probably going to suck.

Posted by: jeffmcm [TypeKey Profile Page] at September 19, 2008 04:35 PM

'this is a b and c-list cast'...
'it's probably going to suck'...

bite your tongues, cadavra and jeff! karl urban plays 'mccoy' in the new star trek babies and he's 'grade A prime cut' all the way, able to save would-be lame movies in a single bound! ;)

Posted by: leahnz [TypeKey Profile Page] at September 19, 2008 05:44 PM

Other than Urban and Pegg, that cast represents some major total douche.

Posted by: LexG [TypeKey Profile Page] at September 19, 2008 05:49 PM

Well, in MI3 Abrams showed that he had good taste in actors (Philip Seymour Hoffman, Maggie Q, Crudup, Fishburne) but then Cloverfield showed that he likes to cast good-looking non-talents, so I look forward to Pegg, Urban, and Sylar from Heroes but the guy playing Kirk is hopefully getting better career advice than Brandon Routh.

Posted by: jeffmcm [TypeKey Profile Page] at September 19, 2008 06:07 PM

While I agree that Paramount is spending way too much money on this thing and that J.J. Abrams is really quite overrated (I love Lost, but he's basically a one-trick pony to me like Chris Carter was), I think some of you are missing the obvious on the grosses for this thing - adjusted for inflation, First Contact and Generations are easy blockbusters.

I know, I know, we all glaze our eyes over when talking about "inflation," but, let's look at recent history, here, with other franchise re-boots - Die Hard 4 did about $20 million more than any other previous entry, the most recent Bond have been topping $150 million while the ones from '80's were barely breaking $50 million, Indiana Jones did about $70 million more than the first one, Superman Returns was the only Superman film to gross $200 millino domestically - my point is that if marketed right, there's no reason these films can't gross signicantly more than their long-gone predecessors by virtue of simple economics.

If Par plays their cards right and just revs up the fanboys who remember 'Khan, there's no reason they can't break $150 million - it's not really that complicated, just a mirage created by inflation. When this thing has the "biggest Trek opening ever," it really won't be as big of a deal as everybody will think.

Does that mean Paramount should have spent $150 million? Probably not - this is not a $300 million film no matter how you slice it. But really, how many summers in a row can we underestimate this studio? Transformers? Iron Man?

Star Trek will probably just make enough money to "rejuvinate" the franchise and be considered a hit, nothing more.

Posted by: Geoff [TypeKey Profile Page] at September 19, 2008 08:02 PM

Does this (especially DP's astute writing) all strike you as some kind of....chickens coming home to roost? The big movie studio machine is really...not needed in this brave new world and Spielberg definitely doesn't need it to keep on keeping on. It reminds me of the musicians making their own way by self releasing stuff.

Movie theaters and studios are in a tough spot...something has to give. This seems like a nice first ante.

Posted by: don lewis (was PetalumaFilms) [TypeKey Profile Page] at September 19, 2008 11:42 PM

Obviously, Cloverfield was cast with unknowns, the better to sell its premise. I still think it was probably the right choice for that project, but, sure, a better class of unknowns couldn't have hurt.

As for Trek, Chris Pine was probably the best thing in the unfortunate Smokin' Aces, for what that's worth. Very different role of course, but a huge step up from Just My Luck. I'll hold out hope that he can deliver as Kirk. Not a lot of options there -- since Shatner owns the role, you can't go with a big name (or probably even find one who'd touch it).

I'm sure Paramount will try to sell the film both ways -- as the reboot of a beloved franchise and as the first in a potential new sci-fi action tentpole series (no familiarity with the original necessary). As others have noted, Iron Man and Transformers certainly went way beyond their pre-sold fan bases.

Posted by: yancyskancy [TypeKey Profile Page] at September 20, 2008 03:18 AM

I think Geoff's got a good point- $150 million is the new $75 million. Get the old fans jazzed up, have a few Iron Manish style trailers, and you're looking at close to $300 million domestic.
In fact, I'm calling $200 million right now.

Posted by: doug r [TypeKey Profile Page] at September 20, 2008 09:22 AM

Or it could be the new speed racer.

Posted by: MDOC [TypeKey Profile Page] at September 20, 2008 09:54 AM

Can't believe no one else thought to do this...

Folks, adjusted for inflation WRATH OF KHAN did $190M and ST: VOYAGE HOME did $209M. So let's drop the "none have done more than $109M" literalist crap right there.

Second, a reboot (which you better believe Par will trumpet on MTV so often that you will think that Pine, Quinto and Urban are in some hot new band) with a new, young cast that will be on every talk show next spring is going to open this up to the general public unlike any other Trek film. Although now Paramount would be benefiting from a Harry Potter-less Christmas season had they left it in its original December slot, the new May opening is likely to see a first weekend box office larger than most of the other films grossed domestic.

Unless it gets terrible buzz as a stinker, this thing is going to do $200M+ domestic easily. I would say $250M+, but WOLVERINE opens the week before so the general fan-boy base will be diluted.

PS - yancyskancy, Matt Damon is on record saying if they want to make Kirk older in the future, he's up for the role.

Posted by: RoyBatty [TypeKey Profile Page] at September 20, 2008 09:58 AM

And Pine is terrific in BOTTLE SHOCK as well.

To clarify: when I said it was a B and C cast, I was not referring to their talent, nor, for that matter, their marquee appeal. I was pointing out that none of these actors command large salaries, making me wonder why the film was costing so much.

Posted by: Cadavra [TypeKey Profile Page] at September 20, 2008 12:10 PM

200 - 250 million??? No chance.

These new actors are NOT the draws. Who cares about them? Very few people have heard of them. Certainly not the casual Trek viewer (if there even is such a thing). The BRAND is the draw. But the brand is inexorably linked to the original cast. Ergo problem.

You will not find a bigger trekkie than me -- trust me on that. But I am 35 (and I think that's just about the target demo for any new Star Trek movie, as I was in my early teens when Khan and the rest came out; you know of any 21 year old die-hard Trek fans??). How many fans my age care about Trek without the original cast? That's the question. I know I don't.

I guess I'll see it, but certainly not because of JJ (and yes, one trick pony fits the bill perfectly). I'll see it just like I've seen all of them -- the score, the swishing sound of the doors. But hoping for 200 million worth of eyeballs, based on an aging franchise whose target demo is probably my age? Good luck.

Posted by: Aris P [TypeKey Profile Page] at September 20, 2008 02:02 PM

I think the Trek franchise will crash and burn. Both the original cast and next generation had years of goodwill built up through the television series. This one is going in cold and I don't see it catching a whole new young audience that it would need to be successful.

That said the Trek 150 is sure a better investment than the Button 150. I can't wait to see it but it will have to make Pursuit of Happyness money to cover that budget which is unlikely given the offbeat story matter and the fact that Pitt is not a box office draw in dramas.

Posted by: hcat [TypeKey Profile Page] at September 22, 2008 11:12 AM

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