How do they divide the box office receipts?

A

Aspiring Mogul

Just to confirm how to read box office numbers.

Laws of Attraction with Pierce "007" Brosnan cost $32 million to make but took in $30 million worldwide, so it was a failure.

"Glory", the 1989 Civll War movie with Morgan Freeman and Mathew Broderick, cost $18 million and took in $27 million, and it was also a failure because the producer takes in about half the gross, which, in this case, is less than the cost of production. I hear, sometimes, that they only take in a third, but I'm not sure about that.

Am I right?
 
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Could the be taking a third, or half of the profit?...

After the movies expenses are paid, the profit is 9 million, in Glory's case, so the producer "earns" 4.5 million.
 
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The studios often still make money because they are buying services from themselves. VERY VERY few movies ever actually get "technically" in the black.

Studio A produces a film (operating as a company they created for nothing but the purpose of producing that film), it loses 2 million dollars, however they paid 2.5 million for post production services to Post house B, which is a subsidiary of the studio. It's a shell game.
 
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And then you need to include all P&A costs. The distributor will often pay at
least the budget and often twice the budget in advertising. So a $32,000,000
will have a total expenditure of up to $90,000,000.

Then the distributor and studio and prodCo take only a percentage of the box
office. In general for a major wide release the split will be 70/30 for the first two
weeks, then 55/45 for two/three weeks, then 45/55 after that. So using general
math to help make things clear, if the movie made $30,000,000 worldwide the
distributor and studio and prodCo only saw $15,000,000 in cash.

Of that $15,000,000 the distributor may take 50% until pay off leaving only
$7,500,000 to the studio and prodCo. In some cases the prodCo gets a gross amount
of, say, 20% of that $7,500,000 so the studio only sees $6,000,000 of their
$32,000,000 investment.
 
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directorik said:
And then you need to include all P&A costs. The distributor will often pay at
least the budget and often twice the budget in advertising. So a $32,000,000
will have a total expenditure of up to $90,000,000.

Then the distributor and studio and prodCo take only a percentage of the box
office. In general for a major wide release the split will be 70/30 for the first two
weeks, then 55/45 for two/three weeks, then 45/55 after that. So using general
math to help make things clear, if the movie made $30,000,000 worldwide the
distributor and studio and prodCo only saw $15,000,000 in cash.

Of that $15,000,000 the distributor may take 50% until pay off leaving only
$7,500,000 to the studio and prodCo. In some cases the prodCo gets a gross amount
of, say, 20% of that $7,500,000 so the studio only sees $6,000,000 of their
$32,000,000 investment.
Click to expand...

That doesn't sound very good.
 
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Aspiring Mogul said:
That doesn't sound very good.
Click to expand...

It's playing the odds and the house always wins. They have between 15-50 movies released a year. Some of them will be big hits and some of them flops. The hits pay for the misses. Even the misses still make some money on home video, deals to pay-TV, hotels, airlines, etc. That is the beauty of the studio system - they have so much content that they tend to make rarely "lose" money.

Remember, on paper, Paramount and 20th Century Fox lost money on TITANIC, the highest grossing film of all time.
 
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Aspiring Mogul said:
So Glory and Laws of Attraction may actually be profitable - is there any way to find out?
Click to expand...
When you are a Mogul and your studio is putting out 10/20 movies
a year you will not post every financial detail about your profit and
loss for the public. Shareholders of the public companies can (to a
point) find out, but the actual totals are not something studios
actively disclose.

"Profitable" is a word that has different meanings. "Titanic" may not
show a profit on paper but everyone made money on it including the
studio and the distributor. The two examples you offer may have lost
money but as Sonnyboo mentions there are more revenue streams
than the box office so they may not be as in the red as it seems.

But no, there isn't a way to get the full, detailed financial report on
either of those two movies.
 
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Aspiring Mogul said:
What's the scoop with the Titanic? Both of you have mentioned that.

And how do you lose money on a movie but make money for everyone? I presume it's due to DVD sales, merchandising, and so on?
Click to expand...

Film financing and profit/loss is very, very complicated - far too
complicated for someone like me to fully explain on a message
board; I'm just not smart enough. All big corporations have very
complicated financials. In many cases a movie can return all the
investment and all the fees and still not show a "profit" on paper.

Maybe it does, none of us have seen the full financials. But the
studio took a fee, the distributor took a fee, the prodCo took a fee,
the producers were paid, the cast and crew were paid and many
of them share in residuals so they make even more, the investors
got all their money back plus their fee but maybe not any "profit".
Studio overhead, prodCo overhead, interest payments, guaranteed
fees... All that is a line item that is taken off before the project reaches
"profit".

I suspect "Titanic" has gone into profit, but it may not have doe to
all the overhead and fees charged against the production. But all those
line items went somewhere and most of it went to Fox, Paramount
and Lightstorm in the form of fees and overhead so they made money
while the film itself did not.

Best I can do on a messageboard. I know it's not good enough. Even on
my level it's very complicated. I can't fully explain the inner workings
of major corporations.
 
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I think the way to understand it is that individual profits are already built in to the budget. So for instance the producer might have a contract that says he gets 50% of the net revenues up to a maximum fee, say $20 million. Many if not all of the above the line people on a big project will have some sort of contract like that. Lets say all those agreements add up to $50 million, but the film only makes $30 million after hard costs - now that producer might 'only' get $15 million, and the film doesn't make a 'profit' because he's technically still owed an additional $5 million. Of course, he just made $15 million on the project, so while the film didn't make a profit he certainly did.
 
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Morris said:
Some of the most creative work the studios do is in accounting.
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That's very simplified.

Any business needs to account for things like overhead, insurance, taxes,
payroll fees, accounting fees, lawyer fees, facility maintenance, grounds
keeping, utilities. Some people think it's "creative accounting" to include
all these items in the returns of a movie. Anyone who has ever run a business
with employees and rent/mortgage, taxes, insurance, up keep, etc. knows
this is just part of the way a business is run.

ItDonnedOnMe has it right. Again, very simplified, but quite accurate.
 
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But the bottom line is that they still make money - that's really all I'm asking.

I know a senior partner who specializes in accounting for film, and I can pick his brains. But all that fancy accounting won't help if there's no revenues coming in, either at the box office or elsewhere. And I'm interested in having more revenues than expenses at the end of the day.
 
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Aspiring Mogul said:
And I'm interested in having more revenues than expenses at the end of the day.
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Don't we all...

For a theatrical release the ticket price is split 50/50 or thereabouts.
The more popular a movie is the higher percentage the distributor can
get - and the other way around. The distributor takes a fee and a
percentage until pay off then a lower percentage. The studio takes a
fee and a percentage until pay off then a higher percentage. The prodCo
takes a fee and a percentage until pay off then a higher percentage.

That's how they divide the box office receipts.
 
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An ex partner who once was the head of N.A.T.O. small film owners division said that one of Spielberg's film was over 100% (I think 103%). The theatre owners made it up on the concession stands.
 
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Aspiring Mogul said:
So, sooner or later, an aspiring mogul is going to have to make a leap of faith
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Yep.

At some point everyone needs to actually jump into the deep
end. Investment in motion pictures is one of the poorest
investments anyone can make. But people do it all the time
because the returns CAN be pretty amazing.

Morris, I, too, have heard that in some cases the exhibitors
are asked to pony up over 90% of their tickets for the first
few weeks. Never heard of them paying to show a movie, but
I wouldn't be surprised to hear of it happening.
 
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I talked to a theater owner who said that he and others paid a small amount upfront for Star Wars. As in the 1977 Star Wars -> http://www.imdb.com/title/tt0076759/
Of course that was 1977 a whole different movie world a galaxy far away. ;)

directorik said:
Yep.

At some point everyone needs to actually jump into the deep
end. Investment in motion pictures is one of the poorest
investments anyone can make. But people do it all the time
because the returns CAN be pretty amazing.

Morris, I, too, have heard that in some cases the exhibitors
are asked to pony up over 90% of their tickets for the first
few weeks. Never heard of them paying to show a movie, but
I wouldn't be surprised to hear of it happening.
Click to expand...
 
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