Photographer: Gabby Jones / Bloomberg
Photographer: Gabby Jones / Bloomberg
Warner Bros. has devised a new plan to compensate filmmakers during the pandemic: treating all films like a box office scam.
After hitting Hollywood with its decision to release all of its new films this year on HBO Max, the studio has adjusted the terms of its agreements with partners to ensure payment regardless of box office sales and increase the odds of yield-based bonds. Warner Bros. will also pay a larger group of money in the cast and crew based on the fees it charges HBO Max, according to people familiar with the studio’s plans.
The company is about to resolve disputes with many parties, people said, who asked not to be identified because the discussions are private. Details of some deals have already begun to appear, with Hollywood Reporter saying this week that Warner Bros. is close to a deal with Legendary Entertainment for the movie “Godzilla vs.. Kong “.
The agreements are a sign of the time with pandemic problems. Most theaters are closed due to the coronavirus, which motivates studios to put their films online. But their payment contracts with partners often depend heavily on the success of the big screen, a system that many in Hollywood want to protect, because it made them rich.
Warner Bros. is scheduled to release 17 films in 2021, including “Dune,” “In the Heights” and sequels to “The Matrix” and “Space Jam.” The films will appear in theaters and HBO Max at the same time, although they will be screened exclusively on the big screen in many parts of the world. The films will be shown on HBO Max for 31 days, but may remain in theaters long after.
According to people familiar with the situation, this is how it will work: when movies come out this year, anyone eligible for a bonus will receive half of the box office revenue that would normally be needed to trigger a payment. And if more theaters close, the threshold will drop even further, a stipulation called the “Covid-19 multiplier.” Those who normally participate in box office receipt profits will continue to do so, in addition to benefiting from on-demand and online sales.
HBO Max will pay Warner Bros. a fee for their 31-day window, and the money from these will be shared not only with participants with benefits, but with the cast and crew. Both companies are part of AT&T Inc.’s WarnerMedia, run by streaming veteran Jason Kilar.
“HBO Max pays a hefty fee for the chance to show these movies,” Kilar said in an interview last month.
AT&T, which acquired Warner’s operations in a $ 85 billion acquisition in 2018, has a long way to go. In addition to helping him deal with the pandemic, the hope is attracting millions of subscribers to HBO Max, which launched last year. The telecommunications giant has the platform to become a full-fledged competitor to Netflix Inc. and Disney +.
Complaints from directors
What is not clear is whether enough cash is enough to ease the tension between the studio and the well-known filmmakers and financiers who immediately cried for Warner Bros. decision. “Tenet” director Christopher Nolan struck a chord with the idea of deriving movies on HBO Max, which he called “the worst broadcast service. “Denis Villeneuve, whose film” Dune “was affected by the move, criticized Warner Bros. and AT&T for a column for the commercial publication of the Variety industry.
“AT&T has hijacked one of the most respectable and important studios in film history,” he said. “There’s absolutely no love for the movies or the audience here.”
Talent agencies have it too he complained, and Endeavor CEO Patrick Whitesell said it was an attempt by Warner Bros. Richard Lovett, president of the CAA agency, said the move was “completely unacceptable” for his company and his clients.
“You unilaterally determined value for our customers and your work to benefit the long-term prospects of HBO Max and AT&T finances, a choice our customers didn’t make,” he said in a letter to WarnerMedia quoted by Variety.
Many of the parties were upset because of them felt Warner Bros. he didn’t give them enough face, or because they wanted his films to appear exclusively in theaters. But the reprimand was also a carefully orchestrated part in a negotiation: many were concerned about the potential impact on pay.
And while launching movies on the Internet is not new, Netflix Inc. i Amazon.com Inc. publishes dozens of performances each year: filmmakers often choose traditional studios because they want their films to appear in theaters first and because the positive potential of a great theatrical scene far outweighs the money of a streaming success. In big movies like “Wonder Woman,” that can cost tens of millions of dollars. Robert Downey Jr. made a reported $ 75 million for “Avengers: Endgame” between his salary and profit share.
Spelling it out
Warner Bros. has spent the last few weeks talking to his partners, such as LeBron James ’SpringHill Entertainment and director Jon Chu, to further explain his strategy and expose the argument that they will make more money that way. Although Warner Bros. he believed he had the rights to release his films on HBO Max without the consent of his partners, he has since adjusted his contracts to offer more favorable terms.
The film industry is always a risky task. Even without a pandemic, most movies tend to lose money. So we guarantee at least some kind of payment day it’s new, even if it’s not what people could do if the theater business were healthy.
Not all Warner Bros. ‘The partners are upset with the HBO Max arrangement, but the studio wants to keep their talent happy, especially when it comes time to promote the films coming out this year, and stay true to future projects.
Additional payments are not permanent. After 2021, the studio plans to return to the old contract model. This poses another risk, in which partners become accustomed to higher, guaranteed payments that the studio cannot afford. To cover the additional costs, Warner is reallocating money from some productions that closed this year.
Sharing the HBO Max license fee with crew members and writers is another temporary change. Normally, crew members don’t share box office receipts, but they get a share of home entertainment sales.
“Our guidance in these situations should always be generous,” Kilar said in last month’s interview.