Photographer: Gabby Jones / Bloomberg
Photographer: Gabby Jones / Bloomberg
Warner Bros. came up with a new plan to compensate filmmakers during the pandemic: treat each film like a box office hit.
After shocking Hollywood with the decision to release all of its new movies this year on HBO Max, the studio has adjusted the terms of its agreements with partners to guarantee payment regardless of box office sales and increase the chances of bonus based on performance. Warner Bros. will also pay a larger distribution and crew group, based on the fees it collects from HBO Max, according to people who know the studio’s plans.
The company is close to resolving disputes with many parties, said people, who asked not to be identified because the talks are private. The details of some agreements have already begun to appear, with the 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 times troubled by the pandemic. Most theaters are closed due to coronavirus, motivating studios to put their films online. But their payment contracts with partners are usually very dependent on success on the big screens – a system that many in Hollywood want to protect because it has enriched them.
Warner Bros. plans 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 on HBO Max at the same time – although they will run exclusively on the big screen in many territories around the world. The movies will air on HBO Max for 31 days, but may remain in theaters long after.
Here’s how it will work, according to people familiar with the situation: When movies are released this year, anyone eligible for a bonus will receive one-half of the box office revenue that would normally be required to trigger a payment. And if more theaters close, the threshold will drop even further – a stipulation called the “Covid-19 multiplier”. Those who would normally share in the profits from the box office receipts will continue to do so, as well as benefit from on-demand and online sales.
HBO Max will pay Warner Bros. a fee for the 31-day window, and the money from it will be distributed not only to profit participants, but to distribution and crew. Both companies are part of WarnerMedia at AT&T Inc., managed by streaming veteran Jason Kilar.
“HBO Max pays a hefty fee for the ability 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, relies heavily on strategy. In addition to helping him cope with the pandemic, the hope is to attract millions of subscribers to HBO Max, released last year. The telecommunications giant is relying on the platform to become a full-fledged competitor to Netflix Inc. and Disney +.
Directors’ complaints
What is not clear is whether the extra money is enough to ease the tension between the studio and the well-known filmmakers and funders who immediately cried over Warner Bros. decisions. Tenet director Christopher Nolan gave HBO Max the idea to handle the films, which he called “the worst streaming service. Denis Villeneuve, whose film “Dune” was affected by the movement, praised Warner Bros. and AT&T in a column for the Variety industry trade publication.
“AT&T has hijacked one of the most respectable and important studios in the history of film,” he said. “There is absolutely no love for cinema or the audience here.”
Talent agencies have them too complained, and Endeavor chief executive Patrick Whitesell said it was a Warner Bros. attempt. Richard Lovett, president of the CAA, said the move was “completely unacceptable” for his company and its clients.
“You have unilaterally established value for our customers and their work to benefit from HBO Max’s long-term prospects and AT&T finances, a choice our customers have not made,” he said in a letter to WarnerMedia. quoted by Variety.
Many of the parties were upset because of them sense Warner Bros. he didn’t give them enough or because they wanted their films to appear exclusively in cinemas. But the rebuke was also a carefully orchestrated part of a negotiation: many were worried about the potential impact on wages.
And although the release of movies on the Internet is not new – Netflix Inc. and Amazon.com Inc. publishes dozens of features every year – filmmakers often choose traditional studios because they want their films to appear in cinemas first and because the potential advantage of a big theater smash far outweighs the money from a streaming hit. On big movies like “Wonder Woman,” it can be 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 SpringBill Entertainment at LeBron James and director Jon Chu, to further explain his strategy and argue that they will make more money this way. Although Warner Bros. he believed that he had the rights to release his films on HBO Max without the consent of his partners, since then he has adjusted his contracts to offer more favorable conditions.
The film industry is always a risky endeavor. Even without a pandemic, most movies usually lose money. So guaranteeing at least some kind of payment day it’s a novel – even if not what people could do if the theater business was 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’s time to promote the movies coming out this year – and keep their loyalty for future projects.
Additional payments are not permanent. After 2021, the studio intends to return to the old model contract. This raises another risk, in which partners get used to higher and guaranteed payments that the studio cannot afford. To cover the additional costs, Warner is reallocating money from some productions that were closed this year.
Sharing the HBO Max license fee with crew members and writers is another temporary change. Crew members do not normally share box office receipts, but receive some of the home entertainment sales.
“Our focus in these situations is always to be generous,” Kilar said in an interview last month.