Full article: http://www.iht.com/articles/2007/11/11/business/strike.php?page=1

The gist: The studios may not be lying when they’re telling the writers on strike that they cannot afford another 4 cents per DVD.

Despite bringing in billions of dollars per year, movie studios may in fact be losing money. An independent study was made that basically audits the movie industry and one of the biggest drains in the last decade has been the participation points offered to A-list movie stars and directors (i.e. Will Smith, Steven Spielberg, etc.).

What some people don’t know is that those actors making $20mil per movie are in fact making between $50 to $70mil thanks to profit participation. But the problem isn’t the points but the fact that the points come off the GROSS REVENUE, not the net profits. So assuming the actor is getting 1%, that means they’re getting 1% of EVERY DOLLAR the movie makes for however long the movie plays.

Typically, when someone gets points, it’s off the net profits. That means everyone, the studios, the theatres, the rental companies, the FX companies, EVERYONE, gets paid FIRST. Once everyone’s paid, then the net profit begins, and from THAT chunk of change is when the lesser known people get their percentages from (such as writers, B-list actors, etc.)

But over the last decade or so, big name people have been getting their percentages BEFORE everyone else, even the studios. So even if the movie bombs, the actor makes bank. What this does is it causes the movie to break even much, MUCH later, and everyone waiting for the net profits have to wait longer.

For example, let’s look at “Anger Management”, which cost $75mil to make. Let’s tack on another $50mil for marketing, which brings the total to $125mil. The movie made $136mil when it closed, so it was profitable, right? WRONG. If you check out IMDB, you’ll see that Adam Sandler’s salary was $25mil against 25% of the gross revenues. What this means is even though the movie should’ve made a $10mil profit, it had in fact lost $8mil. And that’s just figuring Sandler’s take, I’m sure Jack Nicholson got some points as well. Anger Management only made a profit thanks to foreign distribution and video sales.

My point is that many people in movies nowadays are getting paid way, WAY too much. Adam Sandler made $34mil for Anger Management. Arnold Schwarzenegger made around $50mil for Terminator 3. Tom Cruise made $75mil from Mission Impossible 2. And for just a few months’ work. Does this really seem fair to anyone? This is the reason why movies cost so goddamn much, why it costs $15-20 per person to watch a movie and why new DVDs cost $30.

Posted on November 12th, 2007 by Enrique
Filed under: Opinion