Chapter 127: International Distribution Business
"Not many people can directly turn down Francis Ford Coppola's offer," Arthur said with a smile to Winona Ryder after they got home.
Winona Ryder leaned back on the sofa. "After what happened last year, I just don't want to work with Coppola again. Besides, I saw you weren't that interested in Bram Stoker's Dracula either."
Arthur sat next to Winona. "A $60 million budget is too high. Even with Gary Oldman playing Dracula and Coppola directing, my budget limit for this project would be $40 million."
Besides, if it were a vampire film, Arthur would rather invest in Interview with the Vampire. That movie, starring Tom Cruise and Brad Pitt, also had a $60 million budget, but its reputation and box office performance would far surpass Bram Stoker's Dracula.
"By the way, Arthur, are you interested in the adaptation of Jack Kerouac's novel On the Road?" Winona Ryder suddenly asked.
Jack Kerouac was an American author and a leading figure of the Beat Generation. His autobiographical novels like On the Road, The Dharma Bums, Desolation Angels, and Lonesome Traveler shocked the mainstream culture and societal values of the 1950s and 60s with their rebellious and unconventional lifestyles and literary themes.
Kerouac's living record novels often had a meandering, provocative quality, challenging traditional writing styles and representing the Beat Generation's ideal of reckless wandering and contemplative insight.
"Not interested. Such novels are too niche for the mainstream audience today, and the plots are too dull, lacking empathy," Arthur shook his head. In the future, Kristen Stewart would star in a film adaptation of this novel, which didn't make much of an impact.
"Well, Coppola showed me the script a while ago," Winona Ryder explained.
Arthur leaned in closer to her. "Coppola's time has passed. I don't hold celebrities in high regard. Most of Coppola's films have been mediocre failures. The Godfather Part III was just his comeback to make money because he went bankrupt!"
Throughout the 1980s, Coppola directed around ten films, none of which had significant artistic or box office success, leading to his financial crisis.
Now, Columbia was investing in Coppola's Bram Stoker's Dracula, not Paramount. It was clear they didn't green-light his $60 million vampire movie. With Sony backing Columbia, the heads of Sony Pictures, Peter Guber, and Jon Peters, were spending money without a budget.
As summer continued, Orion's The Silence of the Lambs grossed $100 million in North America by the end of June. The comedy Bill & Ted's Bogus Journey earned $32 million.
In her office at Orion, Arthur watched the rough cut of The Addams Family with Amy Pascal before discussing upcoming movie plans.
The Silence of the Lambs grossed $100 million in North America. The theaters took 48%, and Orion received a 15% distribution fee. The remaining amount was split between Galaxy and Castle Rock, the two production companies. Orion had supported the production with $5 million and spent $4.1 million on marketing. With $19.5 million from distribution fees, they had netted $28.6 million.
The production companies earned a total of $48.1 million. After subtracting the $5 million Orion invested and $4.1 million in marketing, $39 million remained. The main crew, led by producer Arthur, received $5 million in bonuses, leaving Galaxy and Castle Rock each with $17 million.
Orion had only invested $8 million in The Silence of the Lambs, but it yielded a risk-free return of over $45 million.
Castle Rock also earned $17 million from North American box office receipts alone, after investing only $9 million. The video and TV rights market in North America was also half Castle Rock's.
"No wonder a blockbuster film can make a new company famous," Arthur was pleased with the report. Sleeping with the Enemy and The Silence of the Lambs had significantly boosted his company's reputation.
"What about the international market? Any settlements yet?" Arthur asked. The international market profits would belong entirely to Galaxy.
Amy Pascal shook her head. "Columbia TriStar is still handling it. The overseas box office is also substantial.
According to our previous agreement, with production, distribution, and theater shares at 20%, 32%, and 48%, respectively, Galaxy would get $28 million from the box office, though some marketing costs need to be deducted," she added.
Arthur nodded. According to general practice, the revenue split in the international market is typically 35% for the production company, 17% for the distributor, and 48% for theaters. However, international distribution is more complex, often involving local partnerships, which incurs higher costs.
Orion didn't have an overseas distribution network, so Columbia TriStar was responsible, and their 32% distribution fee included the commission paid to Columbia TriStar.
"A 15% distribution fee is too high. Our movies are often released domestically first and then internationally, which simplifies promotion, reducing marketing costs significantly," Arthur said, unwilling to sustain the distribution personnel at someone else's expense.
"Lower it by five points. Otherwise, even if Orion can't push the films to more markets, I'd rather negotiate international distribution deals individually at international film festivals.
Also, establish international offices in the UK, Australia, and Western Europe. Our relationships with PolyGram, Village Roadshow, and Gaumont are good, so opening these markets should be easier," Arthur instructed.
He wanted to secure the 35% revenue share for these regions, rather than settling for the current 20%.
A film with a $100 million box office should yield at least $20 million.
For other regions, Galaxy could initially sell the distribution rights directly. Eventually, Galaxy would build its international distribution network.
"Work is underway, but it takes time," Amy Pascal reminded him.
"I understand," Arthur acknowledged. "Sell the international video and TV rights of The Silence of the Lambs directly to Columbia TriStar. Ensure they settle the payment promptly.
If they delay, we can approach United International Pictures (UIP) or Warner Bros. and 20th Century Fox for a buyout."
Amy Pascal smiled, appreciating Arthur's strategy to ensure they secured the best deals quickly.
*****
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