Chapter 141: Box Office Revenue Sharing

Due to the impact of the 9/11 events, Hollywood was quiet in September, with little interest in new releases or celebrity scandals. The focus of the entire country, and even the world, was on the ruins in Manhattan, New York. Films released in early September and now faced nothing but failure, regardless of their cast or production scale.

Despite the film market's slump and many distribution companies facing losses, Fox Searchlight experienced rare excitement.

Although "Saw" was forced to leave theaters after eight weeks, its impressive performance was enough to excite many and bring benefits.

"Have a seat, Tony."

Seeing Tony Gusman enter his office, Gordon-Clyde was extremely welcoming. "What has Murphy been up to lately?"

Tony Gusman's face was glowing, seemingly rejuvenated by a decade. "Aside from demanding box office revenue sharing from us, he's preparing for new projects."

"Oh?" Gordon-Clyde became interested. "Do you know the details?"

"He hasn't disclosed them." Tony Gusman shook his head. "I visited Stanton's studio yesterday. He said he would show us the script and plan once they're ready."

Gordon-Clyde made it clear, "Keep close contact with Murphy!"

Evidently, Murphy Stanton was a director on the rise.

"I understand." Tony Gusman responded.

A low-budget horror film with a production cost of only $800,000 ultimately grossing $61.89 million in North America alone, not through cunning distribution tactics like "The Blair Witch Project," made this director worthy of any company's attention.

As Tony Gusman thought this, Gordon-Clyde suddenly changed the topic. "A vice president position in the marketing department has just opened up."

Hearing this, Tony Gusman's eyes lit up. This was his chance!

Indeed, Gordon-Clyde continued, "You were the first to recommend 'Saw,' and you've made a significant contribution to the company this time. I've already recommended you to the board of directors."

Tony Gusman was overjoyed. "Thank you, thank you, boss."

Gordon-Clyde waved his hand. "Without you, there would be no 'Saw,' nor the cooperation between the company and Murphy Stanton. This is what you deserve."

Nodding vigorously, Tony Gusman was filled with joy. While joyful, he suddenly thought of the name Murphy Stanton. If he had chosen to work with him in Park City, buying "Hard Candy," perhaps he would have been promoted earlier.

Gordon-Clyde on the other side fell silent, signaling it was time for Tony Gusman to leave.

Thinking of maintaining close contact with Murphy Stanton, he mentioned to his boss before leaving, "Murphy has repeatedly urged the box office revenue sharing."

Gordon-Clyde frowned slightly, pondered, then said, "Tell him that every penny belonging to Stanton's studio won't be shortchanged, but it will be paid in installments after the company completes the process, with all North American box office revenue sharing fully paid into Stanton's studio's account by next February at the latest."

This was relatively quick payment speed in Hollywood. He and Fox Searchlight had no intention of tricking, as the North American box office sharing was relatively transparent. Plus, Murphy Stanton was clearly rising fast, a great potential collaborator. Considering "Saw" clearly had more to tell, causing irreconcilable conflicts with Stanton's studio was not wise.

Thinking back, if the director had made a film like "The Blair Witch Project," he would have seriously considered the amount and timing of the sharing. Employing underhanded tactics in such situations is not uncommon in Hollywood, as no company wants to see its costs inflated and profits squeezed.

Hearing from Gordon-Clyde as Tony Gusman thought, Hollywood's film companies always adjust their strategies based on the counterpart. This is a standard business circle, where commercial reputation is necessary, but trickery is equally common.

A week after the 9/11 event, Fox Searchlight sent a financial report to Stanton's studio. Murphy's lawyer, Robert, and accountant, Bill, reviewed it, finding no major issues. However, while the North American box office sharing report came, the payments would be made in installments over a long period.

This practice is customary between distribution and production companies in Hollywood. Sometimes, payment can be delayed to the point of frustration, leading to legal battles over unpaid dues.

Murphy had no major objections to Fox Searchlight's six-month payment period, as their contract specified payments within ten months after North American screening ended. Fox Searchlight wasn't delaying payments but showing goodwill.

Compared to the payment period, Murphy focused more on "Saw's" financial report.

The film achieved a total of $61.89 million in North America. After various taxes, Fox Searchlight, as the distributor, received a $30.5 million share, with some already paid and some still in theaters' accounts.

Fox Searchlight's report detailed a clear sharing ratio.

From the promotional period after signing the distribution contract, Fox Searchlight invested a total of $5.5 million in marketing expenses, plus over $500,000 in storage, transportation, labor, public relations, and insurance costs.

According to the contract, these expenses were included in Fox Searchlight's 25% share of the North American box office, not requiring additional payment from Stanton's studio or deductions from theater box office revenue.

This meant Fox Searchlight would retain 25% of the $61.89 million, approximately $15.5 million, from the $30.5 million.

The remaining $15 million wasn't entirely for Stanton's studio.

The contract included a clause where all copies of "Saw" were printed by Fox Searchlight at their expense, to be deducted from the North American box office share.

Fox Searchlight adopted a conservative distribution strategy, initially releasing only a few dozen copies, scaling up as "Saw" showed market potential, eventually printing 2,560 copies.

The report included a financial statement from the film printing company. Due to long-term cooperation and large-scale printing with Fox Searchlight, the cost per copy wasn't as high as Murphy's estimated $3,000 but $2,450, a standard industry rate for mass printing.

Thus, printing expenses amounted to $6.27 million, which Fox Searchlight needed to deduct from the $15 million.

This left Stanton's studio with about $8.7 million from the North American box office share.

But this wasn't the actual income.

After receiving Fox Searchlight's financial report, Stanton's studio also prepared an expenditure budget.

From this $8.7 million, a significant portion would go towards various expenses.

Although Murphy's zero salary meant Bill Rossi didn't receive an agent's commission, he had no complaints. Actively working for the film's preparation and distribution partly because he believed in Murphy's future and partly because he would receive a certain box office commission.

This amount wasn't high but enough to triple his yearly income at CAA.

Bill Rossi would take away $250,000.

From the perspective of input and return, he was worth Murphy's investment.

Additionally, "Saw" was registered with the Writers Guild, Directors Guild, and Screen Actors Guild, making it a union project. While enjoying union protection, it also required certain funds to be paid to the union, usually after the film generated actual revenue.

Union registration and protection for a small project like "Saw" seemed more like a formality, with the union not paying much attention nor offering significant protection.

But Murphy didn't plan to evade these payments, following Hollywood's established rules until he had sufficient strength.

Expenses weren't limited to these. Murphy's hires, like Philip Lassiter, David Robbie, Helena, and James Franco, were all union members. After the 1988 writers' strike, major unions secured the right for their members to share in film revenues.

Although the sharing ratio was low, avoiding troubles required these payments.

"Saw's" production team mainly comprised individuals with little experience, making the shared benefits modest. In many of Hollywood's A-level productions, if the production team is strong enough, they can share half the profits with the production and distribution companies.

This is one reason many Hollywood companies use questionable tactics, as no company wants to see its costs skyrocket while profits are squeezed.

Including other minor expenses, after Fox Searchlight's payments were settled, excluding the complex and hard-to-understand company taxes, Stanton's studio's actual North American box office income was around $8 million.

Compared to the $61.89 million North American box office, this number might seem modest, but the cake wasn't solely shared by the production side. And an $800,000 investment returning $8 million from the North American box office, a tenfold investment return, was astonishing in the film industry.

Especially since this was just the North American box office, with TV rights, video tapes, and international markets still to come.

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