Photographer: Gabby Jones / Bloomberg
Photographer: Gabby Jones / Bloomberg
Warner Bros. devised a new plan to compensate filmmakers during the pandemic: treat each film like a box office.
After the studio shocked Hollywood with the decision to release all of its new movies on HBO Max this year, the studio has adjusted the terms of its deals with partners to guarantee payment regardless of box office sales and to increase the chance of performance-based bonuses . Warner Bros. also pays a larger group of cast and crew fees based on fees they collect from HBO Max, according to people familiar with the studio’s plans.
The company is close to resolving disputes with many parties, say the people who asked not to be identified because the discussions are private. Details of some agreements have already started appearing with the Hollywood Reporter this week said Warner Bros. is close to an agreement with Legendary Entertainment on the film “Godzilla against. Kong. ”
The similarities are a sign of the pandemic problems. Most theaters have closed due to the coronavirus, which motivates studios to put their films online. But their payment contracts with partners are usually highly dependent on big-screen success – a system that many in Hollywood want to protect because it has made them rich.
Warner Bros. plans to release 17 films in 2021, including ‘Dune’, ‘In the Heights’ and the sequel to ‘The Matrix’ and ‘Space Jam’. The movies are appearing in theaters and on HBO Max at the same time – although they are offered exclusively on the big screen in many areas around the world. The films will play 31 days on HBO Max, but can stay in theaters long after that.
This is according to the people familiar with the situation how it will work: when movies appear this year, everyone who is entitled to a bonus will receive one to half of the cash income normally required to make a payout to bring about. And as more theaters close, the threshold will drop further – a provision called the “Covid-19 multiplier”. Those who would normally participate in profits from box office receipts will continue to do so, as well as on demand and online sales.
HBO Max sal Warner Bros. a fee paid for its 31-day window, and the money from it will be shared not only with profitable participants, but also with cast and team. Both companies are part of AT&T Inc. ‘s WarnerMedia, run by veteran Jason Kilar.
“HBO Max pays a significant amount for the ability to exhibit these films,” Kilar said in an interview last month.
AT&T, which acquired the Warner operations in 2018 with an $ 85 billion acquisition, is paying close attention to the strategy. In addition to helping to deal with the pandemic, the hope is to draw millions of subscribers for HBO Max, which was launched last year. The telecommunications giant is counting on the platform to become a full-fledged competitor to Netflix Inc. and Disney + to become.
Complaints from directors
What is not clear is whether extra cash is enough to ease tensions between the studio and well-known filmmakers and financiers that are immediately dirty about Warner Bros. cried. ‘decision. “Tenet” director Christopher Nolan slammed the idea of blocking films to HBO Max, which he called “the worst streaming service. Denis Villeneuve, whose film “Dune” was affected by the move, told Warner Bros. and AT&T in a column for the industrial publication Variety.
“AT&T has hijacked one of the most respected and important studios in film history,” he said. “There is absolutely no love for theater, nor for the audience.”
Talent agencies also have complains, with Endeavor executive chairman Patrick Whitesell saying it was an attempt by Warner Bros. to trade for oneself. Richard Lovett, president of the CAA agency, said the move was “completely unacceptable” to his firm and his clients.
“You have unilaterally determined a value for our customers and their work to benefit the long-term prospects of HBO Max and the finances of AT&T, a choice our customers have not made,” he said in a letter to WarnerMedia. quoted by Variety.
Many of the parties were upset because they feeling Warner Bros. did not give them enough attention, or because they wanted their films to appear exclusively in theaters. But the reprimand was also a careful part of a negotiation: many were worried about the possible impact on payment.
And although the release of movies on the Internet is not new – Netflix Inc. and Amazon.com Inc. postpones dozens of functions each year – filmmakers often choose traditional studios because they want their films to appear in theaters first, and because the potential benefit of a major theatrical performance far exceeds the money of a streaming hit. On big movies like ‘Wonder Woman’ it can cost millions of dollars. Robert Downey Jr. have a $ 75 million reported for ‘Avengers: Endgame’ between his salary and profit share.
Spell it out
Warner Bros. has spent the past few weeks talking to his partners, such as LeBron James’s SpringHill Entertainment and director Jon Chu, to further explain his strategy and lay out the argument that they will make more money this way. Although Warner Bros. believed it had the right to release its films to HBO Max without the consent of its partners, it has since adjusted their contracts to offer more favorable terms.
The film industry is always a risky endeavor. Even without a pandemic, most movies usually lose money. So guarantee at least some kind payday is new – even if it’s not what people would make if the theater business were healthy.
Not all Warner Bros. ‘partners are upset about the HBO Max arrangement, but the studio wants to keep its talent happy – especially when it’s time to promote the films that appear this year – and maintain loyalty to future projects.
The extra payouts are not permanent. After 2021, the studio plans to go back to the old contract model. This increases another risk, in which partners become accustomed to higher, guaranteed payments that the studio cannot sustain. To cover the extra costs, Warner revalues money from some productions that have been discontinued this year.
Sharing the HBO Max license fee with crew members and writers is another temporary change. Crew members usually do not share in cash receipts, but get a piece of home entertainment.
“Our orientation in these situations should always be generous,” Kilar said in last month’s interview.