Movie business and billionaire

Sony is having a bad year so far in 2013

"Grown Ups 2" was a modest success
"This is the End" was a low budget film that earned triple its production budget domestically
"White House Down" was a terrible failure
"After Earth" was a horrific failure
"The Smurfs 2" looks like it will break even at best


Last year out of 13 movies it had one bad bomb "Total Recall" and one spectacular success "Skyfall with James Bond"

Dan Loeb runs a hedge fund which has a 6% stake in Sony which makes them the largest shareholder. He is requesting that Sony spin off the entertainment division. His language is polite and business like,

Our proposal is a simple one: it contemplates a semi-independent governance structure. We believe that you, Mr. Hirai, should serve as Chairman of both Boards, to promote synergies between Entertainment and Sony Corporation.

So Loeb's most pointed comment has been: “Given entertainment’s perpetual underperformance, perhaps Sony’s reluctance to discuss it candidly stems from (understandable) embarrassment.”

George Clooney's retorts have been very personal:
“How any hedge fund guy can call for responsibility is beyond me, because if you look at those guys, there is no conscience at work. It is a business that is only about creating wealth, where when they fail, they get bailed out and where nobody gets fired.
A guy from a hedge fund entity is the single least qualified person to be making these kinds of judgments, and he is dangerous to our industry.”

While George Clooney may be correct that it takes something other than concern for the bottom line to make his kind of movies, at the same time look at Sony's type of movies on the release schedule for this year which in addition to "White House Down" and"After Earth" includes:
Grown Ups 2
The Smurfs 2
Cloudy with a Chance of Meatballs 2
Carrie (2013)
Battle of the Year (A 3D Dance film)
The Mortal Instruments: City of Bones (the latest in the continuing quest to find a create a Harry Potter or Hunger Games or Twilight series of films)

I have to think that Loeb is entitled to think like a businessman. He sees a wildly variable entertainment division that for the most part is not trying to make award winning movies (except for Clooney), dragging down the mainline business of electronic sales.

The two divisions are a bad fit. Even if Sony Pictures makes computer animated stuff, they can still get that tech from someone else. I agree, they would each have a better shot separate from each other.

Well you have to figure that if a studio doesn't release a film for 6 months, and then it release four summer movies that all have terrible reviews or are retreads of ideas, that they are going to get some criticism.

White House Down
After Earth
Grown Ups 2
The Smurfs 2

George Clooney made a quirky film two years ago with Sony Studio called The Ides of March. It netted George an Oscar nomination for Adapted Screenplay, and it cost $12.5 million to make. It netted $41m domestically and $35m in foreign boxoffice. Since George Clooney basically works for the back end, it must have been a very profitable venture for him. Sony is taking a big chance on him this fall by budgeting $75 million for one of his movies (a huge budget for those kinds of film).

I think he feels a strong sense of loyalty, plus he is such a fierce defender of the movie industry.

But the billionaire doesn't really care about quirky little films. He is talking about the vast TV, video on other print media that costs billions of dollars to run, and makes a low profit compared to the primary Sony divisions that make electronics. He is probably correct in assuming that the executives love the glamour of having movie and TV stars around, and don't want to rock the boat.

Quote: Pacomartin

George Clooney made a quirky film two years ago with Sony Studio called The Ides of March. .

Which sucked, BTW..

Quote: Evenbob

Which sucked, BTW..

Without critiquing the films on quality, the studio made seven smallish films that year. Some involved big stars.

Production budget
$55m Arthur Christmas (animated)
$50m Moneyball (Brad Pitt)
$30m Anonymous (Shakespeare story without big stars)
$28m 30 Minutes or Less (Jesse Eisenberg)
$20m Bad Teacher (Cameron Diaz)
$12.50m The Ides of March (George Clooney)
$10m Bucky Larson: Born to Be a Star (comedy involving unknown star )

Some of these films bombed terribly, but since they had small budgets you never hear about them. Some (notably Bad Teacher and Ides of March) made a lot of money relative to their budget.

But when a studio releases 5 films in one summer, and 4 of them get horrific reviews and lose money you can't be shocked by criticism.

The billionaire Loeb brought up Waterworld from Sony's past (1995).

It's an interesting example. The problem laden film with a production budget of $175m was by far the largest budget of any film nade that year. It earned only $88m in domestic box office of which Sony gets 50% ($44m). If you add in $90m for prints and advertising, and $49m for other distribution costs the film was held up in the press and compared to Cleopatra and Ishtar as one of the most disastrous films of all time.

Strangely enough it earned double the domestic boxoffice overseas. It is estimated that Sony pockets 40% of that revenue. But cable, video rentals, tv rights, etc. on the film brought in an extra $190 million, and co-financing meant the film made a modest profit.

Actually two years later Kevin Costner directed "The Postman" which had an $80 million dollar budget, and $17.6m in domestic box office, and was worth nothing in the foreign market. Despite the much smaller budget, "The Postman" was the real money sink. After a one year break, Kevin Costner has gone on to star in 13 more films, and was permitted to direct one in 2003 (admittedly a much smaller budget film with budget of $22m). It turned a profit with $58m in domestic box office.

While it is easy to point to the game changing success of Toy Story in 1995, which cost $30m to make and became the highest grossing domestic film that year earning $330 million worldwide. Toy Story pushed computer animation into the same league as Disney animated films.

In some sense Waterworld taught film companies that they could still break even with a big budget disaster if it sold well overseas, and sparked an aftermarket. It was still worth it as Kevin Costner still made $14m and a lot of people got big salaries.

Although Sony did not make any big budget films the next year, instead limiting production budgets to $50m or less, by 1997 it was making Men in Black, Air Force One, and Starship Troopers.

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George Clooney keeps a big picture of Batman and Robin (B&R) his 1997 summer flop and the worst failure of the Batman franchise. It killed the series for 8 years. The photo is to remind him about the dangers of taking a big salary, and making an extremely commercial film (one that was more of an advertisement for toys than a film).

B&R cost $125m to make ($50m less than Waterworld) and made $107m domestically ($30m more than Waterworld). Considering the marketing potential of B&R, and the fact that Waterworld eventually broke even, you know B&R was profitable for the studio (even if not a big success).

Clooney was OK as Batman, its the awful acting of
Arnold as Mr Freeze that killed it.

http://www.youtube.com/watch?v=VNaDZIrxh-0

Quote: Evenbob

Clooney was OK as Batman, its the awful acting of
Arnold as Mr Freeze that killed it.

The first Batman movie was the #1 grossing movie of 1989. The second one had higher critical ratings, but lost 1/3 of the boxoffice, but still ended up #3. For some reason Michael Keaton made 6 terrible movies, and either refused to do a third Batman movie or was not asked back.

Val Kilmer was a critical failure, but his movie didn't do any worse (#2 for the year). But the studio was pushing hard to remove the dark edges of the film (particularly scary villains like The Penguin . The result was Clooney's batman was still a #12 film, which isn't bad. But they put the franchise on hiatus for 8 years.

Film - Tickets sold - data (rotten tomato rating)
Batman 63m 6/23/89 (70%)
Batman Returns 39m 6/19/92 (81%)
Batman Forever 42m 6/16/95 (41%)
Batman and Robin 23m 6/20/97 (12%)

Quote: Pacomartin

Val Kilmer was a critical failure, but his movie didn't do any worse

Question here. You mean as an actor? Is that even relevant to a movie about a cartoon character?
And if was second highest grossing movie that year, doesn't that make his or anyone else's acting irrelevant?

Quote: Fleastiff

Question here. You mean as an actor? Is that even relevant to a movie about a cartoon character?
And if was second highest grossing movie that year, doesn't that make his or anyone else's acting irrelevant?

Val Kilmer gets some good reviews in the 30 years that he has been acting in movies. But I meant that his Batman movie was poorly reviewed by critics.

Critics don't matter a lot to a #2 film, but Kilmer's contract was not renewed. As Kilmer was paid $7 million to do his Batman film, and Clooney was paid $10 million to do the sequal, one would normally think that you wouldn't turn down the offer to reprise the role.