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I Know What You Did Last Weekend

Film: Hollywood pores over the first few days of box-office returns, which tell an inside story of boom or doom.

June 23, 1998|RICHARD NATALE | SPECIAL TO THE TIMES

Last summer, "Speed 2: Cruise Control" debuted at the top of the weekend box-office charts. To the casual observer, the sequel's $16.2-million opening weekend made it seem like a sure winner, topping the opening of the huge moneymaker "Speed."

But among financial analysts and in movie studio warrens around Los Angeles, the truth of the matter was understood: "Speed 2" cost at least $145 million to make, almost five times the original film's budget, and the modest size of the opening weekend assured that the film would be as much of a disaster on Fox's balance sheet as critics said it was on screen.

In the end, the loss for the studio came to between $65 million and $85 million, sources said.

Every weekend, studio analysts pore over the latest box-office figures with the knowledge that a movie's destiny is typically revealed in its first few days of business. From there, executives make projections of worldwide box office and revenues from such secondary markets as video and cable and network TV.

Though domestic theater box office accounts for only about 20% of a film's total revenue, the U.S. opening weekend is regarded as crucial to a movie's overall profitability. Without a significant first weekend gross, the trailing revenue streams quickly dry up for major studio releases. In other words, a film has to prove it can make money in order to make more money.

"It's simple, single-line math," one top studio executive explained. The projections of future revenue for a movie are keyed to how well the film performs in the U.S.

Being No. 1 doesn't necessarily mean a film is a hit. Look at two of the summer's big disaster entries that opened to similar weekend receipts: "Deep Impact" had a $41-million three-day debut. "Godzilla" took in $44.5 million in the first three days of the Memorial Day weekend.

What the raw numbers don't show, however, is that Paramount/DreamWorks' "Deep Impact" will reap a much larger profit than "Godzilla."

"Deep Impact," which cost $100 million, has already grossed more than $200 million worldwide and should end up topping $300 million, meaning it will cover most of its production and marketing costs in advance of ancillary income.

Sony's "Godzilla" cost $120 million to produce and had higher advertising costs than "Deep Impact." "Godzilla," part of a planned trilogy, desperately needed a power launch to propel it theatrically overseas and to kick off a heavy merchandising and promotional push. In the end, the film will make only a modest profit, performing no better than "Deep Impact" around the world.

"Godzilla" also is encumbered by profit participation from its creators, further eroding the studio's return. Sequels at this point are unlikely.

In recent years, the opening weekend has come to represent a larger percentage of the total domestic box office, in part because of a deluge of studio films and intense competition for screens.

"Twenty years ago, with the marketplace not as crowded as it is, it was easier for films to maintain a position in theaters for longer with less competition," said New Line President Michael Lynne. "With a more crowded marketplace, the process works faster. Films are now going through their theatrical window in a much quicker time frame and, therefore, judgments about profitability can be made more quickly."

The opening weekend numbers have a direct effect on a film's ancillary revenue.

Cable TV rights are typically calculated on a sliding scale, based on a film's ultimate gross. Videocassette orders are also charted according to box-office performance, as are network TV sales.

Had it opened as well as anticipated, "Godzilla" would have sold to network TV for more than the $25 million NBC paid for it. Had first weekend grosses indicated the film would gross $175 million or more, Sony would have gotten its $35-million asking price, maybe more.

Thus, a difference of about $20 million in U.S. rentals would have brought an additional $10 million from network television alone. Video and cable revenue would have similarly spiked.

While many films follow typical patterns based on genre and size, there are always exceptions. Based on its first weekend, no one could have predicted that "Titanic" would gross almost $600 million in the U.S.--not even Paramount, which sold the TV rights for what is now seen as a ridiculously low $30 million. (Last year's "The Lost World: Jurassic Park," which took in less than half as much as "Titanic" in the U.S., was sold to television for $80 million.)

It also would be impossible to calculate a $45-million gross for Fox Searchlight's "The Full Monty" based on the independent film's early limited release. The movie is one of the most profitable of the decade. Produced for just $3.5 million, it has grossed $250 million worldwide.

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