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COMPANY TOWN

Some Hits and Flops From the Summer Movie Harvest

September 15, 1999|RICHARD NATALE | SPECIAL TO THE TIMES

How can a movie like "Wild, Wild West," which grossed more than $100 million, be classified as a money loser while "Tarzan," which took in about $170 million but cost $150 million, be ranked with the major moneymakers?

The raw numbers don't always satisfactorily explain the intricacies of film financing and other factors that determine profitability. Here are some frequently asked questions about the movie industry's biggest hits and flops in the summer season, which is the financial harvest time for Hollywood's studios.

* What's the most profitable film of the summer?

On a percentage basis, certainly "The Blair Witch Project," which cost about $1.4 million to produce and about $25 million to market.

Artisan Entertainment estimates the film's worldwide gross should reach $200 million, with another $110 million or so from video, cable, etc. Artisan expects that over the lifetime of the film franchise, $150 million in profit could return to the company.

However, in terms of sheer dollar volume, "Star Wars: Episode One The Phantom Menace" has the edge. The $115-million sci-fi spectacular will probably get $50 million to $60 million worth of marketing, according to Fox sources.

Ticket sales worldwide are so far about $750 million and are expected to finish at between $900 million and $1 billion. In addition, "Phantom" will sell about $1 billion in merchandise, according to Lucasfilm, which paid all costs on the film. Other revenue, including home video, should bring in between $300 million and $400 million. 20th Century Fox gets only a distribution fee, which, according to industry insiders, is about 8% to 10% of theatrical rentals.

Returns to Lucasfilm should be at least $500 million. And there are two "Star Wars" movies still to come.

Why is "Tarzan" considered a major moneymaker when it cost $150 million and grossed a bit more than $170 million in the U.S.?

Like many Disney animated movies, "Tarzan" will be extraordinarily profitable because there are so many ways the studio makes money on this one movie.

Disney executives say the film should gross $450 million to $500 million worldwide, with initial overseas engagements running ahead of "Aladdin" and, in some cases, "The Lion King." The real bonanza will come from home video, where the film should sell more than 20 million cassettes ($200 million pure profit to the company).

In addition, "Tarzan" is likely to spawn a sequel, either for theaters or as a direct-to-video release, as well as future theme park and other entertainment tie-ins.

What was the summer's biggest misstep?

Though it wasn't the biggest money loser, Warner Bros.' well-reviewed animated film "The Iron Giant" was a huge missed opportunity. Warner had a strong film in hand, but it failed to turn it into the kind of bonanza for which Disney is now famous. It didn't tap promotional tie-ins to help launch the family film, and because the movie didn't do well in theaters, future home video sales and any franchise potential the film may have had are diminished--including sequels, an animated TV series and limitless merchandising possibilities.

Several other summer releases will barely recoup their marketing costs from theatrical release, films such as "Mystery Men," "The Astronaut's Wife," "The 13th Warrior" and "Brokedown Palace."

Why will some films that are clearly financial losers actually make money for the U.S. distributor?

The Times' movie profitability analysis is based on overall production costs. When the distributor hasn't borne the full cost of production, it's possible to make a profit on films that may lose money for its investors.

Lion's Gate paid less than $1 million for U.S. rights to "The Red Violin" and will gross $9 million. MGM paid only $2 million for "Tea With Mussolini" and will gross about $14 million. Miramax was exposed for just $4 million of the production costs of "An Ideal Husband" and has realized almost $18 million from the U.S. release. And Sony paid PolyGram Pictures only $6 million for U.S. rights to "Arlington Road," which brought in $24 million domestically.

What was the summer's biggest surprise?

There are several nominees in this category. "The Blair Witch Project" is a natural, but Disney's "The Sixth Sense" was just as big a surprise. Studio Chairman Joe Roth estimates Disney will see a pure profit of $75 million on the film, for which it put up about $40 million in marketing costs. Spyglass Entertainment, which financed the $42-million psychological suspense drama, will get the rest.

The teen comedy "American Pie" was also a pleasant surprise for Universal. The film cost the studio $6 million and has grossed $100 million to date. Universal's early-summer release "The Mummy," which cost about $80 million, far outperformed expectations, especially overseas.

How accurate are the budgets given out by the studios?

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