Legendary's Thomas Tull Talks 'Godzilla,' Universal Move, China Plans in Rare Interview
Appearing at THR's annual Power Lawyer breakfast, the executive talked about moving from Warners to Universal, what he's learned dealmaking in China and why movie theaters will never go away.
As Legendary Pictures gets ready to unleash its new Godzilla movie on May 16, Legendary CEO Thomas Tull said that the $160 million movie could begin to turn a profit once it hits $450 million at the worldwide box office.
"Starting a new franchise, if it did $450 million worldwide, anything above that would be pretty good. It's still expensive, but it's not a $200 million movie," Tull explained as part of a wide-ranging interview conducted by Hollywood Reporter executive editor Matthew Belloni at THR's annual Power Lawyers breakfast, which took place April 30 at Spago in Beverly Hills.
Legendary spearheaded the reboot of the venerable Japanese monster movie, putting up 75 percent of the budget, with Warner Bros., which is releasing the film, footing the rest.
Why mount a new Godzilla when the last version, released by Sony in 1998, received a mixed reception, grossing $379 million worldwide? "We make movies I want to see," said Tull. "I've loved Godzilla since I was a kid." He explained that Legendary's reimagining of Godzilla was akin to how Christopher Nolan reinvigorated Batman in Batman Begins and The Dark Knight, on which Legendary partnered with Warners. "Everyone said that franchise was broken, but Chris had a vision. Sometimes instead of just talking about it, you just have to do it and show folks this is our version of it," Tull said.
In this case, Tull is betting on Gareth Edwards, a young British director, whose previous film was the low-budget indie Monsters (2010). "I was blown away by his movie Monsters, which he made for $500,000. He did the effects on his laptop. I thought if we give him another half a million dollars …," Tull said, getting a laugh from the roomful of high-powered attorneys.
He also credited Legendary president and chief creative officer Jon Jashni and his film team "for constantly looking for real voices and great directors. That's part of our thing. Zack Snyder (Watchmen), Guillermo del Toro (Pacific Rim), now Gareth. We try to stand next to people who are more talented than we are and make a business out it."
But Tull shut down any speculation about a possible Godzilla sequel lurking in the shadows, saying, "We don't ever talk about sequels until we've earned that right. I'm superstitious about it."
While Godzilla is being distributed by Warners, which was Legendary's home base for a decade, last July Legendary struck a new five-year production and co-financing partnership with Universal Pictures, which kicked in at the beginning of 2014.
Discussing the reasons for the move in the rare interview, Tull said, "First of all, Warner Bros. is an amazing company, and it was really a privilege to be there for 10 years. They helped us build Legendary. The two companies had an agenda where our two Venn diagrams didn't cross. But it was not for lack of respect or a good relationship. I had a very close relationship with [Warners CEO] Kevin [Tsujihara]. I think he's doing a great job."
As for Universal and its parent company Comcast, Tull said, "They were aggressive about what they wanted us to do and how we would fit in. It was a good fit when we thought about movies, television, theme parks, digital stuff. It's a really interesting and great company."
Citing the work of his attorneys Joseph Calabrese and Skip Brittenham and adding that he'd signed a nondisclosure agreement, Tull begged off discussing differences between the Warners and Universal deals, saying only, "We're really pleased with the deal."
As he surveyed the current entertainment scene, Tull was asked about DreamWorks Animation CEO Jeffrey Katzenberg's warning at this week's Milken Conference that "movies are not a growth business." Said Tull, "To me, that's a math question. Jeffrey is obviously very smart. Here, domestically, it's hard to call it a growth business. Internationally, I think it is a growth business, and, frankly, I think it's becoming more [about] the haves and have-nots in films. You have movies that work really well and are doing more business than ever. And the middle ground of things that don't work really well."
He continued, "The demise of the movie business has been written for decades. To me, there are more entertainment choices available today than ever before. That, to me, is the biggest shift. Not that long ago, the question everyone asked was, 'What is there to do on a Friday night?' Movies were a big part of that, but all of a sudden there's YouTube, Facebook, social media, Xbox Live. You can watch anything you want on Netflix and Hulu. All of a sudden, there's an erosion of your time. That's one of the things we think about: How are we going to get people's attention, to rise above the noise and still make an appointment on Friday night to go see a movie?"
While distribution models are quickly evolving — and Tull said he and his executives were constantly monitoring those changes — he argued that movie theaters will always have a place in the mix, explaining, "Consumers want instant gratification. We're seeing big shifts in television. I still think the movie theaters are a big part of our communal experience. Whether it's an Imax screen or any of the formats where you go into a darkened theater and go on a journey with a bunch of strangers. I don't see that going away. But we've seen windows come down and different ways to view and have choices, and that will certainly continue to change and evolve."
The executive also noted that digital distribution is beginning to fill some of the void left by the collapse of the DVD market: "From our vantage point, we actually started to see it bottom out and the transactions start to tick up a little bit if you take every way you can view a movie digitally. So that, we think, is interesting. We only make four to six movies a year, so we just think the bar is very high for quality."
Turning to the Chinese market, Tull emphasized the importance of having a presence in that country, saying, "If you look at the growth trajectory, it's hard to ignore. Not having a business plan in China for our company we thought was irresponsible. A lot of glass is going to be broken, but when you think about the theaters they're building, China is developing a middle class. We think that's an opportunity."
At the same time, he admitted, working in China involves a learning curve. Tull formed Legendary East in 2011 and stuck a deal with China Film Corp. in 2013 — and he added that the deals he's made in China have been the most challenging of his career. "We've been over there, getting paper cuts and maybe worse, for the past six years," he acknowledged. "It's different people coming together with different interests and just in general our thought was to earn a place in the community. Rather than just show up and say, 'We're here,' you have to understand where they're coming from. The deal we struck with the China Film Group we felt was the right place for us and important for us. But time will tell. We've had some real successes over there with things like Pacific Rim, which did pretty large numbers. But anybody who says they've got it figure out, I'd love to talk to them."
Based on his experience, Tull said he did not believe Chinese protectionism was increasing, but "it's ever-present. And that's the reason we've tried to ask a lot of questions when we're there. The more we try to understand where they're coming from, we find it to be helpful."
Asked whether he sees Chinese companies acquiring a Hollywood studio, he responded, "I hear that talked about a lot. Certainly they have ambitions to be a broader player. You saw that with Wanda and AMC. It's not inconceivable, but I wouldn't say that it's absolutely happening."
Turning to other aspects of the business, Tull said he was "very happy" having Warners and now Universal handling Legendary's film distribution, since setting up a worldwide distribution infrastructure would be an enormous undertaking. But his company is getting more involved in marketing, having bought Five33, headed by Emily Castel, last year. "She's done a phenomenal job, and the work she's done with Sue [Kroll] at Warner Bros. we're really pleased with," he said. "So it's a true partnership."
Tull enjoys talking movies — he said he enjoyed the new Captain America movie; he's looking forward to Snyder's upcoming Batman-Superman movie, saying, "I can't wait to see it. I'm a big fan of the DC Universe"; and he cited last year's 42, which he produced, as "the most special experience I've had" — but he may be even more bullish on television. Last June former Warner Bros. Television Group chairman Bruce Rosenblum joined Legendary as president of its new Legendary Television and Digital Media division. "We think this is a great time to be in the TV business for a lot of reasons. From the content perspective this has been an amazing time. I don't watch a lot of TV, but whether it's Breaking Bad or True Detective, there's just a lot of great stuff. It's also easier for a company like ours to cross over because writers and directors who were hesitant before to go from features to TV, that's no longer an issue. We're trying to assemble a great team between Bruce and Michael Grindon and Peter Johnson. Our M.O. has always been to show, not tell. We have ambitions. We want to build a good business there, but we have to prove that."
Tull continued to emphasize the importance of controlling content as he discussed the current state of the business. "If you look at the return on investment — people constantly talk about how risky it is and clearly there are cases where that's happened — but if you look at what Jon Feltheimer and Lionsgate have done, what Pixar's done, what Marvel's done, Lucasfilm, which is a little bit of a different property. If you do well, content is more valuable every day. There are many more places to consume it. The business model is going to change, but if you have Hunger Games people are going to want to see it. That's what we believe in. So we're trying to make great stuff and look at what the future is going to look like and how it's going to change."
Could the desire to control content lead a Facebook or Apple to try to buy a studio?
"I'm not sure," Tull replied. "I do know as you're competing for people's attention and eyeballs, you want to keep them in your ecosystem. That's why I say I'm a huge believer in content. At the end of the day, you can look at the fanciest flat-screen TV of all time, but if there's nothing on it, it's not that compelling. So I think as the folks in Silicon Valley think about how they are going to interact with their customers, being on the content side will be something they deeply explore. I don't know if they should buy a studio, but I think in terms of being content creators, it's certainly a direction they have to explore."
As for Legendary's own future, Tull said readying the company for an IPO was "not an end goal. To me, that just gives you another set of issues to deal with. At the end of the day, with the shareholder base that we have, it's my job to maximize the return for our shareholders. Whatever direction that needs to take, we'd certainly do. But the question we constantly ask ourselves is what could we do publicly that we can't do privately."
The Spago event also included the presentation of the Hollywood Reporter Raising the Bar Award to Wayne Levin, general counsel and executive vice president of corporate operations at Lionsgate. The award was presented to Levin, who has been with the company for 13 years, by Lionsgate CEO Feltheimer, who commented, "If you're ever in a proxy fight with an unnamed activist investor, there's nobody that you'd rather have in the trenches with you."