Studio Cash Influx Shifts Power in Hollywood (Analysis)
Brett Ratner, mogul? It's true, as Warners and others -- including David Ellison's Skydance's $200 million-plus deal with Paramount -- line up new funds.
This story first appeared in the July 26 issue of The Hollywood Reporter magazine.
Who says Hollywood's major studios are strapped for cash?
A flurry of deals that have closed in July or are nearing the finish line will bring much-needed funds into studio coffers. First, THR reported exclusively July 9 that Warner Bros. is putting the finishing touches on a $400 million to $500 million co-financing deal with Dune Entertainment and Brett Ratner's RatPac Entertainment, an arrangement that will plug a hole left when deep-pocketed Legendary Entertainment signed a massive five-year co-financing and distribution deal with Universal one day later.
By July 16, Paramount was toasting a four-year extension with its go-to tentpole co-financier Skydance Productions, which had been courted by Warners and Sony. David Ellison's Skydance will devote $200 million to $250 million a year to three to four event movies. The three pacts come on the heels of a January deal that saw 20th Century Fox team with former Dune partner Chip Seelig in a $400 million slate-financing deal that will cover a number of the studio's films over the next five years, including an Avatar sequel. Sony still is seeking a partner, say sources, while Disney is not interested.
The infusion won't necessarily change the climate of fiscal austerity that the studios have been operating under since 2008. Nor will it likely alter the size of their respective slates, with the exception of Universal, which will expand the number of titles it releases beginning in 2014, when the Legendary deal begins, according to a knowledgeable source.
Paramount, for one, is keeping the number of films it distributes at about 12 a year. Future projects the studio and Skydance will partner on include new installments of Mission: Impossible, G.I. Joe and Star Trek. Skydance also will chip in for a Terminator reboot as well as sequels to Top Gun, World War Z and Jack Reacher.
Warners is expected to close this summer on the deal with Dune and Ratner, who teamed with Aussie billionaire James Packer in December to back tentpole-type projects. A source close to the deal says it would cover films like a Man of Steel sequel. Warners already touts the biggest slate in town, so the Dune/Packer dollars (as well as its $1 billion deal with Village Roadshow, which runs through 2017) likely won't spur an uptick in productions. If anything, the studio will look to fill the gap left by Legendary, which, unlike Dune, brings product to the pipeline such as Godzilla and The Seventh Son -- the final films Warners will distribute for Thomas Tull's mini-studio.
One possible byproduct of the Warners deal is that Ratner might ink a first-look deal there, putting the Tower Heist director in the rare position of being both talent and investor (albeit with Packer's money). Dune also could see its status improve from behind-the-scenes financiers at Fox to front-and-center power players at Warners. Says a source, "[Dune] will be treated like kings."
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