'Valerian' Losses Hit Investors Hard as China Release Awaits
During an interview with The Hollywood Reporter in May, Luc Besson said that as he was making his big-screen adaptation of the French comic Valerian and the City of a Thousand Planets, he worried the source material would be "impossible" to film. Turns out he may have been right.
The most expensive indie film ever made, ringing up a $180 million price tag, Valerian has flopped at the U.S. box office with a dismal $17 million opening weekend. Since its July 21 release, it’s taken in a total of just $18.8 million.
Now the film's backers — a mix of foreign investors and distributors that pre-bought release rights — is counting on a strong Chinese release date ahead of Spider-Man: Homecoming to help salvage the bottom line.
Valerian will open in China on Aug. 25, giving the film a week before Dunkirk bows Sept. 1 and Spider-Man spins its web Sept. 8. Having Chinese multiplexes all to itself could help the film considerably. Valerian opened head-to-head with Christopher Nolan's World War II drama in the U.S., which hurt its numbers despite a different demographic, and also competed with both Spider-Man and War for the Planet of the Apes, which were still going strong in theaters.
While it may have been difficult to get the beloved 1960s French comic to the big screen and make the property appealing, the film was much easier to finance thanks to a range of international investors. In fact, Besson has maintained that presales to 120 countries largely paid for his EuropaCorp company's portion of the spend on the movie, leaving the studio responsible for only 10 percent of the total $180 million budget.
Still, an actual dollar figure for the sales to those 120 countries has not been released, and only 34 distributors are listed with France's National Cinema Center (CNC) film funding body.
The budget figure also doesn't take into account marketing and publicity costs, reportedly upwards of $60 million. Sources say EuropaCorp guaranteed covering these costs to U.S. distributor STX Entertainment, which won't be on the hook for anywhere near that amount. According to sources close to the film, STX’s exposure on the movie is between $2.5-$3.5 million.
Heat Vision breakdown
Outside of presales, cash to fund Valerian came from literally all over the world. A number of French companies chipped in, according to sources, including telecom giant Orange, which invested heavily as it seeks to transform itself into a content company and studio. It initially took two years of pay TV and VOD rights for Europe, Africa and the Middle East for $9.3 million. But sources at Orange say the total spend ended up at around $20 million, money that was used for promotion and marketing in France, including a splashy Cannes Film Festival party featuring electronic music duo Justice.
In its product placement deal as the designer of the futuristic space ships in the film, Lexus threw in another $11.6 million and also ran a massive international PR campaign. French channel TF1 signed on as a co-producer and paid $3.7 million for first broadcast rights. TF1 has long been a producing partner of EuropaCorp, backing the blockbuster Lucy as well as the missteps The Family and Colombiana.
French telcom outlet Free took the second broadcast rights for $2.1 million, while French bank BNP Paribas, which financed 2011's massive hit Intouchables, made its first direct capital investment in a film, giving Besson $11.6 million. It also heavily promoted the film across Europe with contests to visit the set. With such a loss on its first financing deal, the bank may tighten the vault on any future films.
Valerian was also the first big investment for Gulf Films' new label Novo Pictures, which sunk about $5.9 million into the film, sources tell THR. That blunder right out of the gate may scare the Dubai-based company off from big film investments in the near future, though cash flows to Hollywood had already cooled after the Doha Film Institute scaled back its funding.
Germany's Universum and Belgium's Belga Films, frequent partners of EuropaCorp, also kicked in some cash as co-producers.
But the biggest international investor was clearly China's Fundamental Films, which, in addition to buying a 28 percent stake — worth $67 million — in EuropaCorp (making it the second-largest shareholder behind Besson), also invested $50 million to $60 million in the film.
With so many global entities likely taking a loss after Valerian's dismal showing in North America, everything now seems to be riding on the movie's China release and that late summer sweet spot. "We can anticipate something around $100 million in Asia, but it's difficult to anticipate the appetite of the audience in China. It's not something we can rely on" to boost the film's prospects, says Alexandre Koller, analyst at financial firm Gilbert Dupont. "It's difficult to forecast, but the movie could still make between $300 million and $400 million worldwide."
If Valerian fails to connect in China, EuropaCorp may have to look to Fundamental for a bailout. But Fundamental could be reticent to do so as it has already been pinched by the company's falling stock price. It bought into EuropaCorp at $6.11, but the stock has been hovering between $4 and $4.18 — a roughly 40 percent drop. Then there's the current regulatory environment in China, whose government is in the midst of an unprecedented clamp down on foreign investment.
Nevertheless, having Fundamental on board as the film rolls out in China can only help Valerian's prospects.
"They have to have a strategy for EuropaCorp in terms of the domestic market in Asia and especially in China," says Koller. "Fundamental can be a support for EuropaCorp in China to promote new movies or even to create specific movies geared to the Chinese market. Even if it is not a very big success at the box office, EuropaCorp could potentially develop a franchise from it. It could bring the company better visibility in coming years."
Indeed, Valerian could still become a cult favorite and television staple like Besson's The Fifth Element, which also performed poorly at the U.S. box office but is broadcast regularly around the world and was re-released for its 20th anniversary.
Besson has said he is already writing a sequel to Valerian — and with 21 volumes of the comic it's based on, there is plenty of material — but if the first film fails to deliver to investors, it's unlikely he'll find the money to finance a second effort, especially one in line with his FX-heavy vision.
But even if Valerian causes financial hurt for everyone involved, Besson's company isn't in danger of going under, thanks to its library filled with hits like Lucy and the Transporter and Taken franchises. "Even if it's not the case [that Valerian can become a franchise for EuropaCorp], it's still supported by the back catalog," said Koller. "The market value of the back catalog is worth at least $35 million to $47 million, which represents approximately the market cap of the company.”
Alex Ritman and Patrick Brzeski contributed to this report.
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