Analyst: ‘Rango’ Box Office Boosts Paramount’s Case Over DreamWorks Ani Distribution Fees

Rango might have opened a tad light, but it will ultimately score $159 million domestically, and that’s enough to bolster Paramount’s case as it negotiates distribution fees with DreamWorks Animation, a Wall Street analyst wrote Monday.

Paramount is paid an 8 percent distribution fee by DWA, but the latter wants that reduced once the current deal runs out at the end of 2012.

Conventional wisdom holds that if Paramount can make its own successful CG-animated films, it would be in a better position to demand that the 8 percent fee it charges DWA not be negotiated lower.

“Rango could still bite DWA,” Lazard Capital Markets analyst Barton Crockett wrote Monday.

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The nominal success of the movie, made by Paramount and George Lucas’ visual effects shop Industrial Light & Magic, “gives Paramount more leverage in negotiations over DWA’s desire to reduce its 8% distribution fee,” Crockett wrote.

Crockett acknowledges that the $38 million opening weekend for Rango missed his estimate of almost $60 million by a mile, but the lizard movie should have legs given the response from those who have seen it.

The movie, Crockett notes, “garnered a favorable top critic rating of 88% on Rotten Tomatoes,” which is pretty close to the 93% notched by DWA’s How to Train Your Dragon, which opened with $43 million on its way to $218 million domestically and $277 million internationally.

Crockett estimates that Rango will take in another $25.6 million next weekend, coming in third behind Battle: Los Angeles ($39.4 million) from Columbia Pictures and Red Riding Hood from Warner Bros. ($27.1 million) and ahead of Disney’s Mars Needs Moms ($16.9 million).

He also estimates that Rango will be the biggest domestic box-office hit of the first quarter, followed by Disney’s Gnomeo & Juliet.