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As The Hollywood Reporter continues to sift through a massive trove of Sony Pictures documents leaked by an unknown hacker, more financial details have emerged, giving an unprecedented glimpse into the inner workings of a major Hollywood studio.
Among the most stunning documents is one prepared for parent company Sony Corp. in Japan that reveals studio “ultimates” — among the most closely guarded information in Hollywood — on a number of recent films. “Ultimates” is studio parlance for the ultimate profitability (or loss) of a film, once its theatrical run, home video and other ancillary revenue streams are taken into consideration, as well as the cost of making, marketing and releasing the film.
According to the leaked document, several 2013 movies will end up in profit, including This Is the End ($50 million in profits), Grown Ups 2 ($48 million), Captain Phillips ($39 million), American Hustle ($27 million), One Direction: This Is Us ($18 million), Elysium ($18 million) and Monuments Men ($10 million). Several other movies will not make a profit, according to the document (Monuments Men was scheduled to be released in 2013 but was pushed to 2014).
The document appears to have been prepared in April in an effort to herald the cost-cutting measures implemented by Columbia Pictures president Doug Belgrad and Sony Pictures digital production president Bob Osher.
The non-encrypted document, which was prepared by SPE’s senior VP of finance and controller Curtis Crider, offered up numbers rarely discussed outside of studio board rooms.
“Currently, approximately $1B in production spending can be expected to deliver $500M-$600M in profits,” the letter says. “Through his continued focus on financial discipline, Doug hopes to improve that ratio to a point where $800-$900M in production spending delivers $500-$600M in profits.”
The document also illuminated Belgrad’s handling of negotiations on a Paul Blart: Mall Cop sequel. “The production budget was originally set between $45M and $50M,” the letter says. “Doug successfully negotiated with the producers to get Kevin James to accept less compensation and to reduce the production budget to approximately $38M.”
Similarly, Belgrad brought the budget of the upcoming Adam Sandler movie Pixels down by $25 million even after chairman and CEO Michael Lynton agreed to make it for up to $135 million. “Doug artfully negotiated with the producers to reduce the production budget to $110M and through his own network of contacts secured the required co-financing,” the letter says.
Also contained in the same document were details of Osher’s recent restructure of Imageworks, Imageworks Interactive, Colorworks and Post Production — a move that reduced staff by 230. Osher’s move to outsource much of the company’s special-effects work was controversial in VFX world.
“Because of Bob’s extraordinary focus on cost management, Imageworks is expected to generate $7M in EBIT (before restructuring) in FY15 despite a 30% reduction in revenue,” the letter states.
Even as THR plodded through the mountain of data, the hacker or hackers dubbed Guardians of Peace released a third trove of documents Friday afternoon, far larger than the previous two batches, which combined for some 38,000 individual documents. Those documents contained social security numbers and sensitive personal information on approximately 47,000 current and former employees as well as celebrities like Sylvester Stallone and Judd Apatow. Among the former employee base salaries listed in one spreadsheet were those for former marketing head Marc Weinstock ($1.5 million), former Columbia Pictures co-president Matt Tolmach ($2.1 million) and former vice chairman Jeff Blake ($2 million), who exited in July.
The Sony hack has rocked both Hollywood and the business world as the FBI works with the studio to figure out who is responsible.
“It’s a wake-up call for corporate America that sensitive personal information and intellectual property in digital form are at risk,” says Gerry Stegmaier, a Washington D.C.-based cyber-security legal expert with the law firm Goodwin Procter. “IP and data is the most important asset that these businesses have. It’s like the secret recipe for Coca-Cola. Anything that you would have kept in a vault in the past is stored on a server somewhere. Whether that server has a level of security that is appropriate for the sensitivity and economic value of that information is a question that is now being asked in corporate board rooms across the country.”
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