What the Legendary-NBCUniversal Partnership Means for Both Sides (Analysis)

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Thomas Tull, left, and Steve Burke

With a flush new partner, the cost-conscious studio could start thinking big again.

As the ink dries on the massive Legendary-NBCUniversal co-financing and distribution deal, the two sides now begin the months-long process of hammering out the movies on which they will partner.

The five-year pact — which takes effect Jan. 1, when Legendary’s current marriage to Warner Bros. officially ends — raises the question of which company's movie slate will likely change more under the new union. The answer appears to be that Universal could start thinking big again.

Ever since Comcast acquired a 51 percent stake in NBCUniversal in 2011, the studio began to tighten its belt in response to a changing marketplace, and over the past 18 months it has been hesitant to greenlight films with budgets of more than $50 million, with the exception of animated movies and already established franchise titles like the Bourne and Fast & Furious films. In fact, NBCUniversal CEO Steve Burke said in September that the best way to ensure more stable financials for the film unit is via "franchises and animation,” with the goal of eventually releasing two animated features a year. (There were exceptions, of course, like April's Tom Cruise vehicle Oblivion, which cost more than $100 million.)

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By contrast, Legendary CEO Thomas Tull has a penchant for investing in pricey tentpoles, including nonbranded franchise hopefuls like Guillermo del Toro’s Pacific Rim, which opens Friday. Though he has made small movies in the past, like the Jackie Robinson biopic 42, he is far more likely to get excited by a film like Godzilla, which he is making, than Pitch Perfect 2, which is on the Universal slate.

Under the new deal, according to sources, Legendary has the right to select — or "cherry-pick," as insiders are calling it — which Universal films the company will co-finance, and it has the leverage to opt in at varying percentages, depending on the project. Legendary will be required to meet a minimum overall obligation, as was the case with its Warner Bros. deal. But another source, familiar with the deal said that a pre-agreed selection process allows Legendary the option to finance only certain Universal films and not the entire slate.

That shouldn’t be a problem, though. Given Legendary's deep pockets and its recent success co-backing Warners films like The Dark Knight Rises and Man of Steel, Universal likely will change the types of films it puts into production as well as increase its overall output. The Legendary deal gives Universal its first major financing partner since its slate financing deal with Relativity ended in 2011.

At Warners' premiere for del Toro’s Pacific Rim on Tuesday night, speculation swirled about another proposed del Toro film, At the Mountains of Madness, an expensive Cruise vehicle that Universal pulled the plug on in 2011 after the budget ballooned. Cruise’s presence at the premiere is sure to stoke talk that the movie could now be revived as a Legendary/Universal project  -- though a source said Cruise attended the premiere as a guest of Warners rather than Legendary.

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Del Toro, who was unaware that Universal and Legendary were on the verge of closing a deal even as the premiere was about to take place, said: “Thomas is a big fan of the screenplay and the project. So it bodes well for that."

He added: “I’m a great fan of Legendary. I think Legendary has a strong genre instinct. And they are very aware of the zeitgeist of the culture, so I think it’s a great fit with any studio.”

A number of Universal and Legendary insiders, who were on hand, offered a vague response. Said one, while arching eyebrows, “We shall see, we shall see.”

A pricey gamble like At the Mountains of Madness would fly in the face of NBCUniversal’s recent fiscal prudence -- but having a partner in Legendary could now make it feasible.

On the heels of the Legendary-NBCUniversal deal’s official announcement, Tull chose to address the scope of Universal’s sprawling multimedia reach.

“Comcast and NBCUniversal’s global assets in film, television and theme parks offer Legendary unmatched breadth and opportunity to grow our business,” he said. “We are delighted to be in business with this exceptional team and look forward to a successful partnership.”

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As for the distribution component of the deal, Universal will release worldwide all films self-financed by Legendary, which has a number of projects in active development including del Toro’s Crimson Peak (which stars Charlie Hunnam and Mia Wasikowska), Warcraft, based on the popular online role-playing gameand supernatural thriller Spectral. The fact that Crimson Peak is back at Universal offers another ironic twist given that the sci-fi film was originally in development at the studio, which put it into turnaround before Legendary snapped it up. The studio also will have the option to opt in as an equity partner on Legendary’s self-generated slate.

Additionally, Universal said it will tap into Legendary’s intellectual property for its theme parks, though it is unclear what Legendary titles might be ripe for that type of treatment. Universal, unlike some other studios, does not have a rich treasure trove of intellectual property from which to generate franchise-style movies, so Legendary could help on that front. And the studio will gain entry into the coveted Chinese market by collaborating with Legendary on projects covered by Tull’s new deal with China Film Group.

“Legendary continues to prove that big ideas are relevant and profitable with our global moviegoing audience. We couldn't be more thrilled to embrace the challenges and changing marketplace with Thomas and his team and we are also excited about what opportunities this will bring to our theme parks around the world,” said Ron Meyer, president and COO of Universal Studios.

The head of one production company, however, expressed some skepticism about Tull moving forward at Universal.

"He really believes he was responsible for all these [Warners] movies he got kissed into," the source said. "[Legendary] did 42 and Pacific Rim. Everything else was from Warners' library."

Still, another source disputed that assessment, contending that if it weren’t for Legendary’s faith in The Hangover, Warner Bros. would have abandoned the comedy.

As Legendary’s deal with Warner Bros. winds down -- Warners will release Legendary’s Godzilla and The Seventh Son in 2014 -- all eyes will be on the size and complexity of the next wave of films at Universal that go into active development. With a company named Legendary, Tull is not likely to be thinking small.

(Borys Kit and Kim Masters contributed to this report.)

E-mail: Tatiana.Siegel@THR.com
Twitter: @TatianaSiegel27