Daniel and Linton arrived at the office of Levitt Gore, the Head of Distribution at Universal Pictures.
“Daniel, and the great singer Linton, what brings you two here?” Levitt smiled and said to them, while having his secretary prepare coffee.
“Levitt, we came here today to ask for your help,” Daniel said, taking the coffee from the secretary.
“Your record label has been doing extremely well recently, with a significant increase in profits. It’s the group’s favorite, so what help could I possibly offer?”
“It’s like this, Linton is planning to invest in making a movie himself.”
“What kind of movie? Do you have a script?”
“It’s a youth musical,” Linton said, seizing the opportunity to hand over the script for step up.
Levitt read the script carefully. “The movie script is good, very complete, but musical films are not popular in the market right now.”
“This is a youth musical idol film, telling a story of pursuing dreams and youthful ambition.
The target audience is teenagers. As long as the male and female leads are handsome and beautiful, the songs are good, and the dances are captivating, it will definitely attract teenagers to the cinema,” Linton explained.
“Have you estimated the investment?”
“This movie doesn’t have big scenes or special effects, so it should be within 10 million us dollars.”
“Approximately. Are you looking for Universal to invest?” Villet silently calculated.
“Can Universal invest?” Linton asked tentatively.
“There’s basically no possibility. Musical films have performed poorly at the box office in recent years, and audiences are tired of them. This genre is very difficult to get approved by the company’s audit committee.”
“Then if I invest in producing it myself, can Universal distribute it?”
“You’re investing yourself? Do you have a detailed project proposal?”
Linton took out the project proposal and handed it to Levitt.
“The project proposal is well-made and very professional. The producer you hired is Robert Lewis. This person is good; his professional ability is very strong, and he has worked with Universal before.”
“He also graduated from the University of Southern California School of Cinematic Arts. We are alumni.”
“But you directing yourself, isn’t that too risky? And you’re also going to be the lead actor.”
“I majored in directing at school, and my graduation short film received an A+.
Also, some of the music videos from my debut album were shot by me. Directing a youth musical film is absolutely no problem,” Linton boasted.
“But you’ve never had any film or television works before, have you? You haven’t even served as an assistant director or director’s assistant on other film crews, have you?” Villet directly hit the core of the problem.
“But everyone has a first time, don’t they?”
“But for your first time, you’re making a movie with an investment of tens of millions. Who would invest in that?”
“That’s why I’m fully investing myself. I have confidence in myself.”
“I see. Since you’re all insiders, I’ll be frank. Ever since Universal Pictures was acquired by Panasonic on December 30, 1990, the company’s film performance has been in a full decline.
Last year, among the seven major film companies, its performance was only better than Columbia. This year, the film investment audit committee is even more cautious, leading to a shortage of the company’s own film projects.
Our distribution department can take on more external films, but the box office prospects for your film are not very promising, so the distribution terms we offer won’t be too favorable.”
“What terms do you usually offer for distributing films from outside film companies?”
“There are two models. The first model includes all expenses incurred during distribution, a 30% cut of North America box office revenue, a 40% cut of overseas box office revenue, a 40% cut of the total revenue from video tapes and all TV copyrights, and a 50% cut of derivative product revenue.”
“The second model is a 20% cut of all film revenue, with distribution fees, promotion fees, replication fees, management fees, transportation fees, and insurance costs calculated separately.”
“You can choose either model based on your situation.”
“That’s really exploitative. All investment risks are borne by the production company, but the distribution company takes away most of the profits. And even so, you still have to beg them to distribute it, but there’s no other way, the distribution channels are monopolized by them,” Linton grumbled internally.
“We’ll choose the first model, but the distribution commission is too high. I heard that some films only have a 20% North America distribution commission.”
Linton dared not choose the second model. The second model seemed good, but under Hollywood’s current accounting rules, there were too many places to manipulate things.
It’s possible that even if a film is a box office hit, the distribution company could present an exorbitant distribution fee bill, resulting in the production company making no money at all.
Even worse, it could even result in a loss, with the production company getting not a single penny and going bankrupt, while the distribution company profits handsomely.
“That’s for films that have already been made, where the quality is excellent, and after screening and evaluation, everyone is optimistic about the box office prospects, or they cause a strong reaction at film festivals.
Distribution companies would naturally offer favorable terms to compete. Such films are very rare in Hollywood, perhaps only one a year.
But your film hasn’t been made yet, and we don’t know its quality or box office prospects, so it’s naturally impossible to enjoy such terms.”
“Villet, how about this? I’m also a part of Universal, and I generated huge profits for Universal last year.
I will continue to generate profits for Universal this year. Do you think you could offer more favorable distribution terms?”
Linton appropriately used a subtle Soul Induction on Villet.
“Yes, Linton is Universal’s most profitable singer. He’s one of us, so you can’t treat him like an outsider. Give him the most favorable terms,” Daniel chimed in.
Levitt Gore felt a moment of trance and couldn’t help but blurt out his true thoughts.
“Under the first model, my maximum authorization is a 25% cut of North America box office revenue, a 30% cut of overseas box office revenue, a 20% cut of the total revenue from video tapes and all TV copyrights, and a 50% cut of total film derivative product revenue.”
“Can’t the North America distribution commission for films be as low as 20%?”
“As I said, this is my maximum authorization. Any lower than that would require a decision by the company’s board of directors.
With all due respect, even if I submit it to the board for discussion, given the situation of your film, it’s impossible to get more favorable distribution terms.”
“Then can I just sign a North America distribution contract?”
“Our Universal distribution capabilities reach worldwide. Aren’t you planning to release it overseas?” Villet asked curiously.
“I want to release it in North America first, and then decide on the overseas distribution strategy after seeing the North America box office performance.”
“You can choose that, but doing so will significantly delay the overseas release time.
As you know, although we in Hollywood have always urged the United States Government to strengthen intellectual property protection and combat piracy globally,
many countries overseas are not doing a satisfactory job. The longer the delay, the more detrimental it is to the film’s overseas box office.”
“Alright, let’s choose overseas distribution as well,” Linton thought for a moment and found it reasonable.
“Also, when a film is distributed, promotion is also crucial for achieving good box office results, right? How much promotional funding will you invest?”
“Given the scale and genre of your film, we will initially invest a maximum of 2 million us dollars for North America promotion.
Of course, if the box office exceeds expectations, we will definitely increase promotional expenses, because the higher the box office, the higher our income.
Overseas promotional expenses will be determined based on the North America box office performance.”
“How do you determine if the box office exceeds expectations?”
“If the first weekend box office reaches 8 million us dollars, with 8 million us dollars as the benchmark. If it exceeds 8 million us dollars,
you don’t even need to say it. For Universal’s own benefit, we will also increase promotional investment to strive for better results.”
“What about screenings? How many cinemas can be arranged for the opening week?”
“It depends on when you plan to release it. The difficulty of arranging screenings varies for different release slots.”
“Our film is a youth musical, and the audience is mainly teenagers, so it must be released in the summer to achieve good box office results. We plan to release it in August.”
“An August release? Your production time is very tight. Will you make it?”
“No problem. This film doesn’t have big scenes or special effects, so it will be filmed quickly.”
“Although August is the end of the summer season, it’s still a popular slot, and competition for cinema screenings is fierce.
We’ll aim for no less than 1,500 cinemas, but no more than 2,000 at most, provided the film quality is up to par.”
Linton pondered silently for a while. All the conditions were clear, and they seemed pretty good.
“Thank you, Levitt. I understand all the conditions. Can I go back and discuss them with my producer?”
“Of course. Contact me anytime once you’ve discussed it.”
After Linton and Daniel left, Levitt suddenly slapped his forehead. How did I reveal my bottom line to them so easily?
It’s all Daniel’s fault. No, the music company I co-founded with Morris, Daniel must provide more promotional and distribution resources for the next single and album release.
In fact, this was also the reason Linton wanted to bring Daniel along to see Villet.
Otherwise, if he had directly used a Soul Induction Spell, Villet would have obediently offered the best cooperation terms.
But don’t forget, contracts from large companies like this involve many procedures and can easily raise suspicions.
However, by involving Daniel, and since the cooperation terms didn’t cross the bottom line, everyone would easily attribute the favorable terms to Daniel’s Face.
Ever since Universal was acquired by the Japanese, professional managers at all levels within the company have been finding ways to exploit the company for their personal gain, leading to a natural decline in performance.
Universal Records’ profits surged last year because of the anomaly that was Linton, greatly increasing Universal Records’ standing within Universal Pictures.
But similarly, executives like Daniel were also engaging in actions that benefited themselves at the company’s expense. Everyone had an unspoken understanding, and some even colluded with each other.
For the new female singer Daniel chose this time, Linton was 90% sure that Daniel would not directly select someone from Universal.
Instead, he would recommend someone from a music production company he secretly controlled, or sign a new artist directly to that company.
And this music company would be affiliated with Universal Records, enjoying Universal Records’ distribution resources.
Universal was still relatively good; at least the company was still operating normally. Although its performance was poor, it was still making money.
Sony Columbia, on the other hand, was in a miserable state. After Sony of Japan acquired Columbia, it was completely manipulated by Columbia Pictures’ two co-chairmen, Guber and Peters, who almost drained the company dry.
Not only did Sony spend 200 million us dollars to acquire their personal companies, but it also inherited a lawsuit from Warner Bros., with the court ordering another 1 billion us dollars in compensation. Columbia Pictures naturally suffered huge losses year after year, while the two vampires profited handsomely.
Fortunately, Sony Columbia Records was lucky enough to encounter a president with conscience and professional integrity, Tommy Mottola.
Coupled with having Michael Jackson as a cash cow, and recently cultivating Mariah Carey into a diva, along with numerous other A-list singers,
it earned a large amount of profit for Sony Columbia Records every year. Last year’s profit even exceeded 200 million us dollars, which prevented Sony from falling into a complete financial black hole due to Columbia Pictures’ massive losses.
