COMPASS & LOTR comparison

[Mister Underhill]

Originally Posted by Sauron the White

Am a bit confused at the arcane nature of film financing, distribution and revenues. If New Line did indeed sell off foreign rights a while ago and used that money to help pay the production bills, could someone please explain how a pretty good overseas box office helps them in the light of very poor US revenues which they still own?

Yeah, I mentioned this upthread, too. Since they sold the foreign distribution, their take of the foreign windfall will be limited.

Film financing, distribution, and revenues are never cut-and-dried. It's not like they sold the foreign distribution for a flat fee and are not seeing any foreign money, for instance. But their profits will be capped and they almost certainly got the losing end of that gamble.

And you can't look at raw numbers, as some have, and simply declare profit. "The film cost $180M and they've taken in almost $300M" just doesn't take into consideration all the complexities. Besides the sale of foreign distribution, there are marketing costs that run into the tens of millions, the box office is shared with theater chains (as mentioned above), and then there are "hidden" costs like gross profit participation -- I expect Nicole Kidman, at least, has gross points.

I still expect that New Line's profits, if any, will be fairly modest. Will that money, plus the attractive foreign prospects for a sequel, be enough to make them take that kind of risk again? Time will tell. New Line's resources are not unlimited, and they're about to sink $300-$400M into Hobbit movies.

If it were, say, Disney, I'd guess they'd probably risk a sequel, because they have the means to exploit the license six ways from Sunday -- theme park rides, animated tie-in series, etc. New Line, historically, hasn't been in the "tentpole" picture business outside of LotR. They usually have a slate that's heavy with low-risk $30-40M pictures like the Rush Hour franchise, Wedding Crashers, horror movies and the like.

I'd say the safe money is still on no sequel, but time will tell.