Chapter Eighty-Seven: Sitting in a row and dividing the fruits
With the dismissal of "Stealing Love", Pricewater, on behalf of Crown Studios, has launched close business contacts with New Line Film Company and major cinema chains. The three parties will carry out accounting and box office sharing.
$131,947,440 is a huge amount of money in any era, and this money does not belong to any one person alone, and everyone involved in the affairs of the film, whether it is investment or production, distribution or screening, will have the right to a piece of the cake.
And the first to share the cake was the theater chain. It's not okay if you don't let them enjoy it first! Because the money for the movie box office is in the hands of others, they naturally become the first people to eat the cake.
In Hollywood, there are three modes of account sharing, the first is guaranteed account sharing, if the theater chain is not confident in the box office of a movie, then in order to reduce its own risks, he will adopt the guaranteed account sharing model. In other words, no matter whether the movie is ultimately earned or lost, it has nothing to do with the theater chain, they only charge the agreed fee. The advantage of this account-sharing model is that the risk is small, and the disadvantage is that the profit is also very small.
The second is time-proportional accounting, which is suitable for commercial blockbusters and is also the mainstream accounting model in Hollywood. The advantage of this account-sharing model is that the longer the film stays in the theater, the more profit the theater will make, and the disadvantage is that the final account-sharing accounting is very complicated, and it needs to be divided according to different proportions of different time periods.
The third is a fixed proportion of account sharing, which is mainly used for films that are neither commercial blockbusters nor high-risk films. The distributor and the theater chain negotiate the account sharing ratio in the early stage, and wait until the film is released, after deducting the fixed expenses and taxes of the theater chain, and then divide the account according to the agreed proportion.
The new line film company signed a contract with the theater line to share the accounts in a fixed ratio.
So after deducting fixed expenses and taxes, the theater chain took 47% of the total box office, which is $63,015,296.
It is worth mentioning here that in the United States, there is no need to pay the so-called film industry development fund, at most it is only tax, so there is no need to deduct this 5% fee before splitting the account. The film industry development fund is a characteristic of Huaxia, the only one in the world, and there is no semicolon.
After the theater chain took its share of the cake, it handed over the remaining 53%, or $68,932,144, to the distribution company, New Line Films.
New Line Films' distribution commission with John was 20% of the box office, so New Line took $13,786,428 from it.
Originally, Hollywood's regular distribution fee was 15% of the box office, but because John was a newcomer and he was banned by Michael Ovitz of the CAA, New Line Films charged an extra 5% of the distribution fee.
New Line Pictures is not over after taking $13,786,428, and they are still taking money from the box office for movie copies. As for the distribution fee, John had already advanced $5 million to New Line Films, so there was no need to deduct it.
In the early '90s, one copy cost $640, and "Stealing Love" had a total of 2,930 copies, so New Line Films had to take $1,875,200 from the box office.
In the end, New Line Pictures took a total of $15,661,628.
Watching New Line Films take the equivalent of a quarter of the box office, John was very envious.
Distribution companies are at the top of the food chain in the film industry, and for independent producers like John, distribution companies are the absolute kings.
The reason why distribution companies can stand at the top of the food chain is mainly because they have strong publicity capabilities and broad distribution channels, and more importantly, this kind of resource cannot be established with a little money and connections.
Otherwise, George Lucas would not have begged 20th Century Fox and Paramount to help Lucasfilm release "Star Wars" and "Raiders of the Lost Ark" like he begged his grandfather and grandmother.
And Spielberg and Steve Jobs will not be reluctant to ask Disney for the distribution channels of DreamWorks and Pixar.
Steve Jobs, Spielberg, George Lucas, the three of them have no money, no connections? The answer is definitely no.
Therefore, the issuance company really cannot be established by money or connections, it requires the accumulation of time, as well as a huge capital investment and a broad network to establish. Of course, if you are as rich as John and directly use the money to buy one of the seven or any of the second-tier distribution companies, it will be a different matter.
After New Line Films took $15,661,628, John ended up with only $53,270,516.
But the more than $50 million is not entirely his, and he still needs to pay ICM 15% of the film packaging fee, which is $7,990,577. At the same time, a 2% personal service fee of $1,065,410 was paid to Nancy.
In Hollywood, only top agents can earn millions of dollars a year, and Nancy gets the income of top agents as a junior agent, all because of the big hit of "Stealing Love", otherwise a junior agent like her would not have gotten so much money.
After paying ICM and Nancy's fees, John also had to pay 10% of the project fee to Pricewater, which is $5,237,051. This was followed by a 5 per cent project fee to be paid to the law firm, or $2,663,525.
After paying these expenses, John also had to pay the last third of the crew's and actors' salaries and bonuses with $1 million.
In Hollywood, whether it is the crew or the actors of the film, they can only get two-thirds of their salary in the early stage, and the last third will not be received until the movie is released. And the bonus is also stipulated, as long as the movie is a big hit, then John must pay the bonus according to the provisions of the contract.
After all the personnel expenses were paid, John still had to pay taxes. Taxes in the United States are very complicated, and he has been in the United States for 21 years and has not figured it out. But he doesn't have to worry about it, because Pricewater's accounting firm has already calculated the amount due for him, and he only needs to pay the money.
In the end, John paid $6.12 million in taxes to the IRS based on the amount calculated by Pricewater. Any country is stealing the rich and helping the poor, and the higher the income, the more taxes need to be paid, so John can only pay taxes obediently, who makes him earn more!
After deducting all the expenses, John was left with only $29,193,953 of more than $50 million. If you subtract the $10 million in production costs and $10 million in distribution fees, he would end up with only $9,193,953.