Exploiting Hollywood 1980

Speaking of project companies, the seven major Hollywood studios have adopted the method of forming a project company for every large-scale commercial film. This is a means of self-protection by the major studios.

This has two main advantages. The first is that it can introduce investors from all levels. Everyone invests money in an investment entity, and determines the order of sharing according to the amount and time of the resources invested, or receives fixed income in advance. There is a The corporate entity will be easier to liquidate.

The second benefit is that if the movie fails at the box office, you can use the method of company bankruptcy to evade the joint and several liability of the parent company. Of course, this involves many complex legal operations and contracts, as well as the balance of power between investors and the seven major studios. Not every failed movie can completely escape financial responsibility.

Because of this, the legal fees for establishing a project company are relatively high. Many medium-sized companies that are not one of the Big Seven studios would avoid such a costly operation.

What about low-cost production? They don’t have much money anyway. If a movie fails, they will most likely have no money...

Therefore, those who take greater risks and adopt a less strict project company system are medium-sized studios such as Cannon and Orion. Sometimes they want to avoid expensive legal fees, and sometimes the bank mortgage loan requires the parent company to apply for a lower interest rate, so in many cases, they directly participate in production investment.

The budget for The Silence of the Lambs reached US$16 million, and the two additional investments before and after Dances with Wolves also increased to US$22 million. At this scale, it is actually possible to set up a specialized project company without losing money.

Ronald and Orion's Mike Medavoy, who led these two projects, reached a private agreement: Mike Medavoy privately gave Ronald the green light for these two films, established a project company, and improved the details of the agreement to ensure that Ronald's interest in the film should the parent company encounter financial difficulties. Ronald promised to give him a share of the pie and clear his way out.

Mike Medavoy is a bit pessimistic about Orion, and he tells the truth that Orion does run the risk of becoming unsustainable.

In the past few years, Orion's movies were neither well-received nor successful. The best in recent years was "Mississippi Burning" the year before last, which won several Oscar nominations, but it did not sell as well as expected at the box office, with only 34 million US dollars.

Orion's response to this is to increase investment and provide more resources to each famous author and director.

They found John Milius, the screenwriter of "Apocalypse Now", to direct the film, and invested US$16 million to film "Farewell to the King" with his own personal style.

This movie tells the story of a World War II U.S. Army deserter who escaped a Japanese firing squad in the Philippines. Hiding in the wilderness of Borneo, he was later rescued by a Dayak tribe of headhunters because his blue eyes were considered sacred. Soon after, he became king of the Dayaks.

When British soldiers approached him about rejoining the war against Japan, the blue-eyed king expressed reluctance. But when his own tribe is threatened by invaders, the king decides to fight for their rights and independence...

A civilized man in a civilized society became a deserter because of cowardice and became a chief among a group of backward primitive tribes. In the end, a British man convinced him...

It is conceivable that such a movie is unlikely to win the love of audiences in America. Each item touches upon the uncomfortable areas of ordinary viewers. In the rebellious society of the 1970s, there might have been audiences who were willing to go to the cinema to reflect, but today's audiences won't make themselves uncomfortable in this way.

It’s not that John Milius doesn’t know how to make movies that audiences love to watch. Conan the Barbarian and Red Dawn are both his works. But he was just not satisfied and wanted to make the kind of movies he wanted to make. Of course Orion complied with his request.

Of course, the 2.5 million box office still gave this famous screenwriter and director some respect.

Such examples abound on Orion's production lines in the past two years. Another relatively large-budget movie, "Cannonball Run 3". After the original protagonist Burt Reynolds refused to star, they still felt that the script was of high quality and hired Jim Drake, the director of Police Academy 4, to direct it on the grounds that he was good at directing sequels.

But in this kind of old-fashioned comedy series, the main character is often the one to watch. After changing the protagonist, the old-fashioned plot can no longer stimulate the audience's laughter. The production cost of 18 million yuan resulted in a box office performance of 3 million yuan. To be honest, it would be better to spend more money, cast Burt Reynolds, and continue to star.

Except for the recent "Fireball", which also performed very poorly at the box office and has no hope of recovering its costs, Orion's most recent movie with a production cost of more than 15 million is the just-released "Assassination."

In order to predict Orion's financial situation, Ronald also secretly watched a movie in the cinema.

This is also a very awkward movie. Orion's strategy makes them particularly superstitious about some acting actors. This movie brings together two great acting male stars, Gene Hackman and Tommy Lee Jones.

The director is Andrew Davis, who once directed the breakdancing movie "Street Dancer" and competed with Ronald's "Breakdancing". As a result, because the plot of the movie was too contrary to the audience's aesthetic taste, this big production with a production cost of 16 million US dollars (Orion's standard) was about to suffer a box office disaster.

The main reason was that the plot was too bizarre. A US garrison in Germany was sent back to the country for trial, but he actually escaped at the airport. In the end, when the Secretary-General of the Soviet Union visited Washington, he wanted to snipe him.

The plot arrangement is that after Secretary-General Mikhail and the two generals George and Ronald signed the Strategic Arms Reduction Agreement, the military of the two countries did not want the Cold War to end, so they united to assassinate the Secretary-General. In the end, the protagonist played by Gene Hackman saw through the truth and prevented all this from happening...

Now America's economy is strong, the allies are united, and Japan has a money bag and productivity, which has completely dominated the Eastern Bloc. The people don't believe this story at all. If it was put in the 1970s when America was at a disadvantage during the Cold War, it might still be a box office success.

"Isn't it good?" Diane didn't go to the cinema. After seeing Ronald come back, she wrote something down in her notebook, then kept shaking her head and asked him.

"Ah, the story distracts the audience, it's really not good... But..., when those two actors came out, I almost thought that Old George and Mr. Mikhail really went to make a cameo appearance."

The two actors in this movie really look alike, one is called John D'Amico and the other is called Ray Allen. Ronald deliberately looked at the end subtitles, found the names of the two, and wrote them down for future use. Such actors are usually found specifically for the movie, and they may not be real actors, but they just look alike.

Sure enough, the box office of this movie was also very bad in the first week, earning only 1.8 million US dollars, which is less than one-third of "When Harry Met Sally", which has been released for seven weeks.

The box office of "When Harry Met Sally" has declined very slowly, and now it still has a weekend box office of just over 5 million, ranking fourth. Obviously, this movie has attracted many viewers who have watched it many times, and they go to the cinema again and again to reminisce the urban romantic love myth.

Many urban men and women hope to have a Harry or Sally to save themselves when they are single in middle age.

Ronald has no doubt that this movie will also have a group of people who watch it many times, such as the 50-times club.

Feeling the extreme coldness that Orion is facing this year (four movies failed at the box office), Ronald knew that he had to make some arrangements. In the end, his accounting team and Mike McDavoy decided that if Orion went bankrupt, Ronald would have the right to buy out their investment shares and inherit the production rights of the film to carry out subsequent publicity, distribution, and public relations for awards.

In this way, the two project companies became subsidiaries of Orion and Daydream Investment. If Orion was forced to seek Chapter 11 bankruptcy protection, Ronald would be able to completely inherit all the property rights of the two films (including overseas distribution and videotape distribution).

Companies of Orion's size have a variety of financing targets for filming movies. Such companies generally apply for bankruptcy protection under Chapter 11. While continuing to operate, negotiate a repayment agreement with creditors.

For companies that apply for protection under Chapter 10 of the Bankruptcy Law, creditors of debts cannot penetrate the protection of subsidiaries and companies holding shares to pursue debts.

Of course, the court will also look at the specific investment contracts and industry practices. So Ronald also introduced a legal team to try to make the contract impeccable. Even if Orion's creditors sue for penetration and pursuit, there is a lack of evidence and contract protection.

The terms of establishing the project company were sent to the top management of Orion. Their boss, John Klug, the new richest man in America, is not a person who is willing to give up power. So this contract has to be approved by him.

Mike Medavoy guaranteed that with his endorsement, Klug would not look at the details too much, according to convention. It is very likely that he will sign the documents sent to him by his secretary.

…

"Mr. John Klug asks to talk to you on the phone..."

Mike Medavoy called Ronald first, and his guarantee was ineffective. Klug did not do as he said, but read the contract terms sent by Ronald, and then asked to talk to Ronald and confirm before signing.

"Hello, Mr. Kluge, I'm Ronald, Ronald Lee."

At the appointed time, Ronald received a call from the secretary of the richest man. The German businessman still has a strong sense of time.

"Hello, Ronald. I have seen your movies, they are very good, so I want to talk to you on the phone. The contract is generally fine. When can you make some good-looking and profitable movies? The Orion people always tell me to pursue art, and they think my money is free."

It turned out that they wanted to talk to him and hoped that he would cooperate more with Orion. Ronald was relieved. It seemed that there was no problem with the contract itself.

"This is a difference in concept. I think movies are also a business, no different from selling Coca-Cola and computer software. But some people think that movies are first of all a work of art..."

"Ha, if you were in charge of Orion, could you guarantee that you could run a few movies that sell well like Coca-Cola?" Klug was quite old-fashioned, and he appreciated Ronald's words.

"There is one difference between movies and Coke, that is, they cannot be reproduced. Once you have a good movie, you cannot produce the same quality product continuously like Coke has determined the formula and production process. Movies are generally watched once, and at most a few times, you will get bored."

"Great insight, if I were still young and had not sold the TV station to Rupert, just based on what you said, I would also recruit you to be the president of my TV network..."

"Mr. Klug, you are too polite. I am just a director and I don't know how to run a business..."

Ronald respects the richest man, but he doesn't like this old-fashioned business style. This is not the era of Hollywood studios. It is hard to say who makes more money between the owner of a medium-sized studio and a director of a popular commercial film.

Besides, I didn't even accept the invitation from Sony Oga-san.

"Well, young people always have their own ideas, so I will treat this matter as a business partner. Some terms of your contract need to be modified..."

Okay, here it comes. Ronald feels that old-school businessmen also have bad points, tough and direct, "What do you think needs to be modified?"

"Business terms need to be equal, your lawyer is not very good, why are there only terms for Orion Pictures, but not for your Daydream Pictures?"

"This..." Ronald didn't expect the richest man to have an opinion on this.

Klug's request was that Ronald should also give him equal conditions. If Daydream Pictures went bankrupt during the filming and distribution period, then Orion should also have the priority purchase right, get all the rights of the entire movie, and let Daydream leave decently.

Ronald's only thought was to insure Orion, and if he went bankrupt, he would automatically buy the entire movie. In the final analysis, Ronald felt that Orion was going to go bankrupt.

But Klug wanted the same treatment in return, that is, he thought Ronald was going to go bankrupt?

Ronald didn't know where he got this weird idea from, I went bankrupt? I won't go bankrupt even if you go bankrupt. He was confident in himself and agreed, "No problem, although this is unlikely to happen, I can agree to the terms... Let our lawyers negotiate the new documents."

"Very good..."

Kluger hung up the phone and shook his head. Today's young people are very confident.

But Ronald may not succeed in getting what he wants. The senior executives of Orion are right about one thing. If I want, I can pay to make up for the loss of the movie. As long as they can make some best-selling movies like Coca-Cola every now and then.

"Mr. Richest Man is very interesting. He seems to think that Orion can still be saved..." Ronald put down the phone and said to Richard who participated in the matter.

"This is not surprising. The movie that was also adapted from Dangerous Liaisons, Valmont, is a movie that Orion turned over. Milos Forman is a two-time Oscar winner for Best Director, and according to the information I have received, this movie is indeed much better than Dangerous Liaisons released by Warner Bros."

The "Dangerous Liaisons" in which Michelle Pfeiffer and John Malkovich had an affair was rushed out. The costumes, makeup, props and scenery were all hastily made. It used Hollywood traditions and had nothing to do with the nobles of the Kingdom of Hair.

Moreover, the budget was only 14 million US dollars, and the box office just exceeded 30 million US dollars. With the public relations of the Oscars, Warner Bros. barely managed to break even.

This "Valmont" was carefully crafted. The two movies were shot at about the same time, and Milos Forman did not finish editing until today.

Someone inside CAA has seen the edited sample film. It is said that whether it is Annette Bening who plays the evil aristocratic woman or Meg Tilly who plays the innocent lady, they are much better than Michelle Pfeiffer and Glenn Gross in the same role.

Colin Firth, who plays the Count of Valmont, looks more like a playboy than John Malkovich, who looks like a clown.

The total budget of "Valmont" is 34 million US dollars, which is also super expensive among the movies led by Orion.

It can be seen how much hope Orion has placed on this. As long as this one can sell well, the losses of the previous four movies can be made up.

Ronald nodded. He was also taking insurance to be prepared for any eventuality.

"But, Richard, there is one thing I don't understand..."

"What?" Richard asked.

"Where did Kluge get the idea that I would go bankrupt?"