Universal’s Year-Long Turnaround Shows Cyclical Nature Of Insane Movie Business

EXCLUSIVE ANALYSIS… UPDATED THROUGHOUT: Every movie studio has its fair share of hits and misses because success is cyclical in Hollywood. What goes up must come down, eventually. (Sony Pictures is having a troubled summer now after years of successful releases. Once stable Warner Bros Pictures just went through an executive upheaval as did Fox and Disney before it. Paramount had a film drought last year. And so on.) But then a studio’s fortunes go back up. Such is the case with Universal Pictures. For the past 12 months, its filmmakers have been on a winning streak from June 2012 to now – in other words, after the release of its embarrassingly bloated bomb Battleship and before that a string of stinkers. In the last year Universal has released 14 films with 10 opening #1: Snow White And The Huntsman, Ted, The Bourne Legacy, Les Misèrables, Mama, Identity Thief, Oblivion, Fast & Furious 6The Purge, and this weekend’s Despicable Me 2 which broke records here as well as overseasNot even counting DM2‘s grosses, the studio amassed $3.2 billion at the worldwide box office which was more than in any 12-month period in Universal’s history. The slate also has been the most profitable not only for Universal (not adjusted for inflation, higher ticket prices, or 3D premium sales) but compared to every major Hollywood studio except Disney. I’ve learned that Legendary Entertainment‘s Thomas Tull could announce his selection of a new financial, distribution, marketing, and production partnership as early as this week after kicking tires all over Hollywood – and his choice is “likely” NBCUniversal. That’s a big vote of confidence for the movie side led by chairman Adam Fogelson and co-chair Donna Langley who report to Universal Studios president/CEO Ron Meyer.

“They are killing it,” emails one film financing expert I respect. “Since January of 2012, Universal has beaten Sony, Warner Bros, Paramount, and Fox on ‘cash on cash’ (TCCR) return. And if you look at their next two years, it is filled with sequels (10 in their 25 next pics) which should lead to terrific profits plus lower volatility. And they have event pictures and several brands such as Fifty Shades Of Grey and Wicked (touring in 40+ countries). It’s an amazing run. I never expected this. To be honest, I’m not their biggest fan.”

I’ve learned this short and stunning turnaround actually was the result of a plan by Universal execs to target overseas audiences who make up 70% of theatrical box office and intentionally create international franchises. “They executed well and succeeded. On Ted they got lucky. But that is what happens when you have enough at bats,” a source tells me. Now Uni wants to have potential franchise pics start in the $80M to $100M range if not a well-known brand. They’ll spend more on a sequel.

This strategy followed months of media predictions that all three studio heads would roll (separately or together) because of what was suddenly seen as deep systemic problems at the studio. Universal became the subject of speculative article after speculative article. Remember the bruising Uni brass suffered last summer when Battleship failed and rumors fanned that Comcast had courted DreamWorks partner Stacey Snider to take over?

And then in the middle of all that, the boss, Comcast EVP/NBCUniversal CEO Steve Burke, decided to sit in on Universal’s Monday motion picture meeting for senior Universal execs. Burke at the time only visited his film outpost about once every financial quarter (more often this summer). This Xanax moment took place while Burke was in town for a weekend wedding then atypically stayed on. It had to be made clear internally that he was not coming to fire anybody or commence layoffs. But Comcast folk are a tight-lipped bunch and the silence only added to the “where’s there smoke/there’s fire” chatter destabilizing the studio even more than any inaccurate journalist could. The fact is they didn’t know what to say. Though entertainment vets, Burke and Comcast chief Brian Roberts were “not used to the fishbowl nature coverage of the movie business. That everything which happens, true or false, gets the industry talking,” as an insider explained to me at the time.

For awhile, it looked as if Comcast would be no different than so many other corporate and private investors who came to Hollywood dreaming of big profits only to leave with empty wallets. (Remember, at one point early on during the acquisition and then regulatory period, Comcast seriously contemplated selling the film studio.) “Comcast just weren’t prepared to have movies like Ted make so much more money than anyone imagined - and then to have Battleship do so much less than planned. There’s virtually no other business around where your plans for the year in 24 hours go up and down,” a Comcast exec explained to me back then.

Fogelson self-consciously ran the meeting with Burke watching and said to staff afterwards about his Comcast overlords, “They’re genuine grownups. They’re not panicked. They want to run and  grow an extraordinary business. And as for the immediate effects of Burke’s visit, I feel completely supported as I did before.”

Of course, no one believed Adam. Instead, he and Donna and Ron ignored the public humiliation and predictions they were about to be shitcanned and kept their heads down. It didn’t help when Comcast revamped its own logo to include NBC’s famous peacock but not Universal’s spinning globe. Now things are looking up.

For the most part, Universal has achieved its turnaround Read More »

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Paramount Topples Warner Bros For #1 In 2011 Market Share With Record $5.17B Worldwide

By | Monday January 2, 2012 @ 9:11am PST

Major Hollywood Studios Market Share: 2011

TOLDJA! As I reported first back on December 18th, with the holiday round of movie openings, it became clear who was on top and who was not as far as North American market share for the year 2011. Now the global figures are in as well. Officially the period ends today, and the major Hollywood studios already know who has bragging rights. Paramount Pictures ended 2011 in the No. 1 position among all studios, earning a record $5.17 billion worldwide. The studio released a total of 16 new movies domestically last year and placed first in the North American market share with $1.96 billion, while also amassing record grosses at the international box office with $3.21 billion. That puts the studio about $100 million ahead of Warner Bros which usually takes the coveted title. And WB released about half a dozen more movies than Paramount did in 2011. Granted, Paramount mostly distributed rather than owned most of the film fare that put it in first place. But No. 1 is still No. 1. Warner Bros loses the domestic market share title for the first time in three straight years. On the other hand Warner Bros has ranked either one or two domestically for eight of the last 11 years. Here’s the Paramount announcement:

HOLLYWOOD, CA (January 2, 2012) – Paramount Pictures announced today it ended 2011 in the No. 1 position among all studios, having achieved the highest total combined gross of any studio for the year, earning a record $5.17 billion worldwide. The studio, which released a total of 16 new releases domestically this year, placed first in the North American market share with $1.96 billion, while also amassing record grosses at the international box office with $3.21 billion.

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Box Office Brawl: Warner Bros Demands Recount From Rivals Paramount & Sony

By | Friday December 23, 2011 @ 6:19am PST

EXCLUSIVE: Showing just how fiercely competitive the slumping box office is right now, Warner Bros is griping to me about how rival movie studios are reporting their North American numbers this holiday week. These kind of controversies don’t develop often in Hollywood, but when they do, … Read More »

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Major Hollywood Studios Market Share: 2011

By | Sunday December 18, 2011 @ 2:12pm PST

EXCLUSIVE: Sources tell me that, with this round of movie openings, it’s become clear who’s on top and who’s not as far as North American market share for the year 2011. While officially the period doesn’t end until January 2nd, 2012, the … Read More »

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MPAA Arranges Studio-Guild D.C. Lobbying

MPAA’s new Chairman/CEO Chris Dodd held his first official Board meeting in Washington DC today. But here’s what I find most interesting: following the meeting, the members of the Board from the major studios suddenly embraced the leaders from the … Read More »

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