Monday, October 18, 2010

Why did Paramount sell off distribution rights for Avengers and Iron Man 3 to Disney for a mere $115 million?

Just how much money trouble is Paramount in these days? Or, just how bad is Thor and/or Captain America? Or is Paramount in the middle of a major change in the kinds of films they make? The Wall Street Journal reports that Paramount plans to sell the distribution rights to The Avengers (due May 4th, 2012) and Iron Man 3 (just announced for May 3rd, 2013) to Disney for just $115 million. As you all know, Disney bought Marvel Studios for $4 billion a year ago, but we were told it would be a good-long while before Disney had the distribution rights to the characters they really wanted, the ones held by Fox (the X-Men, Daredevil, Fantastic Four) and Paramount (Iron Man, Captain America, Thor, anyone associated with the Avengers), and Sony (Spider-Man). Well, Paramount just gave up its stake for a measly $115 million. Paramount will still distribute and market the 2011 summer tentpoles Thor and Captain America, but after that, it appears that Paramount's role in the Marvel universe is pretty much done.

There was speculation last year that Paramount was having cash-flow issues after they moved Shutter Island and The Lovely Bones from 2009 to 2010 and more or less stopped sending out review copies of their high-profile DVDs and Blu Rays. The word is that the DVD crunch had hurt them more than other studios, and they were waiting on the income for the DVD/Blu Ray sales of Transformers: Revenge of the Fallen and GI Joe: The Rise of Cobra to replenish the coffers for 2010. The strategy seemed to work, as the relatively empty end-of-2009 schedule allowed Paramount to market the cult horror film Paranormal Activity into a $107 million sensation. Furthermore, they pulled off a solid year-end gross ($83 million) for the multiple-Oscar nominee Up in the Air, turned Shutter Island into a blockbuster ($128 million), and changed their marketing course for The Lovely Bones ($44 million), allowing them to avoid a complete disaster on the costly, but generally unsatisfying thriller.

Moreover, they had a solid 2010, with the expected smashes (Iron Man 2, How to Train Your Dragon, Shrek Forever After), some cheap surprises (Jackass 3D), and some solid hits that were a bit costly (Dinner For Schmucks, The Last Airbender). Sure, Paramount only received distribution fees for Iron Man 2 and the Dreamworks deal is all kinds of complicated, but money is money. And the year will end with the sure-to-be profitable Paranormal Activity 2 and the Dreamworks cartoon Megamind, the allegedly audience-pleasing Morning Glory, and the mid-budget awards bait (The Fighter, True Grit). And next year was no slouch either, with Thor, Captain America, Transformers 3, Kung Fu Panda 2, J.J. Abrams's Super 8, and the sure-to-be cheap and profitable Justin Beiber: Never Say Never. Point being, Paramount seemed to be doing okay, so the question becomes why did they basically give away the distribution rights to two sure-fire smash hits?

Again, much of this is complete speculation, but is there a reason that they felt that they didn't want to spend the money to market The Avengers and/or Iron Man 3? They apparently have the money to market Thor and Captain America, and whatever they'd spend on marketing and distributing all four Marvel films is sure to be less than the production budgets and marketing costs for upcoming mega-movies like Transformers 3 (a Dreamworks co-production), Mission: Impossible IV, and Star Trek 2. Without the Marvel 2012 tentpole, the summer 2012 schedule looks a little barren, with only Madagascar 3 (of course, another Dreamworks animation title) and the Star Trek sequel to hold up the proverbial tents. Or is this a question regarding the quality of the upcoming Marvel films? The Thor trailer is pretty terrible, and there's been no real word on Captain America thus far. Could Paramount have simply seen the writing on the wall and taken the quick cash rather than risk untold millions on the massive question mark that is The Avengers and the sure-to-be complicated Iron Man 3? For the record, my concerns about The Avengers have more to do with the unwieldiness of the project and those at Marvel than it does with Joss Whedon's capabilities as a filmmaker. After all, Favreau is likely gone from Marvel after the tinkering on Iron Man 2, and the third film will have to deal with whatever wackiness occurs in The Avengers (to say nothing of how popular the whole franchise might be if The Avengers wipes out).

Or maybe, just maybe (I know, more speculation that I usually engage in), this is a sign that Paramount wants to try to return to its 1990s heyday of mixing the occasional mega-budget tentpole (the aforementioned Star Trek 2, the theoretically rejuvenated Mission: Impossible series)with a catalogue of star-driven thrillers that don't cost as much, don't need to gross as much, and are rented forever on DVD or whatever medium we'll be watching movies on in a half decade or so. If Paramount picks up the rights to the newly-announced Alex Cross franchise, it will be a sign that Paramount may be leaving the all-tentpoles, all-the-time game to Disney and Warner Bros. Lots of maybes, but the fact that Paramount would basically give away the distribution rights to two of the more heavily anticipated films over the next three years is a bit of a head-scratcher. Feel free to share your theories below.

Scott Mendelson


Isaac said...

Where did you hear that John is done with iron man 3 and what tinkering was done iron man 2?

Scott Mendelson said...

Long story short: Marvel forced Favreau to shoot the film two years after Iron Man 1 (he wanted 3 years), initially refused to give him a raise, and then tinkered with the production, forcing all of that second-half material that made Iron Man 2 feel like a back-door pilot for The Avengers, to the film's detriment. He hints at it on the DVD commentary and supplemental material, and it's been reported elsewhere that Cowboys Vs. Aliens was basically his escape hatch from the Marvel world. If he comes back to Iron Man 3, it will only because of A) a BIG raise, B) Cowboys vs. Aliens flopped, and/or C) he's promised final cut from Marvel and Disney.


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