More on That Slick Bruno Deal

How an agent turned his pie-in-the-sky memo into a reality.

Agent X: A helpful reader (and we could use more of you) has reminded us that years ago—in 1999, to be specific—young Modi Wiczyk wrote a memo on the future of Hollywood. It was called “Another New Ball Game.”

Recall that last week, we told you how the Endeavor agency—in which Wiczyk is a former partner—got Sacha Baron Cohen a sweet deal for making Bruno (the follow-up to Borat) at Universal. The deal involved the brief use of a financing vehicle called Media Rights Capital. Some studio types were suspicious that MRC was a unit of Endeavor and that the whole point of using MRC was to get a deal that no studio would otherwise have yielded. It would be against the law for MRC to be a unit of Endeavor because it is against California state law for agencies to produce films. Endeavor has said that MRC is a separate entity.

The co-CEO of MRC is Modi Wiczyk.

Few ideas are original, and Wiczyk would seem, in his 1999 memo, to have tipped his hat to his forebears. Peter Guber—the former Columbia Pictures chief who almost decimated the studio in the early ‘90s—wrote a memo as a young executive in 1969. It was called “The New Ballgame”—a 15,000-word prediction of future shock in the movie business. (The premise was that home video would transform the movie business as well as music, theater, religion, sex, and just about everything else.)

In the early ‘80s, Michael Eisner wrote another state-of-the-industry memo, replete with baseball metaphors, when he was an executive at Paramount. Jeffrey Katzenberg, as the restless chairman of the Disney studio, annoyed Eisner when he wrote a similar memo packed with baseball metaphors in 1990.

Wiczyk’s “Another New Ball Game” was, potentially, a more revolutionary memo. He wrote it as a young executive at a company called Summit Entertainment. The memo predicted the decline of the studios, with filmmaking talent as the beneficiary. He also predicted that a management company with a lot of big stars would start to produce and own films. “The most immediate and pressing challenge would be to get the studios to carry the product,” he said. The likelihood of a studio boycott was remote, he said, because “whichever studio was suffering at the time would probably break ranks in the name of short-term self-preservation.” Hmm.

Michael Ovitz eventually tried to launch such a management company and failed. But Wiczyk’s memo said the agencies could also carry out the change. “A similar structure could be created which complies with the conflict-of-interest laws,” Wiczyk wrote. “If [a] fund was created as a stand-alone entity and the agency had an arms-length service contract, they could avoid conflict-of-interest violations. … Admittedly this is a delicate issue and a tough deal to pull off, but it’s certain someone would try it.” Why? The potential for enhancing agency commission was “too rich to ignore.” In fact, he said, an agency could double its annual revenues.

All this seems very prescient in light of the Bruno deal. Whether Endeavor really can run with that ball remains to be seen. Wrong sport, but you get the idea. (link)


Tuesday, March 13, 2007

Sacha Baron Cohen

Funny business: When Fox let slip the opportunity to make Bruno, Sacha Baron Cohen’s follow-up to Borat, some thought the studio let one of the hottest stars in the firmament get away. Others said the deal, which cost more than $40 million, was too rich—especially since it’s an open question whether Cohen can pull off another movie based on people not recognizing him (this time as a gay Austrian fashion maven).


The Bruno deal raises another good question: Has Endeavor, the agency that represents Cohen, invented the perfect crime? Or did it simply come up with a clever way of striking a very favorable deal that infuriates the studios?


Endeavor has had some Oscar heat lately—its clients include Martin Scorsese, Alejandro González Iñárritu, and many others (though Reese Witherspoon just bolted). Even before Borat opened, the agency presided over a bidding war for Bruno among several studios. Universal’s winning bid was $42.5 million—a big bump up from Borat, which cost less than $20 million (and has grossed more than $250 million worldwide).

Before the bidding frenzy started, Endeavor sold Bruno to a financing entity called Media Rights Capital. MRC didn’t take much of a risk, since the studios were fighting to buy the project before the proverbial ink was dry. In fact, MRC sold the package to Universal at such lightning speed that some at the studios have wondered aloud (if not on the record): Why did Endeavor need to bring MRC into the deal?


And that raises the question: Is MRC a separate company, or is it Endeavor in different clothing? It is against California state law for agencies to produce films, and Endeavor has said that MRC is a separate entity. But some in Hollywood perceive MRC as a unit of Endeavor—a unit positioned to cherry-pick projects. Former Endeavor agent Modi Wiczyk is co-CEO of MRC.


One executive who passed on Bruno said MRC seems to be an “internal production machine” for the agency. An executive at another company also expressed doubts about the deal. “None of the math made sense,” this executive said. Estimating high, the film seemed to require a budget of only about $30 million, “even if you give Sacha the $15 million that he wanted” for starring. And if that were true, then whose pocket would be lined with the markup?


An Endeavor source says all this is the bitter cavil of the defeated. “MRC is its own company,” he says. After all, Endeavor would hardly risk its business by breaking the law. And through the independent MRC, Endeavor got Cohen one hell of a deal (and presumably an extra-nice commission for itself). MRC agreed to pay Cohen $15 million instead of the $12.5 that a studio would have paid, and gave him the lion’s share of profits as well as creative control. And in the end, he gets to own the negative—a worrisome prospect for studios that live on the income thrown off by their libraries. That’s a package the studios would never have matched—much less beaten—without an electric prod.


One of those executives who did not think the deal was well-advised sees it as a bad precedent, explaining that a studio “should not step into a deal where you’re violating the most basic practices of the business you’re in.”

Executives at Universal disagree. “One could argue if you did this all the time that it’s a bad way to run your business,” one says. “We’re not doing this all the time. But there are unique opportunities.”

The eventual deal with Universal was all the sweeter for Cohen because at the time that it was struck, the research tracking audience interest in Borat looked a little wobbly and Fox—figuring that the movie needed to build a little word-of-mouth in the heartland where no one had ever heard of Cohen—cut the number of theaters in which the film would open. None of that sat well with the star. And Fox did not respond to the opportunity to make the Bruno deal with the alacrity that Cohen or his representatives deemed appropriate.


For its $42.5 million, Universal got rights to the movie in English-speaking countries, Germany, Austria, and let us not forget Belgium and the Netherlands (but apparently not Kazakhstan). Our Endeavor source tells us this is a bargain. Cohen’s Ali G movie did $15 million in the United Kingdom in the pre-Borat days, he says, and Borat pulled in almost $40 million there. So (he argues), it made sense for Universal to wager that Bruno can pull in enough money even in its limited territories—one of which is the United States, after all. (Bear in mind that studios get to keep about half of those grosses. But the Endeavor source says Universal cannot lose money on the movie even if it’s terrible.)


This source says the studios are annoyed simply because they were backed into a corner. “People say, ‘We’re never going to work with you again—fuck you,’ ” he says cheerfully. “Two months later, there’s something they want. … The studios are getting less powerful, not more. Did we do the right thing for our client? That’s a no-brainer.” (link)

Friday, March 9, 2007

Howard Stringer 

TGIF: It’s Friday and that’s a blessing for most everyone, except those executives who will watch their movies get flattened by 300 over the weekend.

Last weekend, however, was huge in terms of media-business journalism—almost like a graduate seminar on some of the biggest players in today’s Hollywood. There was a long piece about John Lasseter and Disney in the New York Times, as well as one about Tom Cruise and his United Artists deal. There was a story about MGM in the Los Angeles Times. And there was the mother of them all in the Wall Street Journal—a remarkable interview with Sony Chairman Sir Howard Stringer.

It took us a while to digest this feast. And since you presumably don’t get paid to read these fine articles, maybe you didn’t get around to them at all. So, here is what you need to know:

The John Lasseter piece
purports to address whether Lasseter can remake the drifting Disney animation operation even while guiding Pixar. Here’s what he’s really saying: Meet the Robinsons is not the first Disney film under his leadership. Don’t blame him for this one. After watching a screening of the film last March, Lasseter beat up on director Stephen Anderson for six straight hours. Nearly 60 percent of the film was dumped. Still, to reiterate, don’t blame Lasseter if it doesn’t work.

The Tom Cruise piece
makes one essential point: Tom Cruise’s production company at Paramount did very, very well with Tom Cruise movies but “those that did not feature the actor—pictures like The Others, Elizabethtown, Shattered Glass and Narc—had ‘mixed’ commercial success.” In this sentence, “mixed” is a euphemism. Cruise is not obligated to appear in any United Artists film. And, at Paramount, Cruise and his partner, Paula Wagner, did not quite average a movie a year—at UA, they expect to make several a year.

The Los Angeles Times article about MGM chief Harry Sloan, the guy who made the Cruise deal,
reveals that he has a lot of crystals in his office and talks about feng shui. If you’re an investor, that might worry you.

The most stunning piece of them all is one that many people somehow overlooked. In his interview with the Wall Street Journal, Sir Howard says his achievements have been masked in part by such problems as Sony’s battery recall which, he says, “took too long for bizarre Japanese reasons that I don’t want to spend the rest of my life discussing.” None of the executives alerted him to various problems, and they’re also bitching because he doesn’t have a place to live in Tokyo, preferring to stay in a hotel when he’s there. Stringer says he won’t get some lonely apartment in Tokyo but concedes he should have “faked it better,” adding, “I mean that seriously.”

We don’t speak Japanese but when you translate those remarks, we think it comes out like this:

“I hate this job! Fire me!” (link)


Wednesday, March 7, 2007

Shia LaBeouf

Project Greenlight: It’s been rumored around a bit on the Web, and now an excellent source says you can count on it: Shia LaBeouf will play the son of Indiana Jones in the upcoming fourth installment in the series, set for release in 2008.


Apparently, the young actor is impressive enough in the upcoming Steven Spielberg-produced Disturbia and Transformers that he won the role.

We liked LaBeouf in Holes and felt inexpressible pity for him in Project Greenlight, when he was suffering through the making of The Battle of Shaker Heights. We missed him in some of the other stuff. So, America, what do you think? He’s got the chops as an actor, but does he have enough leading-man appeal to be the son of Indy? Even some of those close to the project aren’t sure.


But if Spielberg and Lucas are, that’s the end of the conversation. Those two have been kicking around the idea of another Indiana Jones adventure since they all went to an American Film Institute dinner honoring Harrison Ford in February 2000 and watched that boulder roll on the screen. There have been a number of false starts, and by now it’s clear that Ford, who turns 65 this year, needs a kid in the movie.


After all, Indiana Jones is completely foreign to the young audience today, and some in the industry have wondered whether the idea will have broad appeal at this point. It’s also painful to imagine the kind of deal that Paramount will have to give to this collection of talent, though Spielberg is a comparatively thrifty director. Given this combination of players, most studios would say yes and take their chances. (link)

Friday, March 2, 2007

The Oscars are over, but the gossip isn’t quite all gone.

—Who almost got the prestigious Thalberg Award  for lifetime achievement? Come on, guess. You’re right if you said schlockmeister  Roger Corman, producer of such classics as The Wasp Woman and A Bucket of Blood, as well as the original Little Shop of Horrors, Piranha, and other classics. He may seem an unlikely choice for a prestige award that previously has gone to Darryl Zanuck and Samuel Goldwyn, but Corman started so many big careers in the business—Martin Scorsese, Francis Coppola, and Jack Nicholson, among others—that he had lots of support from protégés who signed letters on his behalf.


There’s always next year. (No one has taken home the Thalberg Award, which is handed out irregularly, since Dino De Laurentiis received it in 2000.)

—As we’ve mentioned before, many in the industry were stunned—and some thrilled—when The Departed producer Graham King failed to mention Paramount chief Brad Grey’s name when he accepted for best picture.

Recall that Grey had unsuccessfully lobbied the Producers Guild for recognition as a producer on the film (for work he had done before taking the top job at Paramount). When he didn’t get it, he asked the academy—which generally follows the guild’s lead in these matters—to render him eligible to pick up the Oscar if The Departed were to win. Many thought Grey’s campaign for recognition was a bad idea considering that his studio had Babel in contention and The Departed was a Warner movie. But that didn’t stop him.

In fact, even after the academy made its decision, we’re told King confided to friends that he’d been pressured to withdraw his own name in protest. This strategy worked some years ago when the Producers Guild wouldn’t recognize Grey for his work on The Sopranos. The show’s creator, David Chase, threatened to withdraw his own name and the guild caved. King fretted over what to do but decided to take that possibly once-in-a-lifetime walk on-stage to get the golden statuette—and compensate by thanking Grey in front of the world. Our source assures us that when the big moment arrived, King simply forgot to say thank you. And we absolutely believe that. (Dr. Freud, call your office.)

It’s probably just as well for Grey that the academy didn’t give in. On Oscar night, he was seated in a row with his boss, Viacom Chairman Sumner Redstone. Had he attempted to rise from his chair, there’s no doubt that a gnarled claw would have shoved him back down so fast that Grey’s vertebrae would have cracked.

—It occurred to us that when Jack Nicholson opened the envelope for best picture, he might have said The Departed when the card actually read Little Miss Sunshine. After all, we know which one he preferred. When we mentioned this—jokingly—to an executive associated with one of the losing films, we were surprised to discover that he had the same thought—and he wasn’t joking. Did Jack read the right name? Only Diane Keaton and Price Waterhouse know for sure.