Senior Year Box Set

“Before we get started, I want to introduce everyone to David A. Dawson. As you all know, he was in our highly successful endeavor, Star Academy, and will be in its two sequels scheduled to film this fall. David is also one of the investors in Love Letters and didn’t take any pay for acting in it.”

Wait a minute, I didn’t get paid? I wondered if Ari, my agent, knew that.

“Because of how the movie came to us,” Paul continued, “and David’s contribution by not asking what he is currently worth, we have some skewed accounting numbers on this one. If you check the current financials, you will see we’re at about half of what we would have spent on a similar movie at this point. While that’s good, it means the studio’s cut will be less on the back end.”

Rita leaned in and whispered, “He’s saying you’ll make more if the movie does well.”

“For David’s benefit, I want to explain what our next steps are,” Paul said to everyone and then turned to me. “We’re at the point where we will enter a licensing agreement with a distribution company. They’re the ones who will get the movie into theaters. If we agree to this arrangement, they’ll take care of screening the movie to potential buyers who represent the theaters; they’ll determine how many copies of the film will need to be made; they’ll coordinate the shipment of the prints to each theater a couple of days before release; and handle other tasks of that sort.”

“The other aspect is marketing. I’ll turn this over to Brenda to explain what we plan,” Paul said.

“The first weekend is crucial for most movies. We want to pack the audience in because we will make upwards of half of our box office that weekend. Two prime examples of this are X-Men: The Last Stand, which made 52 percent of its money in its first week of release, and Spiderman 3, which grossed 45 percent.

“The other reason we front-load the marketing is because the amount you make is dependent on the box office. And, if the audience hates the film, we at least pack them in before word of mouth gets out that we have a dog. Even if a movie bombs, a strong opening weekend can be enough to break even or earn a small profit,” Brenda said.

That brought a chuckle from the crowd.

“We have a recent example of this. Hulk grossed 47 percent of its total earnings in its opening weekend, then made almost seventy percent less the following weekend.

“Our rule of thumb is the marketing budget should be fifty percent of the production budget. So, for simple math, if it cost $50 million to make a film, we spend $25 million marketing it. For this film, because the production costs were so low, I suggest we match the production budget for the marketing,” Brenda said.

As she gave us her spiel, they handed out a proposed budget. I found it interesting to see the proposed allocation:

Network Television: 22%

Marketing Services (Creative Services, Market Research, Promotion/Publicity): 21%

Targeted Local TV Stations: 14%

Newspaper: 10%

Internet: 4%

Theatrical Trailers: 4%

Other Media (Cable TV, Radio, Print, Billboards): 25%

Rita pointed out that the Marketing Services line item was for the studio’s internal department responsible for designing and implementing the marketing plan.

“The movie business is seasonal. We cluster releases during the summer and around the major holidays of Christmas, Thanksgiving, Fourth of July, Memorial Day, and Labor Day. We need to figure out the best time to release Love Letters,” Brenda said.

What followed was a debate on whether the film would stand out in a field of high-profile movies that traditionally were shown those times of the year. You were fighting for a finite dollar amount that would be split between all films. If we were head-to-head with a blockbuster, we might get crushed and end up losing money. They finally decided to release it the third weekend of June.

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After the presentation, we walked to another building where the studio executives had their offices.

“We have one last item to talk about,” Paul said.

“He wants money,” Rita predicted.

“We can go one of two ways. Now that there’s an almost-finished product, we can reach out to additional investors and give them a smaller piece of the pie. Or, you can pony up the funds needed to market the film,” Paul said to get to the point.

He showed Rita and me how much he needed. It wasn’t an insignificant amount.

“Why not get a bank loan?” I asked.

Paul was prepared for my question; he had numbers for that as well. The problem was that if the film went belly-up, banks still needed to be paid back, while investors assumed the risk. For them, a movie at this stage presented a much smaller risk than up front, but you never knew. The bank option was cheaper because of the loan guarantee, so they didn’t demand as large a return as the investors did.

“When do you need to know?” I asked.

Paul smiled.

“I’d hoped you would just write a check today.”

“I bet you did,” Rita said.