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Chapter 49: Dividing the Pie
🕑 Added 2024-09-10 17:19:05 +0000 UTCBy the end of September, "Final Destination" had already grossed $52.746 million in North America, surpassing Gilbert's previous film "Shark Beach." The film was still in theaters, continuing to rake in box office revenue.
Simultaneously, Disney had begun releasing the film overseas in early September. By the end of the month, it had earned $38.529 million internationally, bringing the film's global box office total to $91.275 million.
With global box office earnings set to surpass $100 million, Gilbert had once again achieved an impressive milestone, and his name was once more resounding throughout Hollywood.
When Tom Cruise's new film crossed $100 million globally, they celebrated with a party. Now, with Gilbert's second consecutive film about to hit the $100 million mark, a grand celebration was in order.
Touchstone Pictures had already planned a celebration banquet at the Hilton Hotel to honor the film's success.
However, before the celebration, the film faced its first round of box office revenue sharing.
Disney had signed a standard revenue-sharing agreement with the theaters, using a sliding scale model.
For example, in the case of "Final Destination," Disney signed a deal where they would receive 80% of the revenue in the first week.
To someone familiar with the film market in China, this revenue split might seem unbelievable. In China's film market, production and distribution companies typically only receive around 40% of the revenue, often less.
But in 1990s Hollywood, revenue sharing between theaters and distributors worked this way. At that time, theaters mainly profited from selling concessions like popcorn and soda.
In the second week, Disney would receive 70% of the revenue.
In the third week, while other studios might receive 45% to 60%, Disney would still get 65%.
After the fourth week, most studios would receive between 25% to 45%, but Disney would continue to receive no less than 40%. It wasn't until the fifth week that Disney's share would drop to the same level as other studios.
Why was Disney so special? This could be credited to Michael Eisner, the powerful chairman of Disney.
Under his leadership, Disney had signed many stringent contracts with theater companies.
Due to the lucrative merchandise profits from Disney's animated films, theater companies had no choice but to accept these harsh terms.
Thanks to this high revenue-sharing percentage, Disney took home just over $37 million in the first round of North American revenue sharing.
However, the story doesn't end there. "Final Destination" was produced by a separate studio, meaning Disney could still take a distribution commission as the distributor.
This is the sneaky side of Hollywood studios: even when the production and distribution companies are under the same umbrella, they insist on this left-hand-to-right-hand transfer, creating more complicated financial statements.
Without a reliable accountant keeping an eye on things, these convoluted accounts could easily confuse other investors.
In the end, even if a film made a profit, the books might show a loss.
At that point, no amount of praying to God or Buddha would help—your share would already be gone.
And even if you took it to court, it would be difficult to get a favorable ruling. A lawsuit over revenue sharing could easily drag on for five or six years.
The financial costs, time, and energy involved—only those who have been through it would truly understand.
Of course, these tactics are typically reserved for outsiders who don't know the industry but are hoping to make a quick profit from movies.
When it comes to Hollywood insiders, especially directors and stars, studios wouldn't dare pull such tricks.
Because doing so would only push these top-tier directors and stars toward other studios.
Over time, as word got around, who would still want to work with you?
Fortunately, Gilbert belonged to the group that couldn't be messed with. While his revenue share would likely be delayed for a while, Disney certainly wouldn't cheat him out of his money.
Once this was all clear, it was time to calculate how much Disney and Gilbert would receive from the first round of revenue sharing.
Rounding off the numbers, Disney first deducted a 15% distribution fee from the North American revenue, which came to about $5.55 million.
After taking their distribution commission, Disney also needed to deduct the film's promotional expenses.
This included the cost of producing copies, promotional screenings, storage and transportation, hiring research firms, and other marketing expenses.
Additionally, the remaining third of the cast and crew's salaries also needed to be settled.
These expenses were considerable, totaling $9.5 million.
Aside from the $9.5 million in advanced promotional costs, the $5.55 million in distribution fees was pure profit for Disney, with no need to share it with anyone.
The remaining $21.95 million would then be split between Gilbert and Disney's subsidiary, Touchstone Pictures.
According to the contract, Gilbert was entitled to $1 million as the director, writer, and producer, representing a tenth of the film's investment share.
The contract also stipulated that if the film's North American box office exceeded $50 million, Gilbert would automatically receive a 5% profit share of the box office earnings.
However, this box office profit share wasn't urgent since the film was still in theaters. Once the final box office numbers were in, they could determine which tier the film fell into and then proceed with the profit-sharing.
Even so, Gilbert received $2.195 million from the first round of revenue sharing.
Of course, his agent, Sheena Boone, and the PricewaterhouseCoopers accountant, Kevin, would also take their share of Gilbert's income.
The amount wasn't high—around $220,000 in total—but this was just the first installment, with more income to come in from subsequent revenue sharing.
If you want people to do good work, you can't shortchange them financially. Talking about ideals and the future doesn't work; cold, hard cash is what wins loyalty.
So, Gilbert didn't hesitate to let Sheena Boone and Kevin take their share of the revenue.
This income from revenue sharing was far more lucrative than the $1 million paycheck.
However, this wasn't the end. There was still revenue from overseas distribution, as well as earnings from home video and television broadcast rights.
Kevin, the accountant, made a rough estimate that Gilbert could earn between $4 million and $5 million from the "Final Destination" project.
This was a very substantial income, especially in the 1990s, where it was considered extremely high.
No wonder the Wall Street "vampires" kept getting swindled by Hollywood's unscrupulous studios but still kept coming back. This seemed to be more profitable than the stock market.
Speaking of stocks, once Gilbert received his first revenue share, he immediately bought Apple stocks.
At this time, Apple was considered a junk stock on the market. When he asked his manager, David, to buy the stocks, David looked at him with a "bless-your-heart" expression.
Gilbert didn't bother to explain.
After all, Steve Jobs had been ousted from Apple and was now working on Pixar Animation, not yet back at Apple.
However, any time traveler with even a basic knowledge of the IT industry knew just how enormous Apple would become in the future. It would be the first company in the world to surpass $2 trillion, even $3 trillion in market value.
Gilbert wasn't into the internet or the IT industry, and he didn't know how to run such a business.
But he did know which companies would be successful in the future, so he just had to invest.
Gilbert decided to continue buying Apple stocks—it was a sure bet.
He also bought a small amount of Microsoft stock.
But unfortunately, unlike Apple, Microsoft was a hot stock, and he couldn't buy much, nor did he have enough money.
But there would be plenty of investment opportunities in the future. After all, the coming years would see the rapid growth of internet and IT companies, and as long as Gilbert seized the opportunities, he could make a fortune.
