2015: The Studios

Let’s start with the long strokes…

Universal, Disney, and Fox are not being sold.

Sony, Paramount, and WB could change hands at any time.

And amazingly, none of this has anything to do with last year’s box office.

Two of the three “locked-down” studios are, indeed, the lead revenue producers of 2015. But they also represent three of the four major broadcast networks and not coincidentally, are part of complex infrastructures that would not be served well by divestiture.

The vulnerable four each has its own story. Sony has owned Columbia, etc. for 26 years now. The world has changed massively, for Sony, all things electronic, as well as the film and TV businesses. Paramount is separate from the CBS and Showtime part of the Redstone empire and everyone is waiting to see what happens when Mr. Redstone dies. Warner Bros is a legacy leader that had a rough 2015, but its parent, Time-Warner, has shown a willingness to split itself.

The question going into 2016 is, who wants a movie and television studio?

There are a whole lot of billionaires out there now. But the last studio sold – Universal, along with NBC, etc – went for $30 billion.

Fox tried to buy Time-Warner in full… but $80 billion was not enough.

Disney is worth well over $175 billion right now.

Those are huge bites. None of the foursome of potential movers in 2016 would be valued as highly as any of the above. Somewhere in the $20 billion range for the major studios (film and TV divisions) and about $7 billion-ish for Lionsgate.

Still not chump change. But more viable than going after the really big game out there.

Just something to think about.

As for the movie businesses in 2015…

Disney is, simply, in a different business than anyone else. There are good parts. There are bad parts. But for now, they are the only one in the business they are in, and here’s why…

Disney released just 11 movies in 2015. Four of them had production budgets of $40 million or under. Their entire take, worldwide-to-date (with not too much more on the horizon) was $215 million.

Disney released two movies with budgets between $100-$150 million. They grossed a solid $1.1 billion against costs (production and p&a) of somewhere around $550 million, making them profitable in post-theatrical revenue streams.

Disney releases five movies with budgets starting at $200 million and likely rising to just over $300 million. Even with an investment in those five titles of about $2 billion, the studio will do well with theatrical revenues of $4 billion to date, with at least another $1.25 billion on the way.

How much did Universal spend on its three massive franchise titles released this year? Less than half of what Disney spent on their five. And they got $4.4 billion in gross theatrical out of them. Which is great.

But that’s not Universal’s working model.

It would seem that Universal will have only two $100 million-plus budgeted movies in 2016. Both sequels. Neither cracking $200 million.

Disney will have four $200 million-plus budgeted movies in 2016, with at least three more over $100 million, leaving, again, four or so with budgets of $40 million or less.

Other studios may chase the Disney model moving forward. The comic-based explosion is coming, along with annual Star Wars films and the expensive parade of big animated films. But even Warner Bros, which has two D.C. Comics movies in 2016, the Harry Potter spin-off, and The Legend of Tarzan (scary) as very expensive films with franchise hopes, they are not in the Disney mode, as they have 15 mid-budget or low-budget films that they hope will spawn a couple of big surprise cash cows.

Getting back to Universal’s 2015… As noted, 3 movies = $4.4 billion in theatrical against costs of about $950 million.

Bur what is even more impressive – to me, at least – is that the studio did $2.2 billion with 18 non-franchise films. There are a bunch of them (8 or so) that will lose money for the studio. The most expensive will be Seventh Son. However, like Blackhat, Steve Jobs, and Crimson Peak, it was in partnership with Legendary… which also partnered with Universal on moneymakers Straight Outta Compton and Jurassic World. Universal also had $200m+ worldwide grossers with Pitch Perfect 2 and Fifty Shades of Grey.

Lots of doubles and triples. That is as much the story at Universal in 2015 as the three home runs. It’s not as sexy, but it is the reality.

The only other company to do $3 billion on new movies in 2015 was… can you guess?… Fox. (if you were thinking WB, you were wrong by $350 million or so.)

Fox did it with no mega-movies. The highest grosser of their year was The Martian, which should pass $600 million worldwide shortly. But four other $300m+ titles (Kingsman, Home, Taken, and Maze Runner 2), the three live-actions films each under $85m each and the animated film on an output deal with DWA. The Maze Runner series isn’t much talked about, but it is cheaper to make and has made more money than the Divergent series so far. Then you have Spy, which will not only be very profitable, but which is a breakthrough moment for Melissa McCarthy internationally, outgrossing her Sandra Bullock pairing overall and besting the international on Bridesmaids.

The only real blemish on Fox’s year was Fantastic Four, which somehow managed, horrible as domestic was, to get to $168 million worldwide. That and Unfinished Business, which was given a release for two weeks then disappeared. And Victor Frankenstein may end up with some blood on its hands. But like U.B., it was under $40 million and in that case, may have much more post-theatrical value (especially internationally) because of Mr. Radcliffe.

No one is giving Fox a parade for this year’s numbers, but they deserve a nice pat on the back. They did what they do. Not huge risks. Some winners. And if they had gotten a breakout from Paper Towns, which is probably the studio’s biggest missed hope of the year ($85m vs Fault In Our Stars‘ $307 million), it would have been a truly great year, given the studio’s strategy.

This does not mean that complaints in some quarters that the success was not fully maximized have no validity. It’s one thing to not make a billion on a comic book movie, but to lose money is painful in this current environment. You don’t look at this year’s films and say, “I see the future here!” But Kingsman has a strong future and Maze Runner has a solid one. A hard critic could expect more… but nothing less than solid.

Sony made a little less ($2.4b) than Warner Bros ($2.6b) in worldwide gross. But Sony has only 16 releases, while Warner Bros. had 25. So marketing costs for the nine extra titles alone makes up for the difference.

I can’t say that either studio had a strong year.

Sony had Bond, which delivered 36% of the worldwide gross for the distributor. Only Star Wars 7 is likely to be as dominant a top movie for a studio this year and that will be part of a Buena Vista (Disney) gross around 2.5x the size of Sony’s theatrical worldwide gross.

Hotel Transylvania 2 is a big hit for Sony, not only becoming Sony Animation’s biggest hit ever, both domestically and worldwide, but improving on the number by almost $100 million.

After that, it gets less exciting in a hurry. I don’t know what Pixels really cost, but I am guessing it will be profitable in a small way. But while you are crapping on Adam Sandler, please note that this was easily his best box office year ever, with Hotel Transylvania 2 grossing more than any other film he has ever done and Pixels being topped only by that franchise and his Grown-Up franchise.

The Wedding Ringer delivered for Screen Gems, but wasn’t a grower for Kevin Hart, even if it was profitable. He still has to have a strong lead do the kind of business his team-ups have.

Wolf Totem did nothing in the states, which is where Sony had rights. Goosebumps, Paul Blart 2, and Chappie were all $100m grossing meh.

Losses were not painful. Even The Walk was done for a budget that means the hit, even if there is red ink, will be minor.

Tom Rothman can’t be judged by this year’s movies. His studio will be, like Fox, pretty conservative and about the bottom line. The time to start looking at his stewardship will be next September, when his first Columbia movies that he could have killed or actively greenlit himself start landing.

Meanwhile, at Warner Bros… well, I have never seen anything like this over there in my 20 years watching these numbers closely.There were few swings for the fences, keeping it from being a true bloodbath. But when your biggest film is San Andreas, which was still $50 million short of last summer’s Godzilla and $70 million short of World War Z and a whole $280 million short of 2012, you can’t be too happy. Really, they should be paying Universal a bonus for keeping Dwayne Johnson so hot internationally, where the film about a California earthquake did $320 million.

Mad Max: Fury Road is a glorious movie event… that couldn’t keep up with Terminator: Genisys. Painful.

And those are the hits, along with The Intern, which is a bonafide hit and should get more respect.

Then you have the next 22 films. Not all bombs. Magic Mike XXL was a shadow of its original self, but still a serious earner. Get Hard is a real hit. Creed is nearly a smash. But on two of three of those, it feels from the outside that money was left on the table (even as Creed continues to earn).

The only real cash killers were Pan, The Man From U.N.C.L.E., In The Heart of The Sea, so you kinda have to give it to Warners for its conservative – for Warners – approach to 2015.

The bottom line is not as bad as it could have been. Like most of the studios, the spending is mostly under control. It gets harder if the big 2016 films misfire. But to watch the studio, with its broad shoulders and perfect hair, slog through the mud like a tired soldier in training, unable to get its feet up and about to take a major verbal beating from its drill sergeant… painful.

Finally, we have Paramount, which tells us that it is getting back into the movie business moving forward.

Eleven movies. Seven real releases, if you count Project Almanac. It’s a little like grading on a curve.

The company can sell movies. Mission: Impossible did quite well. Terminator: Genisys showed that the franchise may be dead at home, but still plays overseas. The film should make a little money in the end. Spongebob worked, though international is soft. Etc, etc, etc.

Next year, four big sequels and a Ben-Hur reboot. More little stuff that isn’t so little that no one will notice it got released. It could be a $2 – $3 billion year for the studio.

But the real story at Paramount remains a horny 92-year-old in bad shape. What happens when this remarkable man passes?

Overall, the “2 big winners and everyone else is scared” shtick that most box office writers seem to want to push at this moment is a load. As I have noted 278 times, though no one else seems to care, Universal had its most profitable year ever last year without huge numbers and franchises… then had what I suspect will be an even more profitable year this year with franchises. Obsessing on the gross numbers and market share is no way to analyze box office.

Disney and Universal had the best years in 2015. Star Wars may push Universal into second place in terms of what matters: profitability.

Fox had a strong year. Paramount was barely there, but did fine.

Sony and Warner Bros were the weak ones this year… but even in those cases, it was not a burn-down-the-lot kind of year for either studio. Both are in transition. Sony’s path is, in my opinion, clearer… unless Sony sells the studio. Warner Bros has a potentially seismic event in Batman vs Superman and it will either set off a flurry of change in the early summer or it will give the current structure another nine months of breathing room, allowing Suicide Squad and Fantastic Beasts to cement positivity.

Last year was a better year for everyone, overall. But there were a lot of winners this year, though it wasn’t terribly exciting in the surface.

The question remains, will the other studios allow themselves to get sucked into the Disney vortex of mega-spending in the chase for mega-results. So far, it doesn’t look like it. For all the fear that “Disney is the Future,” everyone else seems smart enough to realize that they simply don’t have the same foundational assets.

Disney is likely to stay extremely strong until they face their first overly dense year, far enough from what got them here, in 2018, with three Marvel movies, the fourth Star Wars film, two animated films, and one live-action film from an animated classic. And even then, what could turn up then is not likely disaster, but a show of exhaustion with all of these franchises, which could make 2019 look a little scary.

But that is a long time from now, in a movie galaxy less far away than you think…

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