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Let's make this clear from the start: This is NOT a story about sharing and goodwill during the Christmas season. It's a story about how Hollywood really works -- not a pretty picture sometimes.
For years now, the movie industry has made a practice of sharing the costs of making the industry's biggest-budget films. For example, when Fox decided to make the $200 million Titanic in 1997, the studio brought in Paramount, which footed nearly half the costs for the rights to share in the expected profits. Sometimes this cost- and profit-sharing works like a charm, as Sony and Universal discovered when they divvied up the costs to make the Julia Roberts flick Erin Brockovich. The film cost $51 million to make, and at last sight, had crossed into $200 million territory for its worldwide ticket sales. Nice return there.
Then there's the case of Hannibal, the long-awaited sequel to the 1991 Academy Award winning film Silence of the Lambs. Starring Anthony Hopkins and Jodie Foster, the blockbuster tale of the ruthless killer Dr. Hannibal Lecter cost a mere $22 million to make 10 years ago. But the payoff was sweet: It took in $130 million in ticket sales in the U.S. and nearly as much overseas.
BAD BLOOD. When the sequel hits the theaters on Feb. 9, it will be released as an MGM film. Never mind that it started as a project out of Universal Studios, owned by Vivendi-Seagram, which still has a half-interest in it and will share in half the profits -- if there are any. But this is a Hollywood tale involving bruised egos, corporate jockeying, and quite a bit of bad blood. Not surprisingly, neither of the two studios will comment, on or off the record, about the film. But the tug-of-war over Hannibal has been a hot topic in Los Angeles entertainment circles for months.
You would think that Orion Pictures, the now-defunct film studio that made Silence of the Lambs and owned the rights to that story would have the rights for a sequel. But three years ago, what remained of Orion was acquired by MGM, then in the process of being rebuilt by its billionaire owner Kirk Kerkorian and his deal-making lieutenant, Alex Yemenidjian. In the meantime, novelist Thomas Harris, who wrote the book Silence of the Lambs, sold the rights to make the sequel Hannibal to Italian producer Dino DeLaurentiis.
How did Harris have the sequel rights to a film that Orion (and now MGM) owned? It seems that Harris created the character of Hannibal Lecter in his 1982 book Manhunter, which DeLaurentiis made into a forgettable low-budget film in 1986 that starred Brian Cox as the flesh-chomping Lecter and Dennis Farina as the FBI agent on his trail.
THE PLOT THICKENS. In 1998, DeLaurentiis talked Universal into taking on Hannibal. The plan was to release it on the 10th anniversary of the 1991 blockbuster, and a budget of $85 million was set. But there were still plenty of problems, starting with the fact that the second -- and much more successful -- Hannibal Lecter, Anthony Hopkins, was holding out for a fortune. And Jodie Foster wanted nothing to do with the project. But the biggest problem for Universal was that it didn't own the rights to the character that Foster played, Clarice Starling, who didn't appear in Manhunter. Who owned those rights? MGM, through its acquisition of Orion.
With Yemenidjian having taken over as chairman of the studio in April of 1998, MGM was in rebuilding mode. Yemenidjian knew a hot property when he saw it, and told Universal that if it wanted to use Clarice Starling in the film -- something that the producers thought was crucial -- he wanted MGM cut in on the action.
Here the plot thickens. At the time, Yemenidjian was negotiating to lure away Universal Pictures President Chris McGurk, a one-time CFO at Walt Disney studios, to be MGM's vice-chairman and chief operating officer. Like a baseball general manager, Yemenidjian swapped assets -- the rights to use MGM's James Bond character for Universal's theme parks -- for McGurk's services. MGM also agreed to put $100 million into a joint film-making agreement with Universal and traded a half-interest in an action film called Dragonfly for a half-interest in Hannibal. Dragonfly is being made by Universal now, with Kevin Costner in a lead role, but that's a whole 'nother story.
ALL HELL BREAKS LOOSE. As part of the swap, Yemenidjian's MGM got foreign rights to Hannibal and Universal got U.S. rights. Universal had the upper hand: It maintained the lead in producing the film. But Hopkins had signed on for $12.5 million and 15% of the gross. Foster had opted out, and Universal had signed Julianne Moore for the role of Clarice Starling. Gladiator director Ridley Scott would direct and get a chunk of the profits, as would novelist Harris. In all, Universal gave away more than 25% of the profits. To put it mildly, MGM's financially driven team of Yemenidjian and McGurk were not pleased.
Then all hell broke loose. Unbeknownst to Universal execs, Edgar Bronfman, chairman of Universal parent Seagram, was looking to sell the company. That meant cutting costs where necessary, and Bronfman wanted Universal to recover some of the $42.5 million it had in its production by selling off the rights to some foreign properties. That's common practice among Hollywood studios. But there was a big problem: Universal didn't own the foreign rights to Hannibal, MGM did. And MGM wasn't in any mood to sell off rights to help out its production partners. Besides, MGM had just signed a deal with Fox Studios that called for Fox to distribute MGM films in foreign markets.
The showdown came in late 1999, when Universal execs trooped over to McGurk's Santa Monica office to plead their case. McGurk wasn't buying. And besides, he had them over a barrel. The film industry works on trust and saving face. Universal had already signed on talent like Scott and Hopkins. The film had to be made, or Universal would suffer a major black eye among other creative folks.
So McGurk played hardball. Even with Bronfman's dictate, the film had to be made on schedule, he made it plain. The conversation had to go something like this: Nothing personal, but MGM would be happy to take the U.S. rights to the film, and allow Universal to sell off the foreign rights from their part of the pie.
STRANGE MACHINATIONS. And that's exactly what happened. Universal reluctantly took over foreign rights, selling off the rights in some choice movie markets such as Germany and Italy to recoup the $42.5 million it had in the film. MGM, meanwhile, got the rights to distribute the film in the U.S. Indeed, word is out that MGM got far better terms (that means more money) from theaters that showed MGM's film Autumn in New York, starring Richard Gere, by offering those theater owners the prospect of getting Hannibal when that film came out.
So where does that leave the sequel? The buzz among Hollywood insiders is that the film plays well and that some of the scenes -- including one involving a wild boar eating a human -- are gruesome enough to give the film a strong word of mouth among teens and fans of the 1991 hit. The film came in $1 million under its $85 million budget, a testimony I'm told to Dino DeLaurentiis' taskmaster ways. Hopkins and the others get their take, and then Universal and MGM -- which is really in the driver's seat -- divvy up the rest. Assuming, of course, that there's anything left over. You know Hollywood: Its accounting rules are almost as much fun to figure out as the strange machinations that its studios go through to make the films in the first place.
Grover is Los Angeles bureau chief for Business Week. Follow his weekly Power Lunch column, only on BW Online Edited by Douglas Harbrecht
Copyright 2000, by The McGraw-Hill Companies Inc. All rights reserved.
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