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James Bond is too big for your average movie-house premiere. So when MGM debuted its 20th Bond flick, Die Another Day, on Nov. 11, it did so at Los Angeles' cavernous 6,000-seat Shrine Auditorium. Halle Berry, the latest Bond girl, was there, mugging for the photographers lining the red carpet. So was 007 himself, Pierce Brosnan, and dozens of other stars, including the Osbournes, who seem to show up every time Hollywood throws a party these days.
No one -- not even the Osbournes -- is partying harder than MGM, which owns the rights to the Bond franchise. That's because 007, who has enjoyed a 40-year Hollywood career saving the Free World (as well as an army of beautiful women on both sides of the law), has suddenly become MGM's savior. Billionaire Kirk Kerkorian's studio has had a string of bombs this year, including such high-budget stuff as the remake of 1975's Rollerball and Hart's War, a Bruce Willis military flick.
MGM scratched out a small profit in its most recent quarter on the strength of the surprise, small-budget hit Barbershop. But judging from the open jaws I saw among audiences at the Bond premiere, MGM (MGM
) has nothing to fear when Pierce and Halle open their show nationwide on Nov. 22.
"PRETTY IMPRESSIVE." What the newest Bond has going for it is the presold word of mouth that comes from being a pop icon. The last entry in the series, 1999's The World Is Not Enough, did $352 million in worldwide ticket sales, according to worldwideboxoffice.com. The one before that, 1997's Tomorrow Never Dies, did an impressive $347 million worldwide. "All 20 Bond films released to date have outgrossed their production budgets from the box office alone," says CIBC World Markets analyst Michael Gallant, who notes it's "a pretty impressive feat."
True, 007 has his work cut out for him this time. The current flick cost $140 million to make, including the $4 million paid to Berry and the estimated $12 million for Brosnan. Plus, MGM paid $30 million to the film's producers, Barbara Broccoli and Michael Wilson, the daughter and stepson of Albert "Cubby" Broccoli, who first bought the Bond rights from author Ian Fleming. The studio also filled the film with glossy -- and pricey -- special effects, including a climactic scene in which a jet disintegrates just as Brosnan and Berry fly a helicopter from its belly.
So how does MGM get its money, especially when marketing and promoting a film can easily top $50 million in the holiday season? For starters, the studio received a ton of help in paying down the cost of the film. Ford Motors paid $35 million to feature three of its cars: Bond drives an Aston Martin, made by a Ford subsidiary, while Berry drives a Range Rover and Thunderbird (whose color matches her very skimpy bikini). British Airways allowed the production company to film inside the cabin of one of its 747s in return for making sure that one of its planes made the final cut. Finlanda won the rights to have its vodka in the film, outbidding Smirnoff.
PLENTY TO GO AROUND. MGM Chairman Alex Yemenidjian also figures the studio is getting well over $100 million worth of advertising and marketing from the more than two dozen companies that are including 007 in their TV commercials or in-store promotions. Already, British Airways is showing a commercial advising travelers to "save your pennies and fly like Bond," while Revlon (Berry is a Revlon model), Best Buy, and Sony's electronics products all feature the film in their spots.
Factor it all in, and the numbers soon start coming into focus. Even though the Broccoli family gets a 30% share of the profits, chances are good that plenty will be left for Kerkorian's company.
You can also see why MGM feels safe in Bond's experienced hands. Yemenidjian said the last 007 film produced more than $100 million in earnings and under very similar circumstances. The hidden secret is that every time MGM releases another Bond movie, the value of all the other Bonds in the studio's library rises. Earlier this year, it collected $30 million from Viacom for a two-year deal to show the first 15 Bonds, from 1962's Dr. No through 1987's The Living Daylights, on its CBS and UPN networks and its TNT cable channel.
THE NEXT BOND. No wonder MGM has fought to protect its franchise. It successfully went to court a few years back to stop Sony from producing its own Bond flick. And MGM threatened legal action against New Line when it first announced it was spoofing the 1964 Bond film Goldfinger by calling its third Austin Powers film Goldmember. Eventually, MGM allowed New Line to go ahead with the name, although it insisted that trailers for Die Another Day be put on the front of the New Line release.
MGM, which has told Wall Street that it intends to cut spending for most films other than sequels, is already planning the next Bond movie, probably for 2005. Brosnan has signed on. And for the first time, the studio is also contemplating a spin-off. It has approached Berry, who in Die Another Day plays a CIA spy working with Bond to thwart North Korean terrorists bent on destroying the world. She says she would do the film "in a heartbeat." MGM is waiting for Broccoli and Wilson to give it their O.K.
And you know that they will. After all, superagent Bond scores everywhere, including at the box office.
Grover is Los Angeles bureau chief for BusinessWeek. Follow his weekly Power Lunch column, only on BusinessWeek Online Edited by Patricia O'Connell
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