WSJ on upcoming movie "Terminator 3"
[I am not going to dare to read this, since I have had so many bad experiences with newspaper or magazine commentaries on movies ruining plot details (for no conceivable reason).
So ... I guess I will bookmark this post, hope that SI is still running their servers in a few years, and hope I remember to read this after I see the movie !]
Please ... no "wise guy" posts (like : "Terminator and Batman were brothers !" )
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March 8, 2002
In Sequel-Crazy Hollywood, Studios Couldn't Resist 'T3'
By JOHN LIPPMAN
Staff Reporter of THE WALL STREET JOURNAL
Just after last Thanksgiving, top Hollywood studio executives one after
another drove in secret to a secure location to glimpse a document that
each feared might fall into the wrong hands. The latest threat from
terrorists? No, they were scanning the script of "T-3: The Rise of the
Machines," the most sought-after movie of the year.
Jumping at the call of producers is an indignity usually suffered by
rookie talent agents, not studio bosses. But in an era when Hollywood is
placing more of its bets on costly "franchise" movies to draw audiences,
the latest sequel in the "Terminator" series, after a 12-year absence, was
an opportunity not to be missed. Producers and longtime partners Mario
Kassar and Andrew Vajna knew the studios would jump at the chance.
And they did. "T-3," starring Arnold Schwarzenegger, begins production
next month, backed by Warner Bros. and Sony Corp.'s Sony Pictures
unit. It's the kind of movie that Hollywood is addicted to: a big star, a
proven idea, a ready global audience, giant box office. It's also the kind
of movie that Hollywood has said time and again that it is swearing off: a
$170 million gamble that crowds out other productions and does little to
enhance the creative prestige of the studio.
But studios are under constant pressure from their corporate parents to
produce titles that fit their larger interests -- namely, broadcast and
cable-TV holdings -- and from theater owners to produce blockbusters
that draw crowds. Hence the flood of easy-to-promote sequels with
familiar characters and reliable themes: "Harry Potter," "Lord of the
Rings," "Austin Powers 3," "Blade II," "Stuart Little 2," "Matrix
Reloaded" and "Matrix Revolutions," to name only a few.
When it comes to familiarity, "T-3" is hard to beat. Mr.
Schwarzenegger's line "I'll be back" from "The Terminator" is parroted
by children everywhere. "Eleven years after the last 'Terminator' film,
people are still using his jargon around the world," says Hal Lieberman, a
producer of "T-3." "It's a testament to the movie as an identifiable
brand."
"T-3" isn't an unusually expensive production. Filming the movie and
hiring the cast, including a $27 million fee for Mr. Schwarzenegger, will
cost $120 million to $125 million. Sony's "Spider-Man" and "Men in
Black 2," due out in coming months, carry price tags of more than $150
million. World-wide marketing costs can add an additional $80 million to
the bill of a big-budget film.
What makes "T-3" different is the cost of the deal that was required to get the rights to make the movie.
Those rights were split between a company in bankruptcy-court proceedings and the former wife of James
Cameron, director of the first two "Terminator" films. The upshot is that for "T-3" to get made, an
additional $50 million had to be earmarked for acquiring rights, paying producers and dishing out fees to
people who brokered the deal.
Warner Bros. and Sony have contributed a combined $125
million to the production -- not including marketing costs --
though neither will wind up owning the picture. Warner Bros.
agreed to pay $50 million for the U.S. rights, plus about that
much in marketing costs, to release "T-3" in the summer of 2003. The main reason: It didn't want anyone
else to acquire the rights and release the movie in competition with the studio's two sequels to "The Matrix,"
both due in 2003. Sony Pictures agreed to fork over $75 million for international distribution rights, plus
about $35 million in marketing costs -- though the agreement doesn't cover Japan, the largest movie market
outside the U.S.
T-3's long journey to the screen began modestly enough 20 years ago, when Mr. Cameron wrote a 45-page
outline for "The Terminator" and sold the script to production company Hemdale Films. At the time, Mr.
Cameron was best known for making "Piranha II: The Spawning."
The "Terminator" script told the tale of a cyborg who comes back from the future to assassinate the
woman whose then-unborn son will grow up to lead mankind in the future war of man vs. machines. He
worked closely on "The Terminator" with his producing partner, Gale Anne Hurd, whom he later married.
Mr. Cameron sold to Ms. Hurd his 50% interest in "The Terminator" for $1, which gave her control of half
the sequel rights.
With a production budget of $6.4 million, "Terminator" wasn't a big production, even for 1983. Hemdale
sold the U.S. distribution rights to Orion Pictures Corp., an independent producer known for backing the
likes of Woody Allen. One Orion executive suggested O.J. Simpson for the role of the cyborg. It went
instead to Mr. Schwarzenegger, who had just finished his turn in "Conan the Barbarian."
Despite minimal marketing support from Orion, "Terminator" was a hit, grossing $36.9 million at the U.S.
box office after it was released in 1984. Mr. Schwarzenegger was eager to make a sequel, but Mr. Cameron
waffled. The situation was complicated when Mr. Cameron and Ms. Hurd divorced. Then Hemdale hit the
skids and was forced by creditors to sell off its assets. One of the most valuable of them was 50% of the
sequel rights to "The Terminator."
Enter Carolco Pictures, a little studio famous for making big-budget action movies such as the "Rambo"
series and "Basic Instinct." Carolco's principals, Messrs. Kassar and Vajna, stepped in and bought Hemdale's
50% of the "Terminator" sequel rights for $10 million. Messrs. Kassar and Vajna knew and admired Mr.
Cameron; he had worked for them as the screenwriter on "Rambo: First Blood Part II." Mr. Cameron
agreed to write and direct a sequel.
But Ms. Hurd still controlled the rest of the sequel rights. Carolco agreed to pay her $7 million to become
the producer of what became "Terminator 2: Judgment Day." Ms. Hurd, however, retained her 50% rights
to any future sequels. Mr. Schwarzenegger came on board and accepted in lieu of cash payment a
Gulfstream III corporate jet, valued at between $10 million to $12 million.
Unlike its predecessor, "Terminator 2" turned into one of the costliest movies ever produced at the time: $93
million, thanks in large measure to special effects. When it opened over the July 4 holiday weekend in 1991,
"Terminator 2" was a monster hit, eventually pulling in $205 million at the U.S. box office and $309 million
overseas.
That wasn't enough to save Carolco from eventual ruin. Under the control of Mr. Kassar -- Mr. Vajna had
sold his stake and left the company before "Terminator 2" was released by Sony Pictures -- the studio's
free-spending ways landed it in bankruptcy proceedings in the mid-1990s. Once again, a 50% stake in the
"Terminator" franchise was an asset to be auctioned off in bankruptcy court.
Mr. Vajna, meanwhile, formed a production company, Cinergi Pictures, that made movies such as "Evita"
and "Nixon." Mr. Kassar, after the Carolco debacle, became a producer at Paramount Pictures, but he
chafed under that studio's cost-conscious and corporate approach to filmmaking. In the mid-1990s, Mr.
Kassar rejoined Mr. Vajna at Cinergi, renamed C-2 Pictures after Mr. Vajna bought back Cinergi's publicly
traded shares.
Budapest-born Mr. Vajna got his start in the movie business when he bought two theaters in Hong Kong.
That led him into film distribution, and his first production -- a 1972 kung fu movie called "Opium Trail"
that became a cult classic. During nearly 30 years in Hollywood, he earned a go-for-broke reputation and a
name for flashy accouterments like the cobalt-blue Bentley that sits outside his Santa Monica office. Along
the way, he settled an Internal Revenue Service tax rap stemming from Carolco's complicated financial
structure.
The first thing the reunited partners did was set out to recapture sequel rights to "The Terminator." Mr.
Vajna says he was surprised to discover that Carolco's 50% of the rights was still available. French pay-TV
company Canal Plus had bought the defunct studio's film library, and Miramax had picked up the remake
rights to "Total Recall" and the "Rambo" series. But "The Terminator" was still on the table.
"We refused anything less than $5 million," says Howard Weg, a bankruptcy attorney who represented the
liquidating trust of Carolco. Mr. Weg says the minimum price was based on half of what Carolco paid for
the sequel rights to "Terminator 2," and "we certainly didn't want to get less than that for T-3." Mr. Vajna
initially bid $7 million for the rights, and then had to bump his bid up to $8 million after Miramax lobbed in a
last-minute offer.
Mr. Vajna was jubilant at winning. That evening, he called Mr. Cameron to share the good news and, he
hoped, enlist the director for the third installment.
"You stole my child," the director responded icily, Mr. Vajna says. Mr. Cameron couldn't be reached for
comment.
What angered Mr. Cameron, according to people close to him, is that Messrs. Vajna and Kassar never
mentioned to him their interest in the "Terminator" rights. Mr. Cameron had been working behind the scenes
with Twentieth Century Fox, where he was then filming the epic "Titanic," to make a deal for "T-3." Fox
was blindsided by the bankruptcy-court bid by Messrs. Vajna and Kassar.
"It's a great franchise in the right hands. Dicey in the wrong hands. Once there was no Jim, there was no
movie for me," says Bill Mechanic, the former chairman of Twentieth Century Fox.
With Mr. Cameron declaring he wouldn't direct "T-3," Ms. Hurd had little option but to sell her 50% in the
project to C-2. She did, for $7 million, the same amount she received for "Terminator 2." Ms. Hurd had
now made $14 million on her $1 investment. C-2 had now invested a total of $15 million to lock up the
rights for "T-3," but still didn't have any one lined up to finance or distribute the movie. Messrs. Vajna and
Kassar spent $3 million developing the script -- some to hire writer Tedi Sarafian, the rest for research and
legal expenses.
Mr. Sarafian wrote a script good enough to win Mr. Schwarzenegger's commitment for a third turn. It also
enticed 40-year-old Jonathan Mostow, an up-and-coming director who made the submarine-warfare movie
"U-571." Mr. Mostow brought in two old classmates from Harvard, Mike Ferris and John Brancato, to
touch up the "T-3" script. They are together being paid $1 million.
Meanwhile, Messrs. Vajna and Kassar sold Japanese and German distribution rights to "T-3" for a total of
$20 million. That sale covered Messrs. Vajna and Kassar's out-of-pocket expenses to clear the sequel rights
and get the project launched.
The next step was to find someone willing to take on the risk of putting up money for production. Messrs.
Vajna and Kassar turned to Intermedia Film Equities, a German financier and sales agent known for backing
costly movies. The plan was for Intermedia to advance them production funds in exchange for an equity
stake in the film. It would recoup its investment and then some by selling off international distribution rights
region by region and getting a cut of "T-3" revenue.
By now, word was getting around to the studios, and they began to salivate at the prospect of resurrecting
the "Terminator" franchise. Phone calls started rolling in from Hollywood's studio chiefs: Jonathan Dolgen
and Sherry Lansing from Paramount Pictures, Jeffrey Katzenberg from DreamWorks, Stacey Snider and
Ron Meyer from Universal Pictures, Alan Horn and Lorenzo di Bonaventura from Warner Bros.
But the moguls were staring at a bet-the-farm gambit. For starters, the so-called below-the-line costs --
production costs, not including the cast -- were likely to be $90 million to $100 million, mostly because of
expensive digital effects. They also had to lure Mr. Schwarzenegger to what some Hollywood insiders think
may be his last role before his expected leap into California politics.
Mr. Schwarzenegger's star doesn't shine as brightly as it once did; he hasn't had a
big hit since "Eraser" in 1996. He recently had heart surgery, and he broke a few
ribs in a motorbike accident. But the aging superstar, whom "T-3" producers say
is training six hours a day, was convinced by the latest version of the script -- and
the $27 million pay -- that the time had come to go cyborg again.
As they began soliciting studio partners, the producers feared that word would
leak out about the "T-3" script. Mr. Sarafian's initial draft had started mysteriously
popping up on the Internet. So the two men decided to take extreme precautions:
Any studio executive who wanted to read the script had to drive to a hotel room
and read it in the presence of a chaperone from the producers' office.
When Mr. Dolgen's office was told that the Paramount executive would have to
go through the process, according to a person familiar with the incident, an
assistant told the caller, without even speaking to Mr. Dolgen about it, that her
boss would never read the script under such circumstances. He was later seen pulling up at the hotel, the
source says. Mr. Dolgen couldn't be reached for comment.
Studio executives weren't told about the fees being extracted by the various parties to the production.
Messrs. Vajna and Kassar are collecting a $5 million executive-producers fee. Mr. Mostow, the director,
and his producer are receiving $6 million. Intermedia gets a $2.5 million commission fee for its role as
foreign sales agent and interim financier. And about $10 million will go for lawyers, insurance, completion
bonds and financing charges. Including the approximately $20 million the producers spent on rights and
development, the total tab for "T-3" will come to $170.5 million -- assuming that the project stays on
budget.
In the end, Warner Bros. and Sony agreed to cough up the combined $125 million for the domestic and
international distribution rights, plus expensive marketing costs; to ensure that "T-3" gets equal treatment,
insiders say that Warners has agreed to spend as much marketing "T-3" as it will on each "Matrix" sequel.
Warners estimates that it could realize a modest profit of $25 million when all is said and done. Senior Sony
executive Ben Feingold thinks his company can realize a sizable profit if the movie performs anywhere near
the way "Terminator 2" did: "The character is indelibly etched in every market overseas."
No one is smiling quite like Mr. Vajna, who risked millions of dollars on a bet that he had what the studios
wanted. "A studio name is not a label," he says. "Titles can become labels. 'Terminator' is one such label."
Write to John Lippman at john.lippman@wsj.com
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