Aug. 3 (Bloomberg) -- “Cowboys & Aliens,” the space-invaders western that barely beat “The Smurfs” in theaters last weekend, will return light paychecks to some of Hollywood’s heaviest hitters, including Steven Spielberg.
Executive producer Spielberg, producers Brian Grazer and Ron Howard, director Jon Favreau and stars like Harrison Ford and Daniel Craig usually command a percentage of a film’s revenue, as well as a salary. In “Cowboys & Aliens,” made for $163 million, expenses must be recouped before such shares are paid, said three people with knowledge of the situation who declined to speak publicly because the agreements are private.
That may never happen, given the ticket sales and competition starting with News Corp.’s “Rise of the Planet of the Apes” on Aug. 5, said Matthew Harrigan, an analyst with Wunderlich Securities. The parties probably accepted the terms to get the film made. Rights to “Cowboys & Aliens,” based on a graphic novel, were first sold 14 years ago.
“It is a tough economic time,” said John Schulman, a former general counsel for Time Warner Inc.’s Warner Bros., who wasn’t a party to the movie’s contracts. “To get something done everyone’s got to make some compromise.”
Studios such as “Cowboys & Aliens” distributor Universal Pictures, part of Comcast Corp., have been changing how they pay directors and actors, trying to improve the economics of film-making by recovering production and marketing costs first and awarding incentive compensation from a profit pool later.
In “Cowboys & Aliens,” the participants will be entitled to 50 percent of the film’s earnings if it breaks even, one of the people said.
Cast of Producers
“Cowboys & Aliens” was produced by DreamWorks Studios SKG, Spielberg’s closely held company, Universal and Relativity Media LLC, the studio created by film financier Ryan Kavanaugh. Reliance Big Entertainment, the Mumbai-based company with a $325 million equity stake in DreamWorks, is listed as a production company, along with Imagine Entertainment.
In all, “Cowboys & Aliens” has 16 producers and eight credited writers.
The film generated $36.4 million in its opening three-day weekend in U.S. and Canadian theaters, according to Box Office Mojo, which also estimated the production cost. “The Smurfs,” from Sony Corp., collected $35.6 million for second place.
“For this type of movie it’s soft,” Brandon Gray, president of Box Office Mojo, said in an interview. “And that means it’s more likely to lose money in the market.” The numbers of theaters showing the film will shrink as the weeks go by, he said.
Marvin Levy, a spokesman for Spielberg, declined to comment, as did Michael Rosenberg, a spokesman for Grazer and Howard’s Imagine Entertainment, producer of Oscar winners including “A Beautiful Mind.” Adam Keen of Relativity Media, also declined to comment, along with a Universal spokeswoman.
Ina Treciokas, a publicist for Ford and Favreau, said the actor and director had no comment.
With a $163 million production cost, plus marketing and distribution fees, the movie is unlikely to earn a profit during its worldwide theatrical run, according to Tony Wible, an analyst at Janney Montgomery Scott LLC in Philadelphia.
“I’m not sure they’ll ever get there,” Wible said. It may reach profitability in the DVD and pay-TV markets, he said.
“Cowboys & Aliens” is expected to collect $88 million to $93 million in U.S. cinemas, the estimate of Boxoffice.com, a website that tracks films. It opens overseas next week in some markets, and could take in twice that much internationally, based on other summer action films tracked by Box Office Mojo. Studios split the proceeds with theater operators.
When producing films, Imagine Entertainment can command as much as 7.5 percent of a film’s revenue, the trade publication Variety reported this week. Ford negotiates his fees individually, as does Favreau, who got $10 million to direct, according to the Internet Movie Database, or IMDB.com. Lead actor Craig was paid $6 million, said the site.
The box-office performance of “Cowboys & Aliens” demonstrates that well-known stars and directors no longer guarantee theatrical success, Harrigan, the Denver-based analyst, said in an interview.
The comparable performance of “The Smurfs” “really tells you Hollywood is a little less star-driven and a little more project-driven” than in the past, Harrigan said.
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