The Emperor Strikes Back

How Lucas is maximizing the take on Attack of the Clones

Star Wars producer Rick McCallum still bristles at the memory of his 1999 trip to Hong Kong. Just days after George Lucas' blockbuster Star Wars: Episode I--The Phantom Menace was released in the U.S., street vendors were hawking bootleg videos--weeks before the flick was due to hit Asian theaters. This time around, the Empire intends to strike first. In a bold attempt to thwart pirates, Lucas' much-anticipated Star Wars: Episode II--Attack of the Clones is being released in the U.S. and much of the rest of the world on May 16--the largest single rollout in Hollywood history. "We're not going to be ripped off this time," vows McCallum.

Jedi warriors have nothing on Lucas when it comes to protecting his Star Wars franchise. When Phantom Menace was nearing release, Lucas' team sued one book publisher for copyright infringement, then forced Internet sites to take down unauthorized pictures. This time around, Lucas is pushing just as hard. To scoop unauthorized Internet sites, Lucas has created his own "underground" site, filled with fake news articles and features on the characters. A new company was hired to run the Star Wars fan club. And to show the films, theater owners are again likely to pay high fees while agreeing to Lucas' strict terms for the kind of auditorium in which they can play the flick.

In a town known for maniacally hands-on executives, Lucas might just be setting new Hollywood standards. "He is a control freak, but if you want the film--and everyone does--you do what he asks," says Paul Dergarabedian, president of box-office tracking firm Exhibitor Relations Co. Indeed, the first four Star Wars movies generated more than $3 billion in total revenues. But Phantom Menace, even with an otherworldly $431 million at the U.S. box office, showed subtle signs of losing power. Merchandised sales were disappointing. Ticket sales were 43% behind the 1977 original. There's no telling how much counterfeiters cut into sales, but overall, Hollywood estimates it loses $3 billion a year to piracy.

Lucas, who spent $140 million of his own money to make Attack of the Clones, controls most of the action on the project. Although Twentieth Century Fox Film Corp. is releasing the film, Lucas gets an estimated 40% of ticket sales. He also controls merchandise, videos, and computer games. In 1999, Toymaker Hasbro Inc. paid him $263 million in royalties, on top of the 8.4% stake in the company Lucas owns--a stake he insisted on to even sign the deal. In all, Lucas will net more than $750 million for Attack of the Clones, say insiders.

Starring Ewan McGregor as Obi-Wan Kenobi, Attack of the Clones is expected to battle past expected blockbusters like Sony Pictures Entertainment's Spider-Man to be the summer's biggest hit (table). But just to show the film, theaters will have to give 60% of ticket sales to Lucas and Fox, the studio that distributes it for him, says Bruce Snyder, Fox's distribution president. Normally, studios take about 50%. Moreover, theaters will be required to play the film--in their largest auditoriums--for up to 12 weeks. A theater is likely to get special treatment if it has a digital sound system that has been certified by Lucasfilms' THX Div. THX currently certifies the digital sound systems in 1,800 U.S. theaters and 4,300 worldwide, generating an estimated $30 million in annual fees. This time around, Lucas is also encouraging theaters to install digital projectors, which the filmmaker says will enhance the viewing and lure more customers. Lucas' THX would also certify those projectors, although most theater owners have balked at the high price of installing them.

Getting folks into the theater means a flurry of ads and a cover on Time and other magazines. But to attract more younger fans--and help juice toy sales--the Lucas team has signed new tie-ins with cereal maker General Mills Inc. and with chips company Frito-Lay. In fact, General Mills is even putting out a special-edition Stars Wars cereal. "We're trying to reach the 9-year-olds who were too young in 1999," says Jim Ward, Lucasfilm's vice-president for marketing. "They're now our sweet spot."

Still, even Lucas' spin-control machine can't control everything. The filmmaker is fuming at movie critic Harry Knowles, who got an unauthorized look at the film and published a rave review on his Internet site, Imagine if Knowles had slammed it.

By Ronald Grover in Los Angeles

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