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News Link • Entertainment: Movies

A Movie’s Budget Pops From the Screen

• New York Times

LOS ANGELES — Can a movie studio make money on a film based on an original and unfamiliar story, with no Hollywood superstars, a vanishing DVD market and a price tag approaching $500 million?

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Jennifer S. Altman for The New York Times

An audience wearing 3-D glasses at the screening of the 15-minute trailer for "Avatar", the James Cameron 3-D movie in New York.

Mark Fellman/20th Century Fox

Giovanni Ribisi and Sigourney Weaver in a scene from “Avatar.” James Cameron, the film's director, had a big hit for Fox in 1997, with “Titanic,” which reaped more than $1.8 billion.

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That question looms large for 20th Century Fox and its 3-D science-fiction film “Avatar,” among the most expensive movies ever. Despite many skeptics, the studio thinks it can turn a profit, in part because the film’s creator, James Cameron, was the driving force behind the studio’s immense hit “Titanic.”

But just in case box-office receipts for “Avatar” fall short, Fox has worked hard to hedge its large bet on the movie.

Despite the estimated half-billion dollars spent on its production and marketing, “Avatar” may carry surprisingly little financial risk for Fox’s parent company, the News Corporation, even if it disappoints. That is because of shifting industry economics, reliance on outside investors and help from a network of allied companies and in-house business units.

Fox’s efforts underscore how studios generally have been able to minimize their exposure at a time of blockbuster budgets — albeit at the cost of limiting their profit potential as well.

The final cost of the film has not been tallied, as Mr. Cameron, who has worked on the film for 15 years, and his collaborators, as far-flung as Weta Digital in New Zealand, continue to complete their work. Published reports have put the production budget at more than $230 million.

But the price tag would be higher if the financial contribution of Mr. Cameron and others were included. When global marketing expenses are added, “Avatar” may cost its various backers $500 million.

Tom Rothman and Jim Gianopulos, the co-chairmen of Fox Filmed Entertainment, declined through a spokesman to be interviewed. Jon Landau, Mr. Cameron’s partner in their Lightstorm Entertainment production company, also declined to be interviewed.

But “Avatar” did get a mention in a conference call on Wednesday during which Rupert Murdoch, the News Corporation’s chairman, discussed a surprise 11 percent earnings jump in the company’s fiscal first quarter, which ended Sept. 30.

“I’m confident we will lead the Christmas season,” Mr. Murdoch said. He added that he was “excited and moved” by “Avatar.”

Michael Nathanson, an analyst with Sanford C. Bernstein & Company, wrote in an e-mail message before the earnings call that investors “tend to ignore” the impact of a single movie on a company as large as the News Corporation.

1 Comments in Response to

Comment by Powell Gammill
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I hope to heck Cameron doesn't kill off another studio.  Heaven's Gate II.  I cannot see this making much profit...but hopefully it will make enough so as to be a tax write-off, and not a disaster at a time when companies cannot afford an major economic hit.

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