Warner Bros. guarantees filmmakers a salary for HBO Max movies

Photographer: Gabby Jones / Bloomberg

Warner Bros. has devised a new plan to compensate filmmakers during the pandemic: treating every movie like a box office success.

After shocking Hollywood with its decision to release all of its new films this year on HBO Max, the studio adjusted the terms of its agreements with its partners to ensure payment regardless of box office sales and increase the chances of bonuses based on performances. Warner Bros. will also pay a larger bunch of cast and crew money based on the fees it collects from HBO Max, according to people familiar with the studio’s plans.

The company is close to resolving disputes with many parties, said the people, who have asked not to be identified because the talks are private. Details of some deals have already started to surface, with the Hollywood Reporter saying this week that Warner Bros. is close to a deal with Legendary Entertainment on the movie “Godzilla against. Kong. “

The agreements are a sign of a period of pandemic crisis. Most cinemas are closed due to the coronavirus, prompting studios to put their films online. But their payment deals with partners usually depend heavily on success on the big screen – a system that many Hollywoods want to protect because it has made them rich.

Warner Bros. plans to release 17 films in 2021, including “Dune”, “In the Heights” and sequels to “The Matrix” and “Space Jam”. The films will be appearing in theaters and on HBO Max at the same time – although they will air exclusively on the big screen in many territories across the world. The films will air on HBO Max for 31 days, but may remain in theaters long after.

Here’s how it will work, according to people familiar with the situation: When the films release this year, anyone eligible for a bonus will receive one to half of the box office revenue that would normally be required to trigger a payout. And if more theaters close, the threshold will drop further – a stipulation called the ‘Covid-19 multiplier’. Those who would normally participate in the profits of box office receipts will continue to do so, while benefiting from on-demand and online sales.

HBO Max will pay Warner Bros. a fee for its 31-day window, and the resulting money will be shared not only with the benefit participants, but also with the cast and crew. Both companies are part of AT&T Inc.’s WarnerMedia, run by streaming veteran Jason Kilar.

“HBO Max is paying a hefty fee for the ability to show these films,” Kilar said in an interview last month.

AT&T, which acquired Warner’s operations in an $ 85 billion acquisition in 2018, has a lot to play in strategy. In addition to helping him cope with the pandemic, the hope is to attract millions of subscribers to HBO Max, launched last year. The telecommunications giant is counting on the platform to become a full competitor to Netflix Inc. and Disney +.

Complaints from directors

What is not clear is whether the extra money is enough to ease tensions between the studio and the well-known filmmakers and financiers who immediately screamed about Warner Bros. decision. “Tenet” director Christopher Nolan criticized the idea of ​​directing the films to HBO Max, which he called “the worst streaming service. Denis Villeneuve, whose film “Dune” was affected by this decision, lambasted Warner Bros. and AT&T in a column for the Variety industry trade publication.

“AT&T hijacked one of the most respectable and important studios in movie history,” he said. “There is absolutely no love for the cinema, or for the audience here.”

Talent agencies also have complained, Endeavor executive chairman Patrick Whitesell claiming it was an attempt by Warner Bros. to negotiate. Richard Lovett, president of the agency CAA, said the move was “completely unacceptable” to his company and its customers.

“You unilaterally determined a value for our clients and their work to benefit the long term prospects of HBO Max and AT & T’s finances, a choice our clients did not,” he said. in a letter to WarnerMedia cited by Variety.

Many parties were upset because they felt Warner Bros. didn’t give them enough information, or because they wanted their films to appear exclusively in theaters. But the reprimand was also a carefully orchestrated part of a negotiation: many worried about the potential impact on pay.

And although publishing movies on the Internet is nothing new – Netflix Inc. and Amazon.com Inc. releases dozens of feature films each year – filmmakers often choose traditional studios because they want their films to appear in theaters first, and because the potential benefit of a big theatrical success far exceeds the money of a streaming success. On big movies like “Wonder Woman,” that can run into tens of millions of dollars. Robert Downey Jr. made a grossed $ 75 million for “Avengers: Endgame” between his salary and his share of the profits.

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