The true cost of filmmaking
A blockbuster hit for Warner Bros., 1989’s Batman has taken in more than $250 million worldwide, making it the sixth-highest-grossing film of all time. Yet one recent financial statement leaked to the Los Angeles Times indicates the movie is still $35 million away from showing a net profit. It might seem as if the Joker had gone into accounting, but no one who knows big-budget Hollywood deal making was really surprised. It’s not that Batman hasn’t earned plenty: As Robert G. Friedman, president of worldwide advertising and publicity for Warner Bros., puts it, ”I think it’s fair to say that Jack Nicholson and some others have begun to receive some money.” But the fact that the movie remains technically in the red makes Batman a prime example of Hollywood’s singular approach to bookkeeping — Billy Crystal even joked about it on the Oscars. Here’s how the costs break down, and why the new show-biz superstars may be number crunchers.
GROSS RECEIPTS — $253.4 mill
COSTS — $289.2 mill
Distribution Fee — 80.4 mill
The standard fee for distributing the film, paid by the studio to itself. For Batman, this was a mere 32 percent of the gross — it can go as high as 40.
Advertising and publicity — 62.4 mill
In a word, staggering — almost as much as Bud Light spends on a year of advertising. Prime-time TV commercials, at an average cost of $120,000 per 30 seconds, don’t come cheap.
Prints — 9.0 mill
A print of a movie costs roughly $2,000-$3,000, and there were about 3,000 of them out there working, so this is actually a Bat-bargain.
Editing, dubbing, subtitles — 1.1 mill
Not bad. (They must have already had editing equipment available in the Bat Cave.)
Trade association fees — 2.1 mill
Major studios pay dues to the Motion Picture Association of America, a potent lobbying group. Because Batman did so well, the lion’s share of the studio’s dues that year was charged against it.
Checking on b.o. receipts — 1.6 mill
To ensure they’re getting all their receipts, studios hire people to go to theaters, check the gate, and compare it with what the theater owners report. Well, how much do you pay for insurance?
Negative Cost — 53.5 mill
The cost of creating the final product, the negative of the film — hiring writers, cast, caterers, etc.
Misc. other — 9.7 mill
Freight and handling costs, union and residual payments, taxes and customs, and who knows what else.
Advances — 58.5 mill
Paid to the savvy players who got a percentage of the gross receipts. The richest chunk by far has gone to Joker Jack Nicholson, whose deal gave him an escalating 15-20 percent of the gross from the day the money started pouring in — reportedly more than $50 million so far. How can he get a deal like that? Because he has a complete monopoly on being Jack.
Interest — 10.9 mill
Studios think of what they put up for the negative as a loan, and the interest they charge seems to accrue more or less eternally. This helps create the ”rolling break-even” dreaded by those who are owed a share of a movie’s net profits. Like the mechanical rabbit permanently in front of the greyhound, the film’s break-even point remains always in sight but just out of reach.
DEFICIT — $5.8 mill