America achieves both fame and fortune

Chapter 719 Lost Money

Century City, WMA Headquarters.

In the hall, which was rarely open to the media, a temporary stage was set up. Christopher Nolan and Ali Emmanuel sat at two separate tables, picked up pens, and signed their respective contracts.

At the entrance to a lounge diagonally behind, Martin and Thomas watched as Nolan officially signed with WMA, changing his agency.

This hot Hollywood director left CAA at the end of last month.

Thomas glanced at Nolan, who had just signed with the company, then at Martin standing beside him, and raised his hand to touch his bald forehead.

Although the transformation from grassland to desert took only seven short years, he has no regrets.

When he had a full head of beautiful hair, he was just one of CAA's many low-level agents.

When his hair fell out and turned into a bald patch, he was already a top Hollywood agent, a powerful figure with an annual income of seven figures!

Who wouldn't be envious?

Martin suddenly spoke up: "CAA ultimately couldn't keep Nolan."

"Yes," Thomas replied, but then suddenly gasped in surprise.

The CAA and Nolan incident serves as the best negative example, and he must learn from it.

Agents are merely service providers for their clients, especially when dealing with first-hand clients. Pressuring Nolan like CAA does will only result in being ruthlessly abandoned.

Thomas glanced at Martin. Compared to other people in Hollywood, Martin, perhaps because of his background, seemed to be more sentimental towards his own people.

As long as I don't lose my head, this position is very secure.

Thomas added, "I heard that director Nolan is preparing to sue CAA?"

Martin said, "CAA is withholding his share of last year's earnings and is still delaying it."

Thomas sighed: "CAA is no longer the CAA it was in its early days. With so many top clients leaving, there must be problems with their internal management."

In recent years, CAA has lost many first-tier clients, including Steven Spielberg, Martin Scorsese, Leonardo DiCaprio, Halle Berry, and Christopher Nolan, among others.

Martin thought for a moment and said, "The mindset is different when starting a business versus becoming number one in the industry. In the 80s and 90s, CAA saw itself as a servant to its clients. Now, some senior brokers at CAA may see themselves as the masters of their clients."

This sounds familiar; I feel like I've been to a company like this before.

Martin recalled briefly that many property management companies in his previous life were like this.

Thomas said, "Yeah, back then, the founders of CAA sacrificed so much to secure the agency contracts for Sean Connery and Steven Spielberg. They practically sold their backsides to them. Michael Ovitz almost begged and pleaded to get their agency contracts. And now..."

After the signing ceremony, there were media interviews, followed by Nolan, Ali, Emma Thomas, and others arriving at the lounge.

Martin stepped forward, shook hands with Nolan, and said with a smile, "Chris, welcome to WMA."

Nolan said, "We'll be fighting side by side soon."

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Martin nodded. "As for Warner Bros., I don't know what to say."

Ali then stepped in between the two, saying, "WMA fully supports you in safeguarding your legitimate interests!"

Nolan remarked with some emotion, "I never imagined things would come to this with Warner Bros.."

Martin said, "Last year's revenue share is already 40 days overdue. My lawyer has sent a cease and desist letter, but Warner Bros. keeps delaying and wants to continue delaying."

Alibaba stated, "Warner's reason is that payments from the international market are overdue, and they want us to continue waiting."

Nolan shook his head: "We've already waited for over forty days; we can't wait indefinitely."

Although Martin Scorsese no longer works with Warner Bros., he has appeared in many Warner Bros. films and received a share of the profits from post-production, such as in The Dark Knight.

Nolan has been collaborating with Warner Bros. since "Day and Night," and has been involved in an even larger number of films.

Warner Bros. has yet to pay the two their 2011 post-production revenue share.

Of course, it's not just them; it also involves many companies and individuals.

After the media reporters left, the group went upstairs to discuss the matter.

Soon, Martin's lawyer Hamlin and Nolan's lawyer arrived at WMA.

After sending lawyer's letters repeatedly without any effect, Nolan and Martin both opted for legal action.

Not only them, but many celebrities and directors in the industry who have business dealings with Warner Bros. have also made the same choice.

Warner Bros., which has been the top-performing Hollywood company for the past decade, seems to have encountered some trouble after changing its leadership.

…………

Warner Building, Chairman's Office.

Kevin Tsujihara told several subordinates, "I received a notification from the legal department that the company has received lawyer's letters from numerous individuals, including Leonardo DiCaprio, George Clooney, Daniel Radcliffe, Matt Damon, Christian Bale, Martin Davis, and Christopher Nolan, demanding that we pay the outstanding commissions and the interest accrued therefrom."

Warner Bros. president Jon Berg's first reaction was to shirk responsibility: "The distribution channels are not making timely payments, and the payments for several projects have exceeded the planned expectations, which has led to difficulties in the cash flow of the film business. I cannot divert funds from other businesses to give these people a share of the profits when the money has not been received."

Upon hearing this, Daniel, who was in charge of distribution, was furious: "Why are the film business not paying out on time? Because several films failed last year, with North American box office not meeting expectations, leading to delayed releases in many overseas markets, and even some overseas markets withdrawing from distribution, which has caused a series of chain reactions!"

"Enough!" Kevin Tsujihara interrupted Daniel. "Are you all just blaming each other and shifting blame?"

Jon Berger turned to look at Daniel. What happened to the league? What happened to sharing the responsibility?

Daniel softened his tone slightly and continued, "If it's just a movie released last year that has distribution channel payment issues, I'll take responsibility! But why are older movies having this problem too? I remember clearly that there were no issues with payments for older movies; the distribution companies always made payments on time."

Film production is only a part of Warner Bros., but it is also one of the core businesses upon which Warner Bros. stands. Therefore, Kevin Tsujihara handed over Warner Bros. Pictures to his brother-in-law Jon Berg, hoping that he could rebuild it as quickly as possible.

Kevin Tsujihara rarely gets directly involved in film business. Upon hearing Daniel's words, his gaze fell on Jon Berg, demanding a reasonable explanation.

Jon Berg candidly stated, "The post-production of 'Jack the Giant Slayer' has reached a critical stage, and some additional investment was temporarily added. Due to the tight schedule and heavy workload, in order not to affect the company's daily operations, I temporarily transferred some of the revenue from older films to the post-production of this film."

Daniel remained silent, because this kind of thing was not uncommon within Warner.

This was also within Jon Berg's normal authority, and Kevin Tsujihara did not comment.

Jon Berg continued, "Once the payments from the channels are gradually received, the outstanding commissions will naturally not be a problem. At most, we will give them some interest, or even no interest at all after negotiation."

Kevin Tsujihara and Daniel both agreed that this was acceptable, because similar situations occur frequently in the industry, and because Warner Bros. is one of the top studios in Hollywood.

Even if celebrities and directors send lawyer's letters or resort to legal action, Warner Bros. can easily resolve the issue by simply delaying the process and reaching a settlement with them.

However, given the large number of people and funds involved, Kevin Tsujihara took note: "We can't let it drag on for too long; let's find a way to resolve part of it first."

Jon Berger is a genius, capable of both launching epic reforms in production models and innovating within established Hollywood rules: "The cast of 'Harry Potter and the Deathly Hallows Part 2,' led by Daniel Radcliffe, Emma Watson, and Rupert Greta, received huge sums in royalties later on..."

He glanced at Kevin Tsujihara and rephrased, "If it's based on the box office and profit-sharing contract, they'll get hundreds of millions of dollars."

Kevin Tsujihara immediately understood Jon Berg's meaning: "This project is really profitable?"

Jon Berg shook his head: "Harry Potter and the Deathly Hallows suffered heavy losses."

Previously, Warner Bros. had to appease the Harry Potter cast, and some actresses, like Emma Watson, were spoiled so much that they developed a princess complex.

But with the Harry Potter series over, the value of these actors, once considered infinitely high, has become infinitely low in the future, and Warner Bros. no longer needs to indulge them.

Jon Berg looked at Daniel: "You guys must have spent a lot on advertising and distribution..."

In this matter, Daniel couldn't possibly hold the group back, so he said, "Don't worry, the publicity and distribution costs are much higher than the production costs."

Distribution was handled by Warner Bros., and promotion was mostly done through Warner's media outlets. When Warner Bros. received a share of the box office revenue, the distribution and management costs were deducted first.

To put it simply, it's standard practice for global marketing and distribution costs to exceed the production cost.

Jon Berg added, "The production budget for the show was $1.5 million, which came from loans from the distribution company. Don't forget to calculate the interest."

Daniel waved his hand casually. There was no need to bring this up. He already had a plan in mind. No matter how you look at it, the revenue from "Harry Potter and the Deathly Hallows Part 2" would result in a loss for the production company.

As for the profit sharing stipulated in the contracts signed by the actors, they certainly won't receive it.

It is both reasonable and legal for a film that grossed $13.56 billion worldwide and topped the DVD sales charts in 2011 to have a negative net profit.

Without the large share of revenue from the Harry Potter production team, the portions for other people are not much for Warner Bros., and can be resolved smoothly with a little delay.

After leaving the chairman's office, Jon Berger and Daniel, the production and distribution executives who have a love-hate relationship, huddled together for a chat.

Soon, professionals from both sides will go out and, following Hollywood accounting methods, prepare a revenue report for "Harry Potter 9," proudly and responsibly announcing to the world that the film lost money!

(End of this chapter)