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Old 02-13-2008, 07:24 AM   #26
Sauron the White
Ghost Prince of Cardolan
 
Join Date: Mar 2007
Posts: 903
Sauron the White has just left Hobbiton.
After digesting all that has happened in the last 48 hours, it looks like one thing is clear: these events will cause THE HOBBIT to at least delayed. The combination of New Line and its leaders fighting within their corporate structure for the very existence and the suit by the Estate seem to indicate that there is no longer a bright green light for the next two ME movies.

Which one will shake out sooner? That would probably depend on how Warners decides to resolve the New Line as a studio situation. Reports weeks ago said that Shaye was out and yet he is still there. Reports from two weeks ago said New Line was going to be completely absorbed by Warners but the latest reports seem to say otherwise.

How much money is Warners willing to part with to settle with the Tolkien estate and get the films back on the fast track? If we use conservative figures, we see that the sum could be considerable.

Lets look at the numbers.

Th films took in $2,956,000 US dollars according to boxofficemojo.com. The lions share of that was outside of North America. In fact, some 64% of revenues came from outside. To make it easy, lets take 64% of 3 billion dollars which equals $1,923,000 dollars. New Line sold the foreign rights in many territories for less than the normal 50/50 split before the films ever came out as a way to finance and pay for them. Lets pretend that the money NL did end up with was closer to 35% of that foreign take. That would give NL $675 million dollars from foreign sales of the film.

US sales equaled just over a billion dollars, so using the normal 50/50 theater split, figure on $500 million to NL.

Add those two figures together and you get a total of $1,175,000 in their pockets. Then there is the ancillary income from things like DVD sales and licensing. Attorneys for Peter Jackson in his lawsuit said that was $1 billion dollars.

So what we have to work with is a pot of money of almost $2,200,000 more or less as money NL put in its coffers.

Now what about expenses? This is where studios always padded the books to lessen the shares of others profit participation shares. But lets use some conservative numbers.

The films had an itial budget of $270 million plus some add on costs for film pick-ups. Lets call it $300 billion for the three. Marketting and advertising costs were said to be $50 million per film for another $150 million. Thats a total of $450 million.

So take the revenue profit of $2,200,000 and subtract that figure of 450 from it and you get $1,750,000.

The Estate claims 7.5% of that which equals $131 million.

But then the lawyers really earn their money. Peter Jackson was cut in for almost $200 million dollars in profit sharing. The Weinsteins got a big chunk as did Saul Zaentz. Question: are those legitimate "expenses" which are taken off the revenue before the Estate gets their share or are they consided as after cost expenses? If NL can take another $300 million off the top of their revenue stream, that gets the revenue down to $1,450,000.00.

That would reduce the Estate share to about $109 million. And knowing how these accounting tricks worked in other cases there are all kinds of costs, both real, semi-real and totally bogus which NL will attempt to say they incurred and are legit.

Even using a worst case scenario, where NL is able to get all payments and profits sharing listed as legit and gets their so called profit down to $1.2 bilion, that would still leave the Estate claiming some $90 million US dollars. That is a great deal of money.

So even with every single possible expense being figured in and deducted from the profit calculation, the Estate is in line for about a $100 million dollar payday.

Peter Jacksons attorneys figured he was owed about that same amount. They looked to settle for about 40 cents on the dollar. Will the Estate do the same and still get the single biggest payday in the history of JRRT and his Estate? Will a check get them to back off on claimsto strip NL of rights? Or is it in the interests of the Estate to tie this up in years of litigation hoping to stop the films altogether?
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