Here’s behind-the-scenes info given me by an insider on MGM/UA’s Hot Tub Time Machine, which was supposed to open to $20+M and earned only $13.6M:
The film cost $50M to make, which is not really that cheap, especially for a movie that should have been made for $20M. [MGM says it cost $35M] The reason MGM had to get creditor approval for its P&A spend, which I was told is $47M by the way, is because the creditors stand to lose even more money if HTTM does not come out at least break-even. [NF: I stand by $45M and received confirmation of it . MGM insists it didn’t spend all of it.] The P&A money comes from the credit facility, and the creditors are weighing in on every key decision. I viewed this large P&A commitment it as a “Hail Mary” play, because at this point what does MGM management have to lose? And I think they were hoping that HTTM would miraculously do well just at the moment final bids for MGM were being negotiated.
One of the two banks involved did an analysis that HTTM would need to gross $40M domestic for them to break even. They even brought in some highly paid consultants to bless the numbers, the marketing plan, and advise them (one of whom was a senior movie marketing exec with credentials from outside). The P&A spend and distribution pattern show that MGM considered HTTM a one-weekend picture: they would have to grab their money entirely the first weekend, because they were expecting a drop-off of at least 60%. They went all in, again. And lost.
MGM made their pitch to creditors, and the creditors approved the P&A spend, in early January. I’ll guarantee that some folks at JP Morgan and other creditors are having a tough weekend, and that MGM brass is working to spin the results better to them. They will also probably be talking about trying to save what remaining P&A they have unspent of the approved $47M.
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