Paramount Makes Money Off 'Avengers' Too

The Avengers is the first Marvel Studios film owned, marketed and distributed by The Walt Disney Studios which took over those duties from Paramount this year. So is Paramount left out in the cold even though Avengers is sizzling hot at the box office? The answer is no. Disney CEO/President Bob Iger in 2009 bought the comics entertainment company for $4 billion and then in 2010 bought Paramount out of the final two films of its 6-picture distribution deal with Marvel Studios — The Avengers and Iron Man 3. Under its old deal with Marvel, Paramount also put up P&A and was reimbursed over time. So Disney paid a premium to put everything under its own roof as soon as possible. The result is that Paramount is getting paid without having to put up the P&A or exert the manpower that goes into releasing summer blockbusters. Paramount still distributed Thor and Captain America in 2011. For Avengers, the studio gets onscreen production credit which reads “Marvel Studios in association with Paramount Pictures”. It also gets moolah. When Disney bought the worldwide distribution rights to Avengers and Iron Man 3, it paid Paramount a minimum of $115M as an advance. (The $115 million was to be paid in two installments – half when The Avengers was released, and the other half when Iron Man 3 screens on May 3, 2013.) But I’ve learned that Paramount actually gets the higher of either that $115M or the combination of its 8% distribution fee on Avengers plus 9% on next year’s Iron Man 3. “Looks like there will be overages!” a Paramount exec told me excitedly today. Paramount also kept the pay rights as part of the existing pay TV arrangement so Avengers will debut on Epix that joint venture among parent company Viacom, MGM and Lionsgate. Yes, Paramount lost the bragging rights that come with counting Avengers’ record grosses in its annual tally. But considering that Disney kept 92% of the profits that came from Iron Man 2′s $622 million worldwide revenues, how much were those bragging rights really worth?

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