UPDATE: The Walt Disney Studios deal to buy Paramount Pictures out of the final two films of its six-picture distribution deal with Marvel Studios amounts to the Mouse paying a premium to get cracking on its $4 billion investment in Marvel. When you break down the numbers, it’s a pretty good deal for both studios. Paramount had been earning an 8% distribution fee on the Marvel titles like Iron Man. Paramount also put up P&A and got reimbursed over time. The $115 million will be paid in two installments–half when The Avengers is released May 4, 2012, and the other half when Iron Man 3 is released May 3, 2013. If those movies perform more strongly than expected, Paramount will earn more than $115 million advance. I’m told that Paramount is actually getting 9% on that third Iron Man movie, a reward for launching one of Hollywood’s most valuable franchises. So essentially, Paramount is getting paid without having to put up the P&A or exert the manpower that goes into releasing summer blockbusters.
Paramount loses bragging rights that come with counting the worldwide 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? Paramount needed the Marvel deal when it was signed because the studio had little of its own homegrown franchise product to lean on. Marvel and DreamWorks product got the studio through lean times. DreamWorks is gone and Marvel will be out in 2012, but Paramount is already in a much better place. The $50 million grosses on the $20 million budget Jackass 3D indicate that this franchise is far from done. Transformers 3 gets released in July, a fourth Mission:Impossible is in production and will be released for holiday, 2011. The following year brings another Star Trek, G.I. Joe and the relaunch of the Tom Clancy-created Jack Ryan series, with Chris Pine playing the CIA analyst. Paramount next week releases Paranormal Activity 2, and it owns worldwide distribution rights on sequels. Many of those movies are coming from core lot producers Bad Robot and Lorenzo di Bonaventura, and newcomer Platinum Dunes is revamping the Teenage Mutant Ninja Turtles franchise. Clearly, Paramount won’t need the product in 2012 as much as it has in recent years. Paramount will still distribute Thor on May 6, 2011 and The First Avenger: Captain America on July 22, 2011. (more…)