Chapter 289 Buying insurance for Orion who may go bankrupt
Speaking of project companies, the seven major studios in Hollywood have adopted the method of forming a project company for every commercial film with large investments. This is a means of self-protection for the major studios.
This has two main advantages. The first is that it can introduce investors from all levels. Everyone invests money in an investment entity, and determines the order of sharing according to the amount and time of the resources invested, or receives fixed income in advance. There is a
The corporate entity will be easier to liquidate.
The second benefit is that if the movie fails at the box office, you can use the method of company bankruptcy to evade the joint liability of the parent company. Of course, this involves many complex legal operations and contracts, as well as investors and the seven major studios
Given the balance of power, not every failed movie can completely escape financial responsibility.
Because of this, the legal fees for establishing a project company are relatively high. If it is not the seven major studios, many medium-sized companies will avoid using such a costly operation method.
As for low-cost production? They don’t have much money anyway. If a movie fails, there is a high probability that they will have no money...
Therefore, medium-sized studios such as Cannon and Orion take greater risks and adopt a less strict project company system. Sometimes they do this to avoid expensive legal fees, and sometimes they need bank mortgage loans.
Only the parent company can apply for relatively low interest rates, so in many cases, it directly participates in production investment.
The budget for The Silence of the Lambs reached US$16 million, and the two additional investments before and after Dances with Wolves also increased to US$22 million. At this scale, it is actually possible to set up a specialized project company without losing money.
Ronald and Mike Medavoy, who led these two projects, reached a private agreement: Mike Medavoy privately gave Ronald the green light for these two films, established a project company, and improved the details of the agreement to ensure
Ronald has the rights to the film in case the parent company encounters financial difficulties. Ronald promises to give him a share of the film and will clear his way out.
Mike Medavoy is a bit pessimistic about Orion. He told the truth that Orion does have the risk of being unsustainable.
In the past few years, Orion's movies were neither well-received nor successful. The best movie in recent years was "Mississippi Burning" the year before last, which won several Oscar nominations, but it did not sell as well as expected at the box office, with only 34 million US dollars.
Orion's response to this is to increase the amount of investment and provide more resources to each famous author and director.
They found John Milius, the screenwriter of "Apocalypse Now", to direct it, and invested US$16 million to shoot "Farewell to the King", which is very much his own style.
This movie tells the story of a World War II American deserter who escaped a Japanese firing squad in the Philippines. He hid in the wilderness of Borneo and was later rescued by a Dayak tribe of headhunters because his blue eyes were considered sacred.
.Soon after, he became the king of the Dayaks.
When British soldiers approach him and ask him to rejoin the war against the Japanese, the blue-eyed king expresses reluctance. But when his own tribe is threatened by the invaders, the king decides to fight for their rights and independence...
A civilized man in a civilized society became a deserter because of cowardice and became a chief among a group of backward primitive tribes. Finally, a British man convinced him...
It is conceivable that such a movie is unlikely to win the love of audiences in America. Everything touches the discomfort of ordinary audiences. In the rebellious society of the 1970s, there may be audiences willing to go to the cinema.
If you think about it, today's audience won't make themselves uncomfortable like this.
It’s not that John Milius doesn’t know how to make movies that audiences love to watch. Conan the Barbarian and Red Dawn are both his works. But he is just not satisfied and wants to make the kind of movies he wants to make. Of course, Orion satisfies his needs
Require.
Of course, the 2.5 million box office still gave this famous screenwriter and director some respect.
Such examples abound on Orion's production lines in the past two years. Another relatively large-budget movie, "Cannonball Run 3". After the original protagonist Burt Reynolds refused to star, they still felt that the quality of the script was very high, so they found
Jim Drake, the director of Police Academy 4, came to direct because he is good at directing sequels.
But this kind of old-fashioned series of comedy movies often depends on the protagonist. After changing the protagonist, the old-fashioned plot can no longer stimulate the audience's laughter. The production cost of 18 million yuan was exchanged for a box office performance of 3 million yuan.
To be honest, it's better to spend more money, cast Burt Reynolds, and continue to star.
Except for the recent "Fireball", which also performed very poorly at the box office and has no hope of recovering its costs, Orion's most recent movie with a production cost of more than 15 million is the just-released "Assassination."
In order to predict Orion's financial situation, Ronald also secretly watched a movie in the cinema.
This is also a very awkward movie. Orion’s strategy makes them particularly superstitious about some acting actors. This movie brings together two great acting male stars, Gene Hackman and Tommy Lee Jones.
The director is Andrew Davis, who once directed the break-dancing movie "Street Dancer", which competed with Ronald's "Break Dance". As a result, because the plot of the movie was too contrary to the audience's aesthetics, the production cost of this film was $16 million.
A big production (by Orion standards), it was about to suffer a box office disaster.
The main reason is that the plot is too bizarre. A US military garrison in Germany was sent back to China for trial, but he actually escaped at the airport. In the end, when the General Secretary-General of the Soviet Union visited Washington, he wanted to snipe him.
The plot is that after General Secretary-General Mikhail and the two commanders-in-chief George Sr. and Ronald Sr. signed a strategic arms reduction agreement, the militaries of the two countries were unwilling to end the Cold War, so they joined forces to assassinate the General Secretary.
Long. In the end, the protagonist starring Gene Hackman saw through the truth and stopped all this from happening...
Now that America's economy is strong, its allies are united, and Japan has the money bag and productivity, it has the upper hand over the Eastern camp. The people simply don't believe this story. If it were placed in the era of the Cold War in the 1970s, when America was at a disadvantage, maybe
It was also a box office success.
"Isn't it good to watch?" Diane didn't go to the cinema. After watching Ronald come back, he recorded something in his notebook, and then kept shaking his head, so he came up to ask him.
"Hey, the story makes the audience feel entertained. It's really not good to watch...but...when those two actors came out, I almost thought that old George and Mr. Mikhail were really making guest appearances."
The two actors in this movie are really similar, one is named John D'Amico and the other is named Ray Allen. Ronald read the subtitles at the end, found their names, and wrote them down.
For future use. This kind of actor is usually found specifically for the movie. They may not be real actors, they just look like them.
Sure enough, the film's first-week box office performance was also very poor, earning only 1.8 million U.S. dollars, less than one-third of "When Harry Met Sally," which had been in theaters for seven weeks.
The box office of "When Harry Met Sally" has declined very slowly, and it still has a weekend box office of just over 5 million, ranking fourth. Obviously, this movie has attracted many viewers who have watched the movie again and again, and come to the theater again and again.
Reminiscent of the myth of urban romantic love.
Many urban men and women hope that they can have a Harry or Sally to save them when they are single in middle age.
Ronald has no doubt that this movie will also have a group of people who watch it multiple times, something like a 50-time club.
Feeling the super chill faced by Orion this year (four movies failed at the box office), Ronald knew that he had to make some arrangements. In the end, his accounting team and Mike McDavoy set the principle that if Orion went bankrupt,
Under the protection status, Ronald has the right to buy out their investment share, thereby inheriting the production rights of the film for subsequent publicity, distribution, and award-winning public relations.
In this way, the two project companies have become subsidiaries of Orion and Daydream Investment. If Orion is forced to seek Chapter 11 bankruptcy protection, then Ronald will be able to completely inherit all the property rights of the two movies (
Including overseas distribution and videotape distribution).
A company of the size of Orion has a wide range of targets for film financing. When such a company files for bankruptcy protection, it usually adopts Chapter 11 clauses. While continuing to operate, it negotiates a repayment agreement with its creditors.
For a company that applies for protection under Chapter 10 of the Bankruptcy Law, creditors of debts cannot penetrate the protection of subsidiaries and companies holding shares to pursue debts.
Of course, the court will also look at the specific investment contracts and industry practices. So Ronald also brought in a legal team to try to make the contract as flawless as possible. Even if Orion's creditors sued for penetrating recovery, there would be a lack of evidence and contractual protection.
.
The terms for establishing the project company were sent to Orion's senior executives. Their boss, America's new richest man John Kluge, was not a person willing to delegate power, so the contract still had to be approved by him.
Mike Medavoy assured that, with his endorsement, Klug would not dwell on the details and, as was customary, there was a good chance that he would sign the document sent to him by his secretary.
…
"Mr. John Kluge would like to speak with you on the phone..."
Mike Medavoy called Ronald first, and his guarantee had no effect. Klug did not do what he said, but read the terms of the contract sent by Ronald, and then asked to negotiate with Ronald
Call and confirm before signing.
"Hello, Mr. Kluge, I'm Ronald Lee."
Ronald received a call from the richest man's secretary at exactly the appointed time. The German businessman still had a strong sense of time.
"Hello, Ronald. I've seen your movie and it's very good, so I want to have a phone call with you. The contract is generally fine. When can you make some good-looking and profitable movies? Orion guys
He always told me to pursue art, and it felt like my money was free."
It turned out that he wanted to have a chat with himself, hoping that he would cooperate more with Orion. Ronald felt relieved, and it seemed that there was nothing wrong with the contract itself.
"This is a difference in philosophy. I think movies are also a business, no different from selling Coca-Cola or computer software. But some people think that movies are first and foremost a work of art..."
"Ha, then if you take charge of Orion, can you guarantee that it will produce a few movies that are as popular as Coca-Cola?" Klug is quite old-school, and after hearing what Ronald said, he was very impressed.
"There is one difference between movies and cola, that is, they cannot be produced repeatedly. Once you have a good movie, you cannot continue to produce products of the same quality like Coke, which has determined the formula and production process. Generally, you can watch a movie once, and you can watch it several times at most.
I’ll get tired of it over and over again.”
"Great insight. If I were still young and hadn't sold the TV station to Rupert, just based on your words, I would have hired you to be the president of my TV network..."
"Mr. Kluge, you are too polite. I am just a director and don't know anything about running a business..."
Ronald respects the richest man very much, but he doesn't like this old-fashioned business style. This is not the era of Hollywood studios. A mid-sized studio owner or a blockbuster commercial film director, who makes more money?
It’s hard to say yet.
Besides, I didn’t even agree to Sony Oga-san’s invitation.
"Well, young people always have their own ideas, so I will treat this matter as a business partner. Your contract needs to modify some terms..."
Okay, here it comes. Ronald felt that old-school businessmen also had their shortcomings. They were tough and direct, "What do you think needs to be modified?"
"Business clauses need to be reciprocal. Your lawyer is not very good. Why are there only clauses against Orion Pictures but not against your Daydream Pictures?"
"This..." Ronald didn't expect the richest man to have opinions on this.
Cluger's request was that Ronald give him reciprocal conditions. If Daydream Pictures went bankrupt during the filming and distribution period, Orion would also have the right of first refusal to acquire the entire film.
All the power of the movie to let the daydream leave with dignity.
All Ronald wanted to do was to insure Orion that if he went bankrupt, he would automatically buy the entire movie. After all, Ronald felt that Orion was going to go bankrupt.
But Kluge in turn wants the same treatment, that is to say, he thinks Ronald is going bankrupt?
Ronald didn't know where he came from with this weird idea, I'm going bankrupt? I won't go bankrupt even if you go bankrupt. He had full confidence in himself, so he agreed, "No problem, although this is unlikely to happen.
But I can agree to the terms... Let our lawyers negotiate new documents."
"very good……"
Kluge hung up the phone and shook his head. Young people today are very confident.
But Ronald may not succeed in getting what he wants. The senior executives of Orion are right about one thing. If I am willing, I can completely pay for the loss of the movie. As long as they can also make up for the loss of the movie at regular intervals.
Produce some best-selling videos like Coca-Cola.
"Mr. Richest Man is very interesting. He seems to think that Orion can still be saved..." Ronald put down the phone and said to Richard who was involved in the matter.
"It's not surprising that the movie that also changed from Dangerous Liaisons, Valmont, is the movie that Orion turned around. Milos Forman is a two-time Oscar winner for best director, and according to the information I have received, this movie is indeed
It was shot much better than the Warner Bros. release of Dangerous Liaisons.”
The movie "Dangerous Liaisons", in which Michelle Pfeiffer and John Malkovich had an affair, was rushed out. The costumes, makeup, props and scenery were all rushed, using Hollywood traditions that have nothing to do with the aristocracy of the country.
Moreover, the budget was only 14 million U.S. dollars, and the box office was just over 30 million U.S. dollars. In addition to the public relations for the Oscars, Warner Bros. barely managed to break even.
This "Valmont" was meticulously crafted. The two films were shot at about the same time, and Milos Forman didn't edit it until today.
Someone within CAA has seen the edited samples, and it is said that both Annette Bening, who plays the evil noblewoman, and Meg Tilly, who plays the pure lady, are as good as Michelle Pfeiffer and Glenn Gross.
The role is much better.
Colin Firth, who plays Count Valmont, looks much more like a playboy than John Malkovich, who looks like a buffoon.
The total budget of this "Valmont" is US$34 million, which is also super expensive among Orion-led movies.
This shows how much Orion has placed great hope on this. As long as this one can sell well, the losses of the previous four movies can be made up.
Ronald nodded, he also wanted to be prepared for any eventuality.
"But, Richard, there's one thing I don't understand..."
"What?" Richard asked.
"Where did Klug come from that he thought I would go bankrupt?"