Hunting in Hollywood

On May 31st, the second week of the summer season saw the North American box office premiere only two new films: Paramount's *Soapdish* and Columbia Pictures' *City Slickers*.

*Soapdish* narrates the intrigues of a group of soap opera actors revolving around a fictitious soap opera titled *The Sun Also Sets*. The ensemble cast of *Soapdish* was impressive, featuring Oscar-winning actress Sally Field, Oscar-winning Best Supporting Actor Kevin Kline, Oscar-winning Best Supporting Actress Whoopi Goldberg, and notable stars like Robert Downey Jr., Carrie Fisher, Elisabeth Shue, and Garry Marshall. The film was directed by Michael Hoffman, known for his well-received dramas *Some Girls* and *Restoration*.

Those familiar with Hollywood's inner workings could quickly identify this as another package deal film by CAA. Consequently, despite lacking a top-tier superstar commanding a salary of tens of millions, the film's production cost was still a substantial $35 million.

*City Slickers*, starring Billy Crystal, followed the successful formula of the *Crocodile Dundee* series from the 1980s, with a budget of $27 million.

In its opening weekend, *Soapdish* grossed only $6.73 million, with an expected first-week gross of around $9 million, far below Paramount's expectations.

Although *City Slickers* was designed to follow the *Crocodile Dundee* trend, it performed reasonably well both in terms of reviews and box office, earning $13.03 million over the weekend and projected to hit between $18 million to $20 million for the first week.

Among the six new releases from the previous week, apart from *Ice World*, which saw about a 10% uptick in its second weekend with 816 screens, the other five films experienced a decline of over 30%.

Bruce Willis' new film under Columbia's TriStar label, *Hudson Hawk*, experienced a 47% drop, the highest among them.

Columbia had positioned *Hudson Hawk* as the centerpiece of this summer, while *City Slickers* was a comedy pushed out just before the premiere of *Batman: The Dark Knight* to seize the market.

Unexpectedly, the market performances of the two films were entirely contrary to the management's expectations.

With a production cost of $65 million for *Hudson Hawk*, the film only amassed $11.59 million in its first 10 days, less than the three-day revenue of *City Slickers*.

Entering June, the release date for DC Universe's second installment, *Batman: The Dark Knight*, was drawing nearer. Apart from intensified promotional campaigns, *Batman: The Dark Knight* also began media and fan screenings a month in advance. The early reviews from North American media were overwhelmingly positive, with scores generally above 8 out of 10.

The new week brought an announcement from Warner Bros., the global distributor of the film, officially revealing the global box office of *Batman Begins*, the starting film of the DC Universe.

Since its premiere at the end of the previous year, *Batman Begins* was shown in 51 countries and regions worldwide. Ultimately, it amassed $436 million in North America and $531 million internationally, totaling $967 million worldwide. While it narrowly missed breaking the $1 billion mark, it still significantly surpassed the $790 million global revenue of 1982's *E.T. the Extra-Terrestrial*, becoming the highest-grossing film in Hollywood history as of 1991.

This time, Warner Bros. and Daenerys Entertainment would launch *Batman: The Dark Knight* simultaneously in 21 countries and regions globally. Such a broad simultaneous release was common years later but was still a rare initiative in the early '90s, reflecting the strong confidence both companies had in the film.

Given the unprecedented $80 million combined production and marketing budget, the film needed to generate about $300 million in North America alone for the studios to recoup their costs from the domestic box office.

However, it was well-understood that while the *Batman* series boasted impressive box office figures, its merchandising revenue was even more substantial. Publicly available figures showed that in 1990 alone, *Batman Begins* generated $2 billion in merchandise sales.

With a profit margin of approximately 15% on merchandise, this $2 billion translated into about $300 million in pre-tax profits, most of which flowed into Daenerys Entertainment due to the initial contracts.

This helps explain how Daenerys Entertainment managed to achieve an astonishing $1.13 billion in net profits in 1990, despite a series of significant expenditures.

In early May, just before the premiere of *Batman: The Dark Knight*, the VHS of *Batman Begins* was released globally. In its first week on shelves, it sold 5.6 million units in North America alone.

As the release date of *Batman: The

 Dark Knight* approached, the global sales of the *Batman Begins* VHS soared past 13 million units within a month, nearing $400 million in revenue. This trend suggested that global sales might reach over 30 million units, potentially grossing over $900 million and possibly even reaching $1 billion.

Under the agreements signed between Hollywood studios and various guilds, only 20% of VHS sales were considered profit.

Despite VHS tapes costing up to $30 each during this era, their profit margins were not significantly lower than those from theatrical releases.

Projected VHS sales of over 30 million units for *Batman Begins*, aside from Warner Bros.' distribution share, would still predominantly benefit Daenerys Entertainment, with profit estimates easily reaching $300 million.

Calculating global box office, VHS sales, and merchandise revenue, *Batman Begins* was expected to generate profits in the region of $1 billion within three years of its release, not including subsequent TV rights and other residual income channels.

Such impressive commercial results at the launch of the DC Universe were precisely why both companies dared to invest a combined total of $160 million in production and marketing for *Batman: The Dark Knight*.

The premiere for *Batman: The Dark Knight* was set for June 5th, a Wednesday.

Tomorrow would be the premiere of *Batman: The Dark Knight*. Today, Simon spent the entire day at Warner Bros. Studios in Burbank.

Or rather, Terry Semel forcibly kept him at Warner Bros., as in recent days, Semel had been calling Simon daily, urging him to divide his attention between the distribution of *Batman: The Dark Knight*, post-production of *The Flash*, and other collaborative projects between the two companies.

Given the profits generated by *Batman Begins*, its significance to Time Warner was self-evident.

The reason Semel was so persistently engaged was also influenced by another factor.

Following the completion of the merger between Time Inc. and Warner Bros. at the beginning of the previous year, Time Warner's performance and stock prices had not met industry expectations.

However, to thwart Paramount Communications' hostile takeover attempt on Time Inc., the original stock swap deal was converted into a cash and stock transaction, causing the debt of the two companies, previously at about $2 billion, to surge to $10 billion.

After a year of efforts to mitigate this debt, Time Warner's total debt still stood at $10.6 billion.

Steve Ross, who disliked selling company assets, began preparing for a stock issuance around last year, planning to issue an additional $3 billion in stock to repay Time Warner's maturing debt over the next couple of years.

Time Warner shareholders were naturally reluctant to dilute their holdings or purchase additional shares, and external perspectives on Time Warner's prospects were not optimistic.

Thus, this stock issuance faced considerable internal and external resistance.

Moreover, with the North American stock market continuing to decline in the latter half of the previous year, the plan nearly fell through.

Fortunately, America's decisive victory in the Gulf War boosted the stock market in recent months, enhancing Time Warner's share value, which finally returned to over $10 billion. Along with investor enthusiasm for the upcoming releases of *Batman: The Dark Knight* and *The Flash*, the stock issuance found a new turning point, scheduled for August.

Even with full confidence in *Batman: The Dark Knight* and the certain release of *The Flash* after the stock issuance, Semel was pulling Simon to Burbank as much as possible to present a close collaborative relationship to the public.

To achieve this, the two companies recently agreed on another collaborative project outside the DC Universe, counting as one of the two additional collaborations owed by Daenerys Entertainment to Warner Bros.

Today, Simon was busy with three tasks in Burbank.

In the morning, Semel personally accompanied him at the Warner Studios post-production center for *The Flash*. In the afternoon, he attended back-to-back meetings.

Due to work commitments, Simon had not yet had the chance to welcome Anthony Johnston, who was scheduled to arrive today.

Recently, the Johnston family had formally taken over 30% of MGM's shares from other shareholders who had converted their bonds to equity, becoming MGM's largest shareholder.

Although they had not achieved absolute control, as the largest shareholders, supported by other Australian shareholders, MGM's control effectively fell to the Johnston family, or more accurately, to Simon.

Anthony's visit was to discuss MGM's future development plans.

At Warner Studios that afternoon, two meetings were held.

From 2 to 4 PM, there was a distribution meeting for *Batman: The Dark Knight*.

From 4 to 5 PM, the production meeting for the collaborative film was scheduled.

The new film, titled *The Last of the Mohicans*, was based on the 1826 novel by James Fenimore Cooper. The story, set during the late 1750s colonial wars between England and France for control over America, involves the last three warriors of the Mohican tribe saving and escorting two kidnapped daughters of

 a British colonel back to the British base.

Like *Hamlet*, the story's knight-rescues-princess motif made it a favorite in Hollywood.

Since 1920, *The Last of the Mohicans* had been adapted into films, TV shows, and even cartoons, the latest being in 1987.

This time, the decision to reboot *The Last of the Mohicans* was influenced by the box office and award success of *Dances with Wolves*. Both films shared themes related to the North American colonial wars and involved interactions between Native Americans and white colonizers.

In essence, this was a trend-following move.

Simon remembered that the 1992 version of *The Last of the Mohicans*, directed by Michael Mann and starring Oscar-winner Daniel Day-Lewis, was a box office hit, although he could not recall the exact figures.

Michael Mann, who would later direct the acclaimed *Heat*, had previously collaborated with New World Entertainment on the crime drama *Crime Story*. After confirming this project, Daenerys Entertainment reached out to Michael Mann, who responded positively and expressed a desire to personally write the screenplay.

For the male lead, Warner Bros. initially thought of Mel Gibson.

Inevitably, from *Mad Max* to the ongoing *Lethal Weapon* series, Mel Gibson had become a go-to actor for Warner Bros., much like Clint Eastwood.

Despite Gibson commanding a high share of the profits from *Lethal Weapon 3*, set for release next year due to the box office guarantee, Warner was accustomed to employing him.

Simon agreed with Warner's suggestion. The success of Gibson's *Braveheart*, which also won box office and awards, proved his capability to carry such a historical action film.

Additionally, as *The Last of the Mohicans* was an original film rather than a sequel like *Lethal Weapon 3*, Gibson's salary would not be excessively high.

However, besides *Lethal Weapon 3*, Gibson had accepted two other film contracts, scheduling him through 1993.

Simon had the patience to wait two years, but Warner Bros. could not afford to.

Eventually, they reached out to the original actor, Daniel Day-Lewis, based on Simon's memory, and discussions were ongoing.

After a busy day, Simon returned to Point Dume Estate in the evening, where the Shell Cottage was bustling with activity.

Anthony Johnston had also brought his family along this time.

Since Anthony's eldest son, Brandon, who was the same age as Simon, was a devoted fan of the *Batman* series—he had even asked Simon for a Batcycle on behalf of his cousin during their last encounter. Since the premiere of *Batman: The Dark Knight* was tomorrow, Brandon naturally wanted a sneak peek.

Additionally, Anthony's wife Betty Johnston and their two daughters, 19-year-old Sylvia Johnston and 11-year-old Chloe Johnston, joined him.

Brandon had just started working in the family business, taking this trip as a brief getaway.

Sylvia and Chloe, both studying in England, were able to make the trip to Los Angeles during the Northern Hemisphere's summer vacation.

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