Patrick McIntire
Motion Picture Producer at Universal Pictures & Part Time Instructor at UCLA
“So how much real money does a $25 million film that grosses $100 million at the box office make? Not nearly as much as you think…
First off, the exhibitor (theatre chain) takes 50% on average of the box office receipts. So now your $100 million is down to $50 million. Then there’s the distribution fee, which domestically averages about 30% (in this case, about $15 million). This brings your $50 million down to about $35 million. But we’re not done yet…
P&A (marketing) averages roughly the same amount as the budget of the film worldwide, or about 60% of the budget domestically (US). This varies depending upon the performance of the project. But we’ll use the average (60% of $25 million (the budget) is $15 million). This is then taken from the $35 million, taking you down to $20 million roughly. A far cry from the advertised $100 million gross.
If the project was privately financed (equity investor or investors), they get first monies in and first monies out. At a $25 million investment, the remaining monies go directly to the investors. Leaving $0 initially for producers. Yes, ancillary rights will make up the losses (cable, streaming, airlines, etc.), but this is to show how a movie’s box office claims are not as they appear. Studio films with larger budgets see much higher costs and often don’t turn a profit at all. Profit sharing (backend) can be next to nothing if the film is a bomb. This is just an example and only takes into account domestic box office. But it’s meant to show how misleading a film’s advertising that claims $100 million at the box office can be. Gross receipts are exciting to share. Net receipts? Not so much.”
Comments:
“this equation needs add the variable that in the majority of studio film and tv projects, the taxpayers of the municipality where the production is based and posted pay up to 40% of the cost of the production in the form of a rebate and other financing incentives while the profits on the movie are taxed in another location usually chosen to minimize tax liability.“