NY Times Magazine, November 12, 2006
Funny Money
By JON GERTNER
If you spend a week in Los Angeles asking
Hollywood studio bosses what makes a comedy film
successful these days, the conversations will
most likely start off about art or, more
precisely, about the art of humor. Production
executives will explain that execution is
everything. Or that perfect timing is what
really matters. Or that chemistry between the
cast and director is what truly makes things
(they actually say magic sometimes) happen. But
chances are the talk will turn into a discussion
about money. Late one afternoon in September,
just before dinner, thats the sort of
conversation I had with Tom Rothman at his office
on the 20th Century Fox lot. Rothman and his
partner, Jim Gianopulos, serve as co-chairmen of
Fox Filmed Entertainment; together, they have had
an especially profitable run of comedies over the
past few years, most recently including The
Devil Wears Prada, which this year took in $125
million at the domestic box office. As Rothman
put it, Comedies have been very good to us. To
prove his point, he began rummaging through some
low shelves outside his office that were
cluttered with awards. They werent Oscars but
angular statuettes known as Gold Reels, given by
a movie-tracking service, Nielsen EDI, to a
studio when one of its films reaches $100 million
in domestic box-office receipts. Dodgeball!
Rothman said triumphantly when he found the award
for the movie, which starred Ben Stiller and
Vince Vaughn. That one cost $18 million to make,
he pointed out, and earned $114 million
domestically. And heres Something About Mary,
he said, dusting off the inscription before
handing me the bulky statuette. Theres
Something About Mary, which Rothman considers an
early source for the style, appeal and
eccentricity of contemporary Hollywood comedies,
cost $20 million. It earned $176 million
domestically. And it fared even better abroad,
which is rare for a comedy, bringing in another $195 million.
To hear some studio heads tell it, comedies have
been an unusually good business over the past few
years, even as box-office revenues in general
have languished. The world is grim, and comedy
always plays as a healthy antidote to whats
going on in the world, Matt Tolmach, a president
of production at Sony Pictures, told me. This
year, Sony had two big comedy hits with Click,
starring Adam Sandler, and Talladega Nights,
starring Will Ferrell. Tolmach also noted that
were in a cycle with an uncommonly high number
of talented comedians and directors, which he
regards as happenstance more than anything else.
The success of Stiller, Owen Wilson and Vince
Vaughn (all of whom, incidentally, share the same
agency, United Talent, and all of whom now earn
as much as $20 million a movie) recalls the
1980s, when an abundance of Saturday Night Live
actors (many of whom shared the same manager,
Bernie Brillstein) made the jump to films. Maybe
the biggest difference, one film executive told
me, is that now there are probably a lot less drugs involved.
When it comes to raw numbers, though, its not so
obvious that comedies are booming. According to
Nielsen EDI, for instance, 145 different comedies
took in $2.79 billion at the United States box
office in 2003; the next year, 161 comedies made
about $2.74 billion. And in 2005, 164 comedies
again accounted for about $2.74 billion in
domestic box-office revenues. Generally speaking,
about 30 percent of total box-office revenue
comes from comedies in a given year. So it would
seem that things are holding steady, or perhaps
even falling off a bit. The Nielsen figures,
however, dont capture the renewed interest among
Hollywood executives in producing comedies made
on the cheap, including those that have helped
turn Ferrell, Wilson and Vaughn into stars. This
speaks to the difference between comedy revenue
(the total amount of money taken in at the
domestic and international box offices) and
comedy profitability (the money left over after
subtracting the costs of producing, marketing and
distributing a film). To the studios, the
potential profitability of a comedy is a far more
important consideration than revenue. Indeed,
its the only statistic that really matters.
Hollywood studio executives are called lots of
things, many of them unprintable, but they are
rarely described as what they really are:
portfolio managers. They dont invest in
companies, of course; they invest in movies a
far more complex and risky endeavor,
statistically speaking. But in many respects the
differences end there. Essentially, the studio
bosses spend a large part of their time thinking
about how to manage risk. They diversify their
movie portfolios their yearly slates, usually
between 12 and 20 films by genre, mixing
comedies, animated films, dramas and action
movies. Then they diversify by cost, betting on
some projects that cost $25 million and others
that cost $150 million. And rather than finance
all these movies themselves, they often team up
with other studios, outside production companies
and, more recently, Wall Street investors.
Studios also shop for bargains at places like the
Sundance Film Festival, figuring that they can
transform a cheap purchase into a big hit by
exploiting their marketing skills and vast
distribution networks. That has been the case
with Little Miss Sunshine, for instance, which
Foxs Searchlight division bought for $10.5
million. To date, it has taken in nearly $60 million in the United States.
Comedies dont necessarily produce higher
revenues than other genres indeed, there are
enough bombs every year (like Ben Stiller and
Jack Black in Envy) to suggest that, on
average, a comedy earns a Gold Reel no more often
than any other kind of film does. But comedies do
tend to have lower physical production costs,
since they often dont require extravagant sets
or expensive postproduction work. And if they
have low artistic production costs as well (for
the cast and directors), they have a kind of
jackpot potential that dramas, at least in recent
years, have lacked. In other words, even when a
comedy doesnt produce the huge revenues of a
blockbuster like Harry Potter, it can help push
the returns of a portfolio way up if it is put
together in a way similar to Little Miss
Sunshine or The 40-Year-Old Virgin, which
starred an inexpensive and untested Steve Carell.
Such a film will pay off in the theater, on DVD,
in television sales and ultimately contribute
to the studios catalog. A popular comedy is a
valuable piece of intellectual property. If its
made cheaply, its the equivalent of investing early in Google.
People think it should be easy, but it isnt,
says Harold Vogel, a longtime
entertainment-industry analyst. In part thats
because creating a financial hit isnt just a
matter of getting good scripts or finding
up-and-coming stars; its also the challenge of
successfully marketing a new product to choosy
and often skeptical audiences. Some recent
comedies Wedding Crashers and The
40-Year-Old Virgin, for example have had a
broad, mass-audience appeal. But the studios
often think of the comedy market, and thus their
comedy products, in narrower terms: romantic
comedies, road-trip comedies, spoofs, dramedies
and the like. In fact, studio chiefs make a
concentrated effort to match specific kinds of
comedies with specific demographic groups,
especially young men. This may explain the
existence (and, to some extent, the popularity)
of a film like Jackass Number Two, as well as
the inevitability of a Jackass Number Three.
Indeed, the franchises financial viability
Jackass Number Two cost less than $12 million
to make and demographic sweet spot suggest it
may go on indefinitely, perhaps until a freak
accident obliterates the entire gang in Jackass: The Final Wipeout.
When I made the rounds in Los Angeles earlier
this fall, Jackass Number Two had just opened
strongly for Paramount, burying All the Kings
Men, a period drama starring Sean Penn. Gail
Berman, the president of Paramount, seemed
elated. Not long after she started her job in May
2005, Berman told Variety that her plans for the
studio were simple: Comedy, comedy, comedy,
comedy. When I met with her at Paramount, she
explained that the lack of comedies in
development when she arrived led her to push for
the quick greenlighting of Jackass Number Two
and Nacho Libre, the Jack Black comedy. Nacho
Libre proved to have a strong family appeal. But
both projects were largely created with the
under-25 male demographic in mind, and with an
eye on strong DVD sales to those same young men.
And her next priority, Berman told me, was to try
to recreate her studios success with a romantic,
star-driven comedy like Failure to Launch,
which starred Matthew McConaughey and Sarah
Jessica Parker and took in $88 million
domestically. Or to put it another way, she
wanted to score a hit with a different market segment female audiences.
Jackass Number Two represents a financial
approach to comedy that you might call the
penny-stock comedy model. Paramount isnt the
only studio that now relies on this strategy.
When I visited Foxs studios, for instance, Tom
Rothmans team had just spent the summer revving
up the marketing machine for Borat, which was
already creating a stir in town, even among jaded
movie execs. That movie cost just $17 million.
Meanwhile, the studio was also laying the
groundwork for the release of Night at the
Museum, a special-effects-heavy comedy starring
Ben Stiller (with Robin Williams, Paul Rudd, Dick
Van Dyke, Mickey Rooney and a cameo by Owen
Wilson), which had been in development at Fox for
10 years and which cost $110 million, a sum that
does not include marketing and distribution
costs. You might call Museum the blue-chip comedy model.
I asked Rothman to predict how the two films
would do. Studio chiefs worry privately about
every opening weekend; bombs, like blockbusters,
can come out of nowhere. Yet the chiefs never
display a lack of public enthusiasm for coming
releases. On Museum, which will open just
before Christmas, Rothman was blithe. He had
attended some test screenings and told me that as
a result he was utterly confident the film would
do well. I know its a smash, and I know the
audience will love it, he declared. He also
predicted that it would travel well and make a
substantial profit: Ill tell you, Ill be
shocked if whatever that movie does domestically,
it doesnt do 150 percent of that
internationally. In other words, if the film
takes in $150 million domestically a
hypothetical amount, since it could do far better
or far worse it would earn another $225 million worldwide.
And what about Borat? Rothman sighed. It was
still six weeks before the film would open, on
Nov. 3, and he thought it would do well, but he
could not forecast how well. As a matter of
fact, I could predict the ultimate gross of
Borat probably less well than any movie we have
for the rest of the year. Rothman noted that he
and Gianopulos would never make Borat for the
price of Night at the Museum, but the fact that
Fox could do Borat at a modest cost made it
worth putting into production. Rothman then
raised the issue of whether the studios had lost
their appetite for taking chances. Thats
actually not true at all, in my opinion, he told
me. Borat was the kind of risk worth taking, he
added, which means you have to be willing to
risk failure. And yet Borat seemed more of a
creative risk than a financial risk. The film
didnt cost much by Hollywood standards, and
expectations around town were so high that every
studio executive I spoke with every executive,
that is, except Rothman seemed to think it
would be tremendously profitable. For Fox, that
would make it a very safe bet indeed.
When it works, the penny-stock model for comedies
highlights the savvy of studio executives in a
way a blue-chip picture cant. Anyone can spend
large sums on stars, computer-generated effects
and then marketing and distribution, but not
everyone can conjure profits so resourcefully.
One of the visionaries of this approach is Tom
Pollock of the Montecito Picture Company, a
partnership between Pollock and the director Ivan
Reitman. When he described his projects to me,
Pollock made the business sound simple: find a
good script, pick an undiscovered star or
anonymous acting ensemble, get a good but not
expensive director and run a tight ship while
filming. Road Trip, which Montecito produced
for DreamWorks in 2000, was a model for this kind
of film. The idea behind it four characters go
on a raucous drive from Ithaca, N.Y., to Austin,
Tex., to save a romantic relationship was
generated internally at Montecito, but Pollock
didnt have a script or a director. Then Ivan
Reitmans son, Jason, who is also a director,
noticed a documentary at the Sundance Film
Festival called Frat House, by Todd Phillips
(and Andrew Gurland); he suggested his father and
Pollock take a look, too. We saw it and thought,
Heres the guy who really gets the joke, Pollock
told me. So Montecito hired Phillips to direct,
and Phillips in turn wrote a script (with Scot
Armstrong) for the lowest rate allowed by the
screenwriters union. After multiple drafts, it
seemed promising enough for DreamWorks to put it into production.
Pollock, a former studio chief at Universal,
points out that you probably cant make a great
action picture for $25 million. But you can be
funny on any budget. A Montecito production so
far there have been three in this vein: Road
Trip, Eurotrip and Old School costs, on
average, a fraction of what typical studio films
do and (so far) earns a better rate of return.
Road Trip cost about $17 million, Pollock told
me, and Eurotrip and Old School each cost
about $25 million. Eurotrip did about $18
million at the box office, he explained, so it
lost a little money. But both Road Trip ($68
million) and Old School ($75 million) did well
at the U.S. box office, especially with young
men. Old School sold about six million DVDs,
moreover, which translated into extraordinary
additional profits. This is a long, fancy way of
saying that when you make these kinds of
comedies, on your losers youll lose $3 million
or $4 million, Pollock said. But on Old
School, DreamWorks, our partner, made over $100 million. Cash.
Sequels have a different calculus. When Montecito
made Old School, for instance, Vince Vaughn and
Will Ferrell together were paid about $2 million.
For Old School 2, a film Pollock would like to
make even though it doesnt fit his frugal
approach, Vaughn and Ferrell together could cost
as much as $30 million or $40 million and that
doesnt include the originals third star, Luke
Wilson. This isnt a problem only Pollock faces;
its an industry-wide quandary. As one agent told
me, unless such stars adopt a sliding scale, the
economics of combining two or three of them in a
single film no longer make sense. To many people
I spoke with agents, producers and executives
alike the top talent has been so successful
that they now risk pricing themselves out of the very markets theyve created.
A few months before I visited Los Angeles, this
was the situation when Rothman and Gianopulos at
20th Century Fox pulled the plug (at least for
now) on Used Guys, a science-fiction comedy
starring Ben Stiller and Jim Carrey, partly
because its projected costs reached $112 million.
In Hollywood, those close to the matter were
still discussing its implications. At the very
least, the blowup appeared to be a warning that
the studios were getting serious I often heard
the word rational about minimizing risk and
boosting profits. But whether it meant that
comedy stars would no longer fetch enormous
upfront payments that seems doubtful. As
financially attractive as the penny-stock model
for comedies may be, movies with huge stars will
not suddenly disappear. Those guys who are
getting $20 million, Rothman says, if theyre
in a very funny film, theyre likely, on a purely
economic basis, to be worth it. What seems
probable is that stars who have been getting
large, additional back end percentages of a
films gross will find those deals a thing of the
past. And it almost certainly means that the
studios interest in some blue-chip comedians is
on the wane. Jim Carrey, for instance, has had a
dismal year not only did he change agents, but
two film projects he was involved in, in addition
to Used Guys, collapsed. Carreys films have
taken in billions around the world; in purely
financial terms, his value to the studios has
been far more than $20 million a picture. Yet the
difficult question now is whether, after a string
of failures, employing him at a high salary plus
a back-end percentage diminishes the profit
potential for the studios. Put simply, Carrey may be too big a risk these days.
Newly expensive stars like Vaughn and Ferrell
present a different kind of uncertainty: both
stars movies do well here but poorly abroad.
Pollock says he believes that the domestic (and
DVD) potential of Old School 2 makes it
worthwhile to spend the money on the stars
anyway. He and Reitman may get the money without
going through the studios: they recently struck a
deal with Merrill Lynch to help finance a slate
of 10 films, at an average cost of $25 million.
Michael Blum, a managing director at Merrill
whose team agreed to finance the deal, says that
computer-driven analysis usually the stock in
trade of any investment banker cant contribute
as much to this deal as it might to non-Hollywood
ventures. Investing in a couple of respected
movie veterans, on the other hand, who have a
prudent approach and enough access to the studios
to influence a range of crucial factors (a
movies opening date, for instance), should have
a positive effect on box-office results. You
cant be blind to the subjective side of this
business, Blum told me: Weve got sophisticated
computer models. We can slice and dice and look
at slates of films in prior years in various
different ways. We can put probability on certain
genres, in certain seasons, with certain budgets,
with certain directors, and spit out various
probabilities of returns. But as Blum sees it,
Reitman and Pollock simply know how to identify
promising material and make good, profitable
movies. Old School 2 doesnt fit their typical
criteria, but Blum says that it might make sense
anyway. The costs will no doubt be higher, but
Blum sees higher revenues too. And he may wager
that that will translate into healthy profits.
Over time, the studios may become more receptive
to relying on probability models for their
decisions; several economists who study the
industry, most notably Anita Elberse at Harvard
and Jehoshua Eliashberg at Wharton, told me they
believe were on the cusp of understanding how
studios can make more efficient bets on films.
One advance would use computer models to put a
more accurate value on the contributions of stars
(and thus adjust their salaries accordingly);
another would evaluate the financial viability of
scripts before approval (Eliashberg has spent the
past few years creating a database and software
program called the scriptanalyzer for just such
a purpose). Elberse and Eliashberg have each
discussed using such methods with at least one
studio and various production companies.
One plausible outcome is that sophisticated
analysis would screen out more of the losers,
resulting in a higher percentage of good or at
least financially viable movies. But would we
get as many great and risky films? And would we
get better comedies? That seems unlikely.
Computers and money managers arent the best
arbiters of funny. Obviously they lack the quirky
appreciation that allows for Theres Something
About Mary, a movie (made, not incidentally,
with then up-and-comers Ben Stiller and Cameron
Diaz) that arguably raised the bar for whats
permissible in a mainstream comedy. Its
doubtful, moreover, that such a risk-averse
system could tolerate the old-fashioned Hollywood
pitch. When Matt Tolmach and Doug Belgrad, both
production presidents at Sony, agreed to make
Talladega Nights, for instance, it was an act
of faith. The pitch consisted of Tolmach, Will
Ferrell, the director Adam McKay, the producer
Judd Apatow and Ferrells manager, Jimmy Miller,
all together in an office saying, Will and
Nascar. That was it, Tolmach told me when I
met with him and Belgrad in their offices at
Sony. There was no script. And we agreed to make the movie.
I asked them if they could imagine backing out of
the deal if the script, when it came in, wasnt funny.
We didnt, Tolmach replied. And we honestly
didnt think about it a lot. I mean, it wasnt
literally Nascar! and then they left the room.
They had a character. They really knew who Ricky Bobby was.
Belgrad added: And there was a basic shape to
it. It was kind of a sports movie.
There was a rise and fall and rise, Tolmach
said. There was hubris and all that stuff.
But yeah, it was a big bet, Belgrad said.
And were doing the same thing with their next
one, Tolmach said. And honestly, I feel better
about that than about some scripts I have on some
movies that were making. I like those too. But
these guys know what they do, and they know what
is funny, and they know how to make their stuff funny. And theyre commercial.
Jon Gertner, a contributing writer, last wrote
for the magazine about the nuclear-power industry.
