Chapter 51: A Slightly Tricky Negotiation
March had arrived, bringing not only the Oscars but also the NCAA "March Madness."
Unfortunately, these weren't the things Aaron cared about—Phone Booth was set to release in mid-March. Perhaps because competition was light and the studio had confidence in the film, 20th Century Fox opened it in 650 theaters.
The opening weekend grossed $7.1 million over three days, and with positive word of mouth, Phone Booth was clearly a success—especially considering its modest production budget of just $1.6 million.
Century City, Fox Plaza.
Inside the office of Joe Roth, president of 20th Century Fox, Aaron Anderson sat across from him, a copy of the script Ghost on the desk.
"Ghostly romance, Aaron… do you really think there's a market for this?"
"And a love story with a $22 million production budget? That's no small amount!"
Aaron nodded. "I know. The film requires some visual effects, so the budget is higher. But with Edward Zwick directing and Kevin Costner as the lead, I'm confident in its success."
Joe Roth leaned forward. "Here's how it'll work: 20th Century Fox invests $11 million for a 50% stake. In the North American market, if the box office is under $50 million, our distribution fee is 15%. Between $50 and $100 million, it drops to 13%. Over $100 million, it's 10%."
He tapped the desk for emphasis. "We're putting up $11 million for half the movie. Fox needs a guaranteed return. Our investment comes first in line for recoupment. All North American distribution fees are 15%. Internationally, it's 30%, unless you want to sell the rights outright."
In other words, no matter how well—or poorly—Ghost performs at the box office, 20th Century Fox would first recoup its investment and marketing costs, including the $11 million production budget.
By international standards, the revenue split between production, distribution, and theaters is typically 35%, 17%, and 48%. With Fox handling distribution themselves, they'd add their 13% fee on top.
Although, by convention, hiring an international agent would only cost about 10% in fees, Fox's involvement saved Aaron a lot of hassle, so he could accept that.
In the future, once the film's reputation grew, whether domestically or overseas, distribution fees could drop to 8–10%.
What Aaron couldn't accept, however, was the baseline revenue share for North America and international markets. For a fledgling company like Dawnlight, 20–25% of the revenue for the production company would be sufficient. But North America was the main market, and Fox's share was naturally high—were they really unwilling to take on a little risk? Luckily, they weren't funding the entire production.
"Mr. Roth, you know, if I pre-sell the international distribution rights, I'm confident I could raise over $10 million myself," Aaron said. He hesitated because Ghost had such high box-office potential, and giving up too much would be costly.
It was like Dances with Wolves—Kevin Costner had traded international rights with Orion Pictures to secure part of the budget, only to watch the international box office profits slip away.
Aaron had a proven track record with films like Sex, Lies, and Videotape and Cinema Paradiso. The overseas rights for Ghost were certainly valuable.
Joe Roth smiled. "Phone Booth did create value for you, but Ghost is different—it costs ten times as much. More importantly, it's a fantasy romance, so you'll need financial support from a distributor."
Aaron paused. "I'll consider it."
Pretty Woman was set to release next week, and New Line's Teenage Mutant Ninja Turtles would hit theaters early next month. Once those box-office results were out, Aaron was confident other companies would take notice of Ghost. For now, he would first secure the earnings from Phone Booth before making any major decisions.
By mid-to-late March, when American college students were on spring break, Los Angeles beaches were packed with them letting loose. Jennifer Connelly had come down from Northern California to Santa Monica just for the occasion.
Aaron lay on the sand with the stunning Jennifer Connelly in his arms. Before him stretched a glittering scene: thousands of students on the long beach, enjoying beer, champagne, rock music, beach volleyball, and live performances.
"American college students are really something," Aaron murmured under his sunglasses, genuinely impressed. Last year, he had barely experienced anything like this, being stuck in his own grind.
"After a whole winter of studying, this week is their time to play!"
Jennifer, clad in a sexy bikini, kissed Aaron. After taxes and expenses, he still had roughly $600,000 in cash—enough to indulge—but his mind was elsewhere.
Although major studios like 20th Century Fox, Paramount, Columbia under Sony, and TriStar showed interest in Ghost, negotiating conditions was tricky. If they were to provide production funding, the terms were stringent—unless Dawnlight financed the film themselves and let the studios handle distribution.
The big distributors released nearly 30 films annually. Only a few were fully produced or co-financed by them; most were projects funded by other production companies, with the distributors handling release. Securing funding from these distributors wasn't easy.
"By the way, Aaron, Phone Booth has already grossed $12 million. Shouldn't you be thrilled?"
The film had been in theaters just ten days, and the result was already a success, now playing in over 1,100 theaters.
"I am thrilled! Of course I am. Let's head to a bar and celebrate," Aaron said, putting his arm around Jennifer.
Jennifer hugged him by the waist. "The Oscars are coming up soon—the most exciting time in Hollywood."
"All right. We'll have time for that later. Tonight is the premiere of Pretty Woman. Let's go see it."
After all, this movie could impact his reputation.
Warren Beatty seemed to have weathered his scandal, a testament to Hollywood's forgiving nature. Isabelle Adjani had earned an Oscar nomination for Best Actress with The Lover.
"This is about to premiere—the film you praised so highly," Jennifer reminded him.
Jennifer hadn't left Stanford; her focus on Hollywood was minimal, especially since Aaron left CAA. She no longer had a professional agent, and her one-year contract had expired with no plans to renew.