"Danny, currently several major studios are very interested in 'When Harry Met Sally,' so the commercial prospects are definitely guaranteed. However, in order to maintain control over this project, Daenerys Pictures prefers to invest independently. On the other hand, the funds I have on hand won't be available until the end of the year, but the film is scheduled to start shooting in September. That's why we're choosing to cooperate with a third party".
Although he had taken the initiative to contact them after Daenerys Pictures leaked word that they were looking for partners, Dennis O'Brien keenly raised his own doubts after listening to Simon's explanation of the project's general situation.
"Simon, as far as I know, Daenerys Pictures has absolute control over both 'Final Destination' and 'Pulp Fiction'. It shouldn't be difficult for you to secure the same treatment for 'When Harry Met Sally' from The Big Seven, should it?"
Simon shook his head. "Danny, it's different this time. The key is that I also plan to participate in the investment. If we cooperate with one of The Big Seven, even if we can get control over the project's production process, the subsequent distribution, not just North American theatres, but all other channels, will inevitably be completely tied to the other party. Moreover, the accounting systems of major film companies cannot guarantee that Daenerys Pictures will receive the benefits we deserve. You must have some experience with this".
Dennis O'Brien nodded in deep agreement.
Almost all film capital entering Hollywood detests the 'Hollywood Ledger' of major studios and even second and third-tier distribution companies.
In order to withhold as much of the independent producer's deserved profits as possible, Hollywood distribution companies will do everything they can to falsely report costs in all aspects.
Take theatrical distribution, for example. If it's a project by an independent producer, the profit-sharing rules between the Hollywood distributor and the producer are usually like this.
After the movie is released, the distributor will first deduct a portion of the box office as a distribution commission. The percentage of this money is determined by the contract between the two parties; the stronger the producer, the lower the distribution commission they need to pay.
In the original timeline, during the cooperation between DreamWorks and companies like Paramount, the distribution commission they needed to pay was only 8%. But weak producers might have to pay commissions as high as 15%.
But that's just the beginning.
The distributor's subsequent promotion and distribution expenses are where the 'essence' of the Hollywood accounting system lies.
Distributing a movie certainly costs money.
Copying costs, TV advertising, offline expenses for the company's loss-making projects, mowing the studio's lawn, private jets for executive vacations, basically anything they can charge to you, they will.
Ultimately...
The P&A expenses, which might actually be less than half of the production costs, will appear on the distributor's books as even higher than the film's production budget.
So, can the 'Hollywood Ledger' be avoided?
No.
This is already an open rule for Hollywood film companies. Even the 'Harry Potter' series, which once had a single film gross $1 billion worldwide, is actually at a loss on the books. Even if the producer is strong enough to send their own accountants to track the distribution, the result will only be an inflated P&A budget.
Of course, this raises a question.
No one is a fool.
If Hollywood does this, why do so many capital investors still flock to it?
It's obvious.
There are definitely strategies to deal with the 'Hollywood Ledger'.
For powerful capital investors, they usually invest at the level of the entire major studio and then settle the total account, sharing profits and losses together. No matter how the film company plays tricks on individual projects, the overall financial statements must be clear. Otherwise, the IRS won't stand for it.
As for small and medium-sized film investors, they either choose to sell the rights outright or set up a film company to handle distribution themselves.
Currently.
Simon's distribution plan for 'When Harry Met Sally' is basically similar to 'Run Lola Run'. He aims to retain the rights for various channels as much as possible, first pushing the film into North American theatres, and then gradually operating subsequent distribution based on local box office results. Of course, it will still mostly be outright sales.
Inside the office.
Simon and Amy spent more than an hour explaining the main cast, shooting schedule, distribution strategy, and other details of 'When Harry Met Sally' to Dennis O'Brien.
Finally, Simon talked about the investment ratio and profit distribution.
"Danny, if HandMade Films is interested in investing in 'When Harry Met Sally', my requirement is a $15 million budget, with each party bearing half, which is $7,500,000 each. However, for future profit distribution, as the production party leading the entire project, after deducting the budget costs, Daenerys Pictures needs to take 60% of the net profit, and the remaining 40% will belong to HandMade Films".
Hearing this, Dennis O'Brien immediately shook his head. "Simon, that's too high".
Simon insisted, "It's not high at all, Danny. You have to understand, this is on the premise that the project is profitable. Daenerys Pictures handles all the production work, but in reality, we're only asking for a 20% share of the net profit as a commission. This is very fair".
Dennis O'Brien hesitated for a moment and followed up, "Simon, what about the future revenue settlement process? If we participate in the investment, when can we recover our funds?"
"You can discuss the details of this with Amy later. However, Daenerys Pictures intends to stay in Hollywood for a long time; we will never deliberately withhold payments from partners. To show our sincerity, after reaching a cooperation, HandMade Films can station an accountant to follow the entire project".
Dennis O'Brien thought for a while and finally said, "Simon, I still need to discuss this with George. I might give you an answer next Monday".
Simon nodded. "Of course, no problem. However, HandMade Films isn't the only one contacting us for this project. Daenerys Pictures offers the same cooperation terms to everyone; we don't haggle. So, if someone gives an answer tomorrow, or even tonight, we can only say it's a pity".
After saying this, seeing Dennis O'Brien stand up, Simon and Amy also rose.
After seeing O'Brien off, Simon and Amy returned to the company office building.
Simon went back to his office, and Amy followed him in. Seeing Simon turn around and sit comfortably in the leather chair behind his desk, she walked to the guest area to tidy up the pile of documents from earlier, saying, "Simon, you shouldn't have taken the initiative to promise O'Brien he could station an accountant".
Simon picked up the copy of 'Forrest Gump,' turned to the bookmark, and leaned back in his leather chair, holding the book. "Amy, I was being very sincere just now. I hope Daenerys Pictures can go a long way; there's no need to play tricks on these details".
Amy carried the tidied stack of documents back to the filing cabinet against the wall and continued, "Many founders of film companies have actually thought that way, but Simon, reality often doesn't allow us not to use some tactics".
Simon smiled and said, "In that case, you can be the one to discuss going back on our word with them".
Amy gave a slight roll of her eyes, closed the cabinet door, turned around, and sat down opposite Simon's desk again. Looking at the young man across from her, she said, "Ron, Wes, and I are going to New York tomorrow. The location scouting for 'Final Destination' is finished; we need to go through all the scenes, and we also have to discuss some filming cooperation issues with the Queens Government and Kennedy Airport. Speaking of which, you secured this project from Fox, but now it seems you don't care about it at all".
Tomorrow was Saturday.
However, the federal 40-hour work week system was actually only to protect the lower-level working class.
There are specific provisions in the U.S. Labor and Employment Law that state corporate executives who manage more than two people are not protected by the 40-hour work week system. If these people work overtime, the boss doesn't have to pay overtime pay.
In Simon's view, this was actually telling people a very simple truth: if you want to be a superior person, don't expect to work only eight hours a day.
Simon listened to Amy's half-serious complaint, turned a page of the book in his hand, and said, "I'm the boss; securing the profit-sharing terms from Fox was the work I needed to do. As for the rest, this project isn't worth me following it the whole way".
With the script completed, director Wes Craven settled, and the assistance of Amy and the others, Simon was very confident in this project.
'The Butterfly Effect' was another huge success. Now no one thought 'Final Destination' would fail to cross the $20 million guarantee threshold. For such a purely entertaining teen horror film, Simon indeed didn't need to spend too much effort on it.
After chatting for a few more minutes, Simon looked at his watch, closed the book, and asked Amy, "It's almost time to get off work. Do you have plans for tonight?"
Amy raised an eyebrow and smiled. "I have a dinner date with my boyfriend".
"Oh, forget it then," Simon shrugged and explained, "Actually, it's Jonathan. You know, Robert De Niro has never had an agent. After he recently lost the lead role in Fox's 'Big', he started thinking about finding an agency for himself. Jonathan wants to bring De Niro to WMA and is hosting a party tonight specifically for that; he hopes I can go too".
Speaking of which, Simon's acceleration in securing some copyrights was also influenced by many projects he had recently discovered.
For example, 'Big'.
In the original timeline, this movie not only achieved the great result of breaking $100 million at the North American box office but also brought Tom Hanks his first Oscar nomination for Best Actor.
It was only while chatting privately with Jonathan Friedman that Simon learned Robert De Niro had also vied for this project. In addition, among the projects Fox had already confirmed was 'Die Hard', which was also a blockbuster series.
Outside of Fox, many other hit projects from Simon's memory were already beyond his reach.
Moreover, there were some projects Simon was hesitating about whether to intervene in.
Like 'Rain Man', which topped the North American box office next year in the original timeline; the current script was still in a state of having nowhere to land.
However, 'Run Lola Run' had basically secured this year's North American box office championship. If the North American box office champions for next year, the year after, and even the year after that were all related to Simon, it wouldn't just be conspicuous; it would be a matter of whether he was letting anyone else survive.
If others can't survive...
Tsk!
Out of this consideration, Simon had already planned to consciously mix in some projects that wouldn't be hits according to his memory during the subsequent copyright acquisition process. When funds were abundant, he would also truly invest in their production.
Across the desk.
Hearing Simon's explanation, Amy said, "Even if De Niro looks for an agency, the possibility of him going to CAA should be greater. By the way, what was the deal with you asking Susan to send that, uh, Nicole Kidman's information to Jonathan and having them headhunt her?"
Simon thought of his meeting with Michael Ovitz on Monday, shrugged, and said, "It's nothing. I just feel that CAA is too powerful now, and we should use fewer CAA clients in the future".