Disney pays off Paramount for film rights
Hollywood history may be replete with failed partnerships, but Paramount Pictures’ pact with Marvel Studios isn’t one of them.In an announcement Monday, the Walt Disney Co. said it will pay Paramount at least $115 million to cede worldwide rights to Marvel’s “Iron Man 3” and “The Avengers” so that it can release the films itself. Par will still handle “Thor” and “Captain America,” but after that, its output deal with Marvel is done — a pact that’s on track to earn the studio north of $300 million when all is accounted for. Better yet, Paramount doesn’t have to expend any manpower on “Avengers” and “Iron Man 3,” even though it gets what’s essentially a hefty distribution fee. Disney will have to pony up more than $115 million if either of the two Marvel films overperform, according to insiders. It was widely rumored that Disney would make such a move. When it bought Marvel Studios for $4.3 billion earlier this year, the studio found itself in the uncomfortable position of having to watch a competitor market and release one of its movies, “Iron Man 2.” Working with Marvel, Disney is now free to take full creative, marketing and distribution control of the lucrative “Iron Man” franchise, as well as “Avengers.” While there were no public feuds between Disney and Par over the marketing of the “Iron Man” sequel, Par and Marvel — not the Mouse House — got bragging rights. Also, Disney didn’t have a full say in the making or selling of the pic. For its part, Paramount can now turn its attention to its homegrown franchises, including fresh installments in the “Transformers,” “Star Trek,” “Mission: Impossible” and “G.I. Joe” series, as well as a new Jack Ryan movie. Other franchises with continuing potential include “Jackass” and “Paranormal Activity.” “Five years ago, when Paramount and Marvel made our initial deal, both our businesses were in very different places,” Par chairman-CEO Brad Grey said. “We are grateful for the partnership we have had with the terrific Marvel team over these years and proud of the work we have done together. Today, this new agreement is the right deal for Paramount, for Marvel and for Disney.” The Mouse House says the $115 million payment to Par will more than be offset by being able to exploit the Marvel films across all of its properties, including its vast international operation. “In completing this agreement, Disney will now assume worldwide marketing and distribution of ‘The Avengers’ and ‘Iron Man 3’ and leverage these two highly anticipated films across the multiple global platforms of the Walt Disney Company,” Walt Disney Studios chair Rich Ross said. “We appreciate the tremendous momentum that Paramount established with these iconic Marvel characters and look forward to propelling the brand even further in the coming years.” “Avengers” debuts May 4, 2012, followed by the “Iron Man” threequel a year later on May 3, 2013. “This is a definition of a win-win situation,” Par vice chairman Rob Moore said. Inking the distribution deal with Marvel Studios for as many as 10 movies was one of Grey’s first acts as studio topper. Par needed movies, and Marvel came armed with a $225 million credit facility with Merrill Lynch. The 2005 deal carried plenty of risk. The Marvel characters available to develop for the bigscreen, such as “Iron Man,” were lesser known at the time. But Marvel and Par turned “Iron Man” into a global behemoth. The first film, opening in May 2008, grossed $585.2 million at the global B.O., while the second, released in May, grossed $621.8 million. Marvel paid Par a 10% distribution fee for the first “Iron Man,” and 8% for the sequel. Marvel reimbursed Paramount for all marketing costs. The $115 million Par is getting from Disney is a minimum guarantee. Insiders say Par gets an 8% fee on “Avengers,” and a 9% fee on “Iron Man 3.” In terms of the two remaining Marvel titles, Par will release “Thor” on May 6, followed by “Captain America” on July 22. Any sequels to those two films would go to Disney. There’s some speculation that Par could be in the offing to sign a distribution deal with a restructured MGM, a pact that could include rights to the next “James Bond” film.