Legendary Stumbles With Big Writedowns on ‘Seventh Son,’ ‘Blackhat’ (EXCLUSIVE)

Seventh Son Movie Universal

For someone who isn’t used to failure and admittedly is a sore loser, Thomas Tull is so far having a nightmare year at the box office.

His company, Legendary Entertainment, was forced to take a $90 million writedown on Michael Mann’s $70 million cyber thriller “Blackhat,” which has earned just $14.5 million worldwide since its release last month, sources close to the company tell Variety. And after anticipating that Legendary’s upcoming release “Seventh Son” was headed for potential disaster, Tull took an early $85 million writedown — in 2013 — on the long-troubled movie, which debuts nationwide on Friday.

“Seventh Son,” a fantasy action film that cost $95 million to produce and tens of millions more to market, is tracking to open between $7 million and $10 million this weekend. Overseas, the movie, which stars Jeff Bridges, Ben Barnes and Julianne Moore, has already earned $82 million, including $25 million in China, and another $15 million in Russia.

It’s no secret that Legendary has struggled with “Seventh Son” for years. The film, which started production under the direction of Sergei Bodrov in March 2012, has had four different release dates, beginning with Feb. 15, 2013. It landed on two other dates after that — Oct. 18, 2013, and Jan. 17, 2014 — the first due to post-production delays after visual effects facility Rhythm & Hues declared bankruptcy, and the second when the picture became orphaned after Legendary split with longtime studio partner Warner Bros.

All eyes have been on Legendary since Tull moved the company off the Warner Bros. lot in 2013 and struck a new distribution deal at Universal, financing tentpoles like “Jurassic World” and hits like “Unbroken” and “Dracula Untold.” It’s also on the upcoming N.W.A biopic “Straight Outta Compton.” Legendary’s first film under the Universal partnership was the low-budget thriller “As Above So Below,” a $5 million feature with no notable names that scared up $40 million worldwide.

Whereas Legendary covered half the budget of Warner’s films, it does not have the same arrangement with Universal, which lowers its eventual returns. For example, Legendary is said to have funded around 20% of “Jurassic World,” which stomps into theaters June 12.

Universal’s deal with Legendary is also unique in that the studio doesn’t cover marketing costs for its partner’s films; Legendary shoulders those on its own, with Universal merely collecting a distribution fee. In the case of “Blackhat” and “Seventh Son,” the arrangement meant Universal didn’t take the hit; the studio has essentially protected itself from Legendary’s creative choices.

Under its arrangement with Universal, Legendary gets distribution for a growing slate of films that it is now financing on its own, but also access to theme parks and a vast TV business through which it can set up shows and further promote its projects — a deeply-discounted “Seventh Son” commercial aired on NBC during the pre-game show for the “Super Bowl,” for example.

Tull, who had a lot of success at Warner, having backed the “Batman” and “Superman” franchises, “The Hangover” comedies and fanboy fare like “300” and the rebooted “Godzilla,” has a lot of stake when a film tanks, and loses sleep when they do, according to those close to him. He’s the company’s largest shareholder, so failures hit hard.

To help offset losses at the multiplex, Tull has been looking to expand the company into other areas — namely, television and digital platforms, with sources noting the moves are meant not only to find new sources of revenue but also to evolve the company at a time when audiences are turning to more sources for entertainment.

The company’s TV side already has several shows in development and others picked up to series, including “Colony,” which will air on USA Network and star “Lost’s” Josh Holloway.

On the digital front, there’s a lucrative Netflix deal through which Legendary is producing shows with Judd Apatow, and it will soon release a live-action feature adaptation of videogame “Dead Rising” produced exclusively for Sony’s Crackle. It also owns Chris Hardwick’s Nerdist Industries, and Felicia Day’s Geek & Sundry.

Legendary also is making strides in China, where its Legendary East will produce big-budget fantasy film “The Great Wall,” another project that’s long been in development.

And when it comes to marketing its films, Legendary is turning to a new analytics group it has formed in Silicon Valley — a way to use big data to spend marketing dollars more effectively. That arm slashed the budget for “Seventh Son’s” campaign when the movie wasn’t tracking well in the U.S.

Some observers feel that Legendary could spend more time developing the scripts of its fanboy-focused films. There have been a few exceptions that drew a better critical reception. Yet Legendary, which had success with its self-financed baseball biopic “42” and with a 25% stake in Christopher Nolan’s space drama “Interstellar,” is sticking with its formula.

Another pricey Legendary production is “Warcraft,” based on Blizzard Entertainment’s fantasy game franchise, which comes out in March 2016; a film based on Mattel’s “Hot Wheels” cars is in development. The company has just one other picture on the slate for the rest of the year that it produced and financed on its own: Guillermo del Toro’s Gothic horror “Crimson Peak,” debuting Oct. 16. It stars Tom Hiddleston, Charlie Hunnam and Jessica Chastain.

For now, Tull is smarting over “Blackhat” and holding his breath over “Seventh Son,” which is estimated to gross between $125 million and $150 million globally.

That film’s multiple release dates gave Tull reason to worry in 2013, which is what prompted him to take the hefty writedown back then. But when trying to raise money from investors, including Japan’s SoftBank, Tull recognized that “Blackhat” and “Seventh Son” could be problems when paired with “Skull Island,” featuring King Kong, sequels to “Godzilla” and “Pacific Rim,” and “Crimson Peak,” since they didn’t have the same kind of built-in brand awareness or were based on already established properties.

Tull has long prided himself as being as transparent as possible to his investors. If a film isn’t going to perform, he’s going to own up and give them fair warning.

Given its performance internationally, Tull is hopeful that “Seventh Son” won’t turn out to be the disaster he anticipated, though domestically it’s clearly headed for box office misery despite heavily promoting the film at two Comic-Cons, in San Diego, and hyping it to its target audience of younger males through sports broadcasts.

“‘Seventh Son,’ as with all fantasy films, generally faces a challenge because it’s such a specific genre that you really have to entice that segment of the audience that enjoys that type of cinematic experience,” said Paul Dergarabedian, senior media analyst for Rentrak. “And that can be tough and often requires some sort of fanboy or fangirl enthusiasm for the title, and that can be elusive at best.”

Still, Legendary was able to offset some of the cost through a partnership with China Film Group, which committed production dollars. Legendary also recouped some costs through Canadian and Malaysian tax rebates, and deferred incentives it received from converting the film to 3D and f/x work completed in Vancouver.

“Blackhat” didn’t benefit as much from those kinds of deals despite having filmed in Hong Kong.

http://youtu.be/0CpsXi3atQw
http://youtu.be/5i90Qr0Qi6w

“Historically, cyber-thrillers have mostly met with audience indifference,” said Dergarabedian, referring to films like “Hackers” and the similarly themed Julian Assange film “The Fifth Estate,” even with Benedict Cumberbatch in the lead.

It’s also rare for dungeons & dragons fantasy fare to break out, with the exception of “The Lord of the Rings” and “Hobbit” franchises, both of which are based on classic books.

“Of course audiences are fickle, and the tastes of the ticket buying public are wildly unpredictable,” Dergarabedian adds. “Look at the recent war movie successes after a long period of stagnancy.”

“Seventh Son” isn’t the only anticipated misstep this weekend. Warner Bros.’ equally risky Wachowski siblings fantasy film “Jupiter Ascending,” which cost $175 million, is likely to open at around $20 million, with “The SpongeBob Movie” expected to top both.

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  1. hELLEBORE says:

    7th Son is actually really good. It is a timeless picture with scope that other moves really lack. You can clearly see where they spent the money in production design and costumes. This attention to detail reminded me of Bram Stoker’s Dracula by Francis Ford Coppola. Cgi looked great and IMAX was the way to see this. Louis CK is correct when he talked about the IMAX blue immersion being the best. Overseas sales have made the budget back and any domestic sales wii be butter. ‘The Dude’ and ‘Maude’ Jeff Bridges and Julianne Moore back together is worth the admission alone.

  2. Jack says:

    Hedge funds aren’t creative, they write checks for the Hollywood.

    TT should embrace his financial strengths and leave the script choices and movie making to those more qualified.

    I guess it’s not HIS money anyway, so what does he care as long as he gets his fees.

  3. A Voice of Reason says:

    Honestly, when will TT see that JJ is bringing him down? TT brings in the bacon and JJ does what with the spoils? Time to clean house and bring in someone whose creative chops mirror TT’s business acumen. Hello, MP?

  4. I’m thinking Legendary deserves a step back. They’ve been associated with such gravy that it’s been way too easy for them – and I resent them big time for the bait-and-switch they pulled on us with Godzilla. The trailers definitely showed lots of Cranston and Godzilla, and the movie had about 2 minutes of each. I fell asleep. Skydance has much more thoughtful, worthwhile films by a mile.

  5. Legendary Pictures should return to Warner Bros.! It’s the only way. Warner & Legendary was one of the most effective and one of the best tandem of studios of all time! So much great films, so much masterpieces they have released together. Legenday Pictures is a very, very strong studio, with very strong CEO Thomas Tull, but with Universal Pictures things goes bad to them, when with Warner Bros. the bright future awates. No matter how it’s possible, but I really want it, want Legendary Pictures and Warner Bros. to reunite again, and it’s really the best future for both studios.

    • Tazuki Kurata says:

      Didn’t you read the article? Universal has nothing to do with Blackhat or Seventh Son. They solely belong to Legendary at the first place. Legendary produced both movies even before they signed contract with Universal. Universal only distributed those movies but not financed. Had those moved been released by Warner Bro., they would have been flopped the same way as they already did coz’ they are not good products themselves. And how do you know that the bright future would await for Legendary if they are still with Warner Bro? Look at Jack the Giant Slayer…LOL. I think Universal is the one who should blame Legendary for putting those movies on Universal profile. Universal just had a banner year in 2014 as they made the highest profits in the history of the studio. I think 2015 will be a even better year for Universal regardless the dark spots like the seventh son or blackhat.

  6. What “fanboy-focused” scripts is the author referring to? Can someone elaborate?

  7. x4avalanche says:

    How do you take those roles in Seventh Son when you know you kill it in different movies that are going to give you a potential Oscar?

  8. Jean-Michel says:

    BLACKHAT was such a bizarre choice for Legendary. Mann was coming off a bomb (MIAMI VICE) and another film (PUBLIC ENEMIES) that probably ended up somewhere around breakeven, despite having Johnny Depp on the heels of the POTC trilogy and the surprisingly successful SWEENEY TODD. Nowadays Mann is totally indifferent to conventional aesthetics–his recent films are slammed for their cinematography and sound design by people who generally don’t even notice those elements–and his narratives seem willfully by-the-numbers, like clotheslines on which to hang his interest in… I dunno, “hyperreality” or more sub-Hawksian man’s-gotta-do thematizing. The thing is I kinda dig what he’s doing most of the time, but dropping 70 mil on it is commercial suicide. On top of that the film’s star is a frankly dubious quantity and his co-star is an actress with no drawing power outside of certain chunks of East Asia… yet the plot (hinging heavily on terrorism against a Chinese target) would make it very difficult to gain approval from the regulators in Beijing, and so far there’s no word of any Chinese release despite Legendary’s big presence there. I don’t get the thinking there.

  9. harry georgatos says:

    Opening BLACKHAT on the same day as AMERICAN SNIPER didn’t help. Making China as partners in BLACKHAT with the USA seemed hypocritical as China is the biggest theif of digital in information in American Government circles and the American private sector. This played to the films detriment! With Legendary they had a good relationship with Christopher Nolan and the material Nolan brought to Legendary. It comes down to the material that resonate with the public and Legendary hasn’t been looking into it’s crystal ball lately. Not looking forward to PACIFIC RIM 2 and GODZILLA 2.

  10. JR says:

    Universal was smart to structure it’s deal so that it didn’t have to eat Legendary’s marketing costs on these flops. Although the distribution fees will be nominal at least it has shielded itself somewhat. Hopefully Jurassic Park can bail Legendary out.

  11. Conshimfee says:

    Warcraft is directed by Duncan Jones, who has shown excellent directing chops in his film Moon and Source Code. He’s David Bowie’s son…guessing he might pull it off.

    • jedi77 says:

      I am literally praying that Jones isn’t in over his head with this one. He is, so far, a great new director. But look at the cast. In any other forthcomming film, that cast would be a guarantee of economic failure. They even considered Colin Farrell at one point. Another guaranteed economic failure actor. I absolutely love Colin Farrell, but almost every medium to big budget film he ever acted in, was an economic failure. Just bad luck I guess.

      I have no like or dislike of Warcraft, I just like good films.
      But it seems to me, that if this film is any good, it will be the biggest positive surprise since The Lord of The Rings.

  12. DougW says:

    Sandra Bullock in The Net was a cyberthriller hit.

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