In a Q&A with entertainment-industry attorney Ken Ziffren on Saturday at UCLA Law School, she sized up how cash break-even deals have been impacted by the widening gulf between top tentpoles and the rest of the pack on an average weekend at the office.
“What we’re discovering is the highs are even higher,” said Snider at the school’s 41st annual Entertainment Symposium. “So sometimes the cash break-even deals are yielding disproportionate profit participations. So what we’re looking at now is whether or not there are circumstances where you can just rationalize it. It’s not about taking away from the creative talent.”
“Yes it is,” Ziffren interjected.
Snider explained further that while the studio values the talent as much as ever, the increasingly exorbitant costs of producing and marketing tentpole films worldwide to the tune of hundreds of millions of dollars gets all the more difficult in a “feast or famine marketplace” which top performing titles tend to leave lagging competitors far away in the dust during a typical weekend frame.
“It is an enormous undertaking, and it inures to the benefit of our participants to enable that operation to continue,” he said.
In a cash break-even deal, talent starts collecting their gross points only after the studio recoups its costs and a distribution fee covers the cost of overhead. Snider said that the Fox studio shifted its approach from first-dollar gross several years ago, before she was there.
While Fox has enjoyed its own success on the blockbuster franchise front like “Logan” in a theatrical marketplace where smaller movies have increasing trouble commanding their share of box office, she signaled that those titles shouldn’t be written off just yet.
“The success of Amazon Studios is a perfect example of how there is an opportunity it seems because of the new platforms, as long as you’re modeling your cost structure appropriate to that opportunity,” she said. “It does seem the major studios have made a bet for the bigger pictures but I do feel there’s an opportunity for variety.”
Fueling some of the challenges films are facing is an international marketplace where pay-TV output deals may not be as lucrative in the future, Snider explained. “Around the world, many of the windows are coming up and it’s a real challenge,” she said. “There’s more local production around the world, the TV shows we used to package with the films to create output deals are less vital to our international partners than they were before. And we’re just going to have to find ways to make deals to bridge the financial gap.”
She said the studios will have to create their own opportunities as well to make up the projected shortfall. “The studios will need to find their own platforms to compensate for the absence of clients to sell films to and build our own direct consumer opportunities,” she said, making clear that she was not referring to any such specific Fox-related move.