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Hollywood benefits from weak dollar

But high costs make for double-edged sword

The weak dollar may be stressing out overseas travelers, but it helped Hollywood pics hit home runs this year. Also helping were several sturdy tentpoles and a selection of mid-range pics that gained traction with or without success in the U.S.

Five tentpoles (third iterations of “Pirates of the Caribbean,” “Shrek” and “Spider-Man,” the fifth Harry Potter and “Ratatouille”) topped $400 million, while two surprises (“The Simpsons Movie” and “Transformers”) went past $300 million.

Solid mid-level performers included titles like “300,” “Mr. Bean’s Holiday,” “Blood Diamond,” “Ghost Rider,” “Wild Hogs,” “Enchanted,” “Eragon,” “The Heartbreak Kid” and “Stardust.”

“We saw less polarization this year in terms of films taking away from each other,” notes David Kornblum, senior VP at Walt Disney Intl. Motion Picture Group.

Amid serious competish from local titles such as Ang Lee’s “Lust, Caution” ($44 million), few major Hollywood titles tanked overseas. Even “Lions for Lambs” took in $32 million outside the U.S., more than double its domestic cume.

As for the dollar’s lack of strength, Hollywood saw benefits at the foreign box office due to favorable currency translations, perhaps by as much as 5% this year. But that particular box office boost is a double-edged sword, according to Sony exec VP Jay Sands.

“The weak dollar’s great if your film performs well but since your local costs are also greater, your losses are greater if the film doesn’t perform,” he says.

A Spain-based exec concurs. “Obviously, the weak dollar means our revenues in dollar terms are up by significant margins but P&A costs have also increased.”

One Italian distrib says the cheaper dollar means distribs such as Lucky Red can pick up rights to U.S. films such as “Rush Hour 3” and “The Kingdom.” And the weakening greenback has proved a far greater benefit to U.S. studios than to local exhibs in Germany, where long-standing contracts are in euros, not dollars.

“There hasn’t been any real advantages or disadvantages for us as nothing has really changed,” says Arne Schmidt, spokesman for German multiplex group Cinemaxx.

Early estimates show combined overseas grosses at $9.3 billion — up 8% over last year’s record-setting $8.6 billion, led by Warner Bros. at $2.15 billion; at $653 million, “Pirates of the Carribean: At World’s End” edged “Harry Potter and the Order of the Phoenix” as top foreign grosser.

But expectations were sky-high for the pirates and Harry Potter. Some of the other 2007 highlights and nuances:

  • Toons ruled, led by “Shrek the Third,” “Ratatouille” and “The Simpsons.” The Paris-set “Ratatouille” found a particularly sweet spot in France, where it became the year’s top grosser at $60 million.

  • “Babel” turned out to have far more traction overseas as it cracked the $100 million mark — three times better than the domestic cume, with Japan leading the way at $15 million and Spain at $13.8 million. “Spaniards are willing to turn out once in a while for a top-notch, high-profile auteur film,” says an Iberian exhibition exec.

  • Fantasy continues to work better overseas. “The Golden Compass” cleared $100 million foreign Dec. 19 — more than double its downbeat domestic perf; international auds salvaged Par’s “Stardust,” which hit $96 million offshore, a stark contrast to its $38 million Stateside total.

  • Despite their rep for dourness, Germans are suckers for slapstick, whether local or imported, as in the case of Rowan Atkinson’s laffer. “Mr. Bean’s Holiday” was the seventh-biggest grosser in Germany at $26.6 million cume — only $6 million short of the U.S. total.

  • Brits love Harry Potter as “Order of the Phoenix” was far and away the top U.K. grosser at $100.6 million. They also strongly support pics with Blighty cast and/or locations such as “Hot Fuzz,” “Atonement,” “Stardust,” “Music and Lyrics,” “The Golden Compass,” “Run, Fat Boy, Run,” “Notes on a Scandal” and “The Last King of Scotland.”

  • Perceptions of success and failure are different outside the United States, particularly regarding the launch. Andrew Turner, Cineworld head of film buying, notes, “While the opening weekend performance is still crucial in the U.K., it is not quite as ruthless a marketplace. An underwhelming opening weekend is not necessarily the be all and end all.”

Nick Vivarelli in Italy, Archie Thomas in the U.K., John Hopewell in Spain and Ed Meza in Germany contributed to this report.

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