WB, Fox make deal for ‘Watchmen’

Warner to open superhero film March 6

Warner Bros. and Fox have settled their very public battle over “Watchmen.” A deal has been hammered out that that gives WB some face-saving points, but which gives Fox the equivalent of a movie star’s gross participation.

Warner Bros. gets the right to open its superhero pic on March 6 as planned, and Fox’s logo will not be on the film, sources said.

Fox, on the other hand, will emerge with an upfront cash payment that sources pegged between $5 million and $10 million, covering reimbursement of $1.4 million the studio invested in development fees, and also millions of dollars in legal fees incurred during the case.

More importantly, Fox will get a gross participation in “Watchmen” that scales between 5% and 8.5%, depending on the film’s worldwide revenues. Fox also participates as a gross player in any sequels and spinoffs, sources said.

A joint statement said, “Warner Bros. and Twentieth Century Fox have resolved their dispute regarding the rights to the upcoming motion picture “Watchmen” in a confidential settlement. Warner Bros. acknowledges that Fox acted in good faith in bringing its claims, which were asserted prior to the start of principal photography.

Fox acknowledges that Warner Brothers acted in good faith in defending against those claims. Warner Bros. and Fox, like all “Watchmen” fans, look forward with great anticipation to this film’s March 6 release in theatres.”

Attorneys for the studios are scheduled to meet Friday morning with U.S. District Court Judge Gary Feess in Los Angeles to finalize the settlement.

Fox, which first acquired rights to the graphic novel in 1986, filed suit in February at about the same time director Zack Snyder wrapped production. The studio, which had advised WB of its rights position before the film went into production, contended in court that it retained distribution rights under a 1994 turnaround agreement with producer Larry Gordon, who took “Watchmen” to Warner Bros. after attempts to make it with Fox, Universal and Paramount.

Feess found in his ruling that Gordon, who’s not a defendant in the case, had never exercised his option to acquire Fox’s remaining interest in “Watchmen” nor had he honored his agreement since 2005 to offer the project to Fox under the “changed elements” part of the pact.

Feess had ruled on Christmas Eve that Fox had distribution rights to “Watchmen” and urged the studios to seek a settlement rather than go to trial, which had been set to begin next Tuesday. The studios had disclosed last week that they had been making progress toward resolving the dispute.

Though it was denied by both studios, sources said that in recent weeks that WB and Fox discussed several intriguing horse-trading scenarios after WB choked on Fox’s initial ask of 10% gross and distribution in some overseas territories.

One scenario had WB moving “Terminator Salvation” away from its Memorial Day weekend opening on May 22, because it collides directly with Fox’s launch of “Night at the Museum 2: Battle of the Smithsonian.” WB considered that, but there was a major problem. “Terminator Salvation” rights owner Halcyon has that May 22 release date stipulated in its contract. With sci-fi films “Transformers 2” and “Star Trek” due this summer, there is no better berth for “Terminator Salvation” than the four-day holiday weekend, so a moving wasn’t possible.

Another area that was explored involved Steve Carell. Fox wants to pair the actor with Tina Fey in “Date Night,” a comedy that Shawn Levy will direct. Fox needs to get that film in production by the spring, because Fey has a small window before resuming her duties of writing and starring in “30 Rock.”

WB was in a position to block that, because it held an option on Carell for a “Get Smart” sequel that it could have used to ruin Fox’s “Date Night” dreams. WB didn’t press that, because it has a strong relationship with Carell and it was clear that “The Office” star badly wanted to make the movie with Fey. WB agreed to push “Get Smart 2” to spring 2010, a move made before the studio settled its “Watchmen” dispute.

Carell and Fey are finalizing their deals for the Fox film.

The next chapter in the saga might come when WB seeks some redress from producer Larry Gordon, who has been at the center of the maelstrom and who has a gross participation comparable to the one that WB will be giving to Fox, according to sources.

“Watchmen” marks the second big legal affairs snafu for WB in recent memory. It wasn’t that long ago that WB had to pay $17.5 million to settle claims so that the studio could release “Dukes of Hazzard”; the “Watchmen” settlement is likely to cost WB much more money than that.