New details surrounding the union of Apple Studios and David Ellison’s Skydance Media prove the tech giant is willing to spend big to build a global tentpole movie business, sources tell Variety.
Nearly a month after it was announced that Apple had landed a slate of live action films from longtime Paramount Pictures partner Skydance, producer of the mega-franchise “Mission: Impossible” and the upcoming sequel to “Top Gun,” the town is still abuzz about what a lucrative and rarified deal Skydance carved out for itself. Apple, which has been very selective and strategic in the film projects it chooses since launching its division in 2019, has clearly identified Skydance as a key component in the next steps of its evolution.
The agreement closely resembles a “put deal,” according to sources, an increasingly rare Hollywood arrangement wherein a distributor is obligated to release movies its partner chooses. Jason Blum’s Blumhouse, Jordan Peele’s Monkeypaw and Arnon Milchan’s New Regency are a few of the players that have commanded similar pacts.
Though not unprecedented, industry observers say the deal between Skydance and Apple is among the richest received by any production company. Under the terms of the pact, Skydance is guaranteed at least two fully-financed feature films per year with budgets up to roughly $125 million, numerous insiders close to the situation said. Skydance is also guaranteed a payout of up to $25 million per picture, depending on certain budget thresholds. That money compensates Skydance for the backend profits it theoretically would have reaped if the film were a conventional box office success. The movies that Skydance releases for Apple are not guaranteed theatrical runs.
The deal was forged at a time when media companies and streaming giants have been competing fiercely and spending freely to lock up compelling content — a case in point is the recent two-sequel deal for Daniel Craig’s “Knives Out” franchise, which Netflix spent over $400 million to secure, as well as Amazon Studios’ sprawling “Lord of the Rings” saga with its reported $1 billion price tag.
Under the terms of conventional “put deals,” Skydance could theoretically put a movie into production and force Apple to finance and release it, though that would be extremely unlikely. Doing so would put an unnecessary strain on the alliance by essentially handcuffing Apple to a movie it didn’t want to make. In the past, companies with “put deals” have usually ensured that any movies they make have the enthusiastic backing of their distribution partner.
Creative executives at Apple, including the leads on the Skydance deal Jamie Erlicht and Zack Van Amburg and features head Matt Dentler, will work to identify which films from Ellison’s slate will qualify under the two-picture minimum. Sweetening the pot is the fact that, in essence, Skydance will retain copyright to all intellectual property it produces at Apple. Both parties will share downstream revenue, and the arrangement leaves room for additional profit participation for Apple, sources said.
Apple was seen as a likely landing spot for Skydance when its first-look pact with Paramount expired. In 2021, Apple and Skydance Animation announced that they would embark on a series of animated films together, a sign of their deepening relationship.
Still, the financial details of the pact with Skydance’s feature film arm surprised some industry observers because Ellison, the son of billionaire Oracle founder Larry Ellison, does not have to capitalize his own movies. When the tech scion first landed in Hollywood he was seen as an important source of financing, but he has worked to strengthen his creative chops. Ellison has developed successful films such as “The Old Guard” and “The Tomorrow War” in recent years. He’s also overseen some commercial misfires, such as Ang Lee’s costly flop “The Gemini Man” and the relaunch of the Terminator series with two failed sequels in 2015’s “Terminator: Genisys” and 2019’s “Terminator: Dark Fate.”
Representatives for Apple and Skydance Media declined to comment on the matter.
The Cupertino, Calif. based company won Skydance in a bakeoff against its staunch competitors including Amazon Studios and Netflix. Its most formidable opponent was Amazon Studios, whose biggest streaming movie “The Tomorrow War” came courtesy of Skydance. They also collaborated on the Michael B. Jordan action film “Without Remorse.”
While Skydance is still free to develop film projects with other distributors, the partnership goes a long way in redefining a movie strategy at Apple. Over the past three years, Apple TV Plus has been following the acquisitions-heavy model set by its streaming predecessors — scooping up indie fare like “CODA” for a recording -breaking $25 million at the Sundance Film Festival in 2021 (that film is now in the thick of the Oscar race). But most of its films have been artier offerings such as Joel Coen’s “The Tragedy of Macbeth” and Sofia Coppola’s “On the Rocks,” both of which were made through an alliance with indie player A24.
There are notable populist exceptions — including the Tom Hanks films “Greyhound” and “Finch,” but those were made by Sony and Universal respectively and acquired during the pandemic. Now, Apple seems to be signaling that it plans to use its formidable stockpile of cash to make more broadly appealing movies. In-house production on more ambitious films has also ramped up in the past 18 months, including the rich package for Will Smith’s “Emancipation, an original Christmas musical from Will Ferrell and Ryan Reynolds, and a $200 million pact for Matthew Vaughn’s spy thriller “Argyle.”