Back-end participation deals with top directors, producers and actors,
in which they receive a percentage of a movie's gross -- regardless of
whether it is profitable -- have been principally responsible for
pushing the movie industry into an annual loss, according to a report
produced by research company Global Media Intelligence and Merrill Lynch
and reported by today's (Monday) New York Times. In its report about the
study, the newspaper commented that it may be particularly relevant
during the current writers' strike. "As it turns out, the pot of money
that the producers and writers are fighting over may have already been
pocketed by the entertainment industry's biggest talent," the Times
said. The study examined releases last year that yielded $23.7 billion
from sales to domestic theaters, foreign theaters, home video, pay
television and every other source of income. Total costs for those
films, however, amounted to $25.6 billion -- or a combined loss of $1.9
billion. The loss, the study determined was due partly to a 15.5-percent
decline in foreign DVD sales, but "the real killer," said the Times was
the growth in participations, which totaled an estimated $3 billion. By
comparison, the newspaper noted, citing WGA figures, total residuals for
the year amounted to $121.3 million, while a single actor could easily
earn $70 million from a so-called first-dollar gross deal on a hit
movie. And such deals amount to super-residuals. As Steven Blume, CEO of
Content Partners, a company that buys participations for cash, told the
Times. "These participations are paid in perpetuity."
http://www.imdb.com/news/sb/2007-11-12/
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