October 28, 2003
NEW YORK TIMES
One Director to Be Paid Like a Top Movie Star
By Anne Thompson
_________________________________

When Universal Pictures ushered the "Lord of the Rings" auteur Peter Jackson and his team into Hollywood's elite 20/20 club - $20 million in guaranteed up-front salary against 20 percent of the gross receipts - the action underscored a major Hollywood shift: event-movie directors are becoming as valuable as stars like Tom Cruise and Mel Gibson.

Mr. Jackson, whose first two parts of the "Rings" trilogy grossed a total of $1.8 billion worldwide, suddenly jumped far ahead of his fellow A-list directors with his deal to produce and direct another remake of "King Kong." Mr. Jackson's take on the last two "Rings" films is roughly 10 percent of the gross, a person close to the production said. The third film is to open in December.

"As technology improves and effects become the stars, directors are cashing in just the way the actors did," the producer Jorge Saralegui said. "A lot of directors are going to feel, `I'm close,' like star writer-directors Bob Zemeckis and James Cameron, who can sell movies on their name."

The stakes have gotten very high, with moviegoers expecting more as the price of tickets continues to rise. Thus the producers and directors who take command of these unwieldy special-effects behemoths have become more valuable. Gifted writer-directors like Andy and Larry Wachowski (the "Matrix" trilogy) and Jonathan Mostow ("Terminator 3: Rise of the Machines") spent hundreds of millions of studio dollars on their films, largely on expensive and often frighteningly unpredictable visual effects.

One studio chief said she was in a state of shock when she heard about Mr. Jackson's deal. "No director has ever made more than $12 million" on a single film, she said. "It's going to have unbelievable ramifications. It's insane."

But Mr. Jackson's agent, Ken Kamins, said the "King Kong" deal (shared by Mr. Jackson; his wife and writing and producing partner, Fran Walsh; and the writer and co-producer Phillippa Boyens) resulted from a "perfect storm" of circumstances that would never be repeated. Mary Parent, Universal's co-president, agreed.

"Peter is a unique talent," she said, "coupled with the fact that this deal involves three people, three sets of services over almost three years, compounded by the unique history of the project itself."

After the first two "Rings" movies reached their huge grosses and earned 19 Academy Award nominations and 6 Oscars, Mr. Jackson was sought after by seven studios, Mr. Kamins said. But Universal had one advantage over its rivals: the studio owned a 1996 "King Kong" script by Mr. Jackson and Ms. Walsh. But Mr. Jackson's hopes of remaking his favorite film were dashed, Mr. Kamin said. Universal executives said that the studio chairman at the time, Casey Silver, shelved the project just after Mr. Jackson's horror film "The Frighteners" bombed at the box office in 1996.

In July 2002, to reassure Mr. Jackson of their good intentions, Universal's chairman, Stacey Snider; Ms. Parent; and her co-president, Scott Stuber flew (watching the 1933 "King Kong") to New Zealand, where Mr. Jackson was working on "The Return of the King," the third and final "Rings" film.
Landing Mr. Jackson was not easy. He had been burned once, and in many ways his precedent-setting deal is less about establishing a gigantic salary benchmark, Mr. Kamins said, than it is an elaborate "kill fee" to protect Mr. Jackson from getting burned again, at a time when Universal was in the process of being sold. (General Electric eventually purchased the studio.)

Mr. Jackson will cover any costs over a budget of $150 million, and will not direct any other film before "King Kong," said the studio, which does not plan to share the gross receipts with expensive stars. "The star of the movie is the title and a story everyone has known for 70 years," Mr. Kamins said.

One studio chairman, speaking on condition of anonymity, said the deal would have the same effect on movie budgets as Columbia's 1995 decision to pay Jim Carrey $20 million for "The Cable Guy." Almost immediately a long list of stars moved into the $20 million-20 percent club.

Even a midrange star like Kurt Russell soon reached a career-high salary of $15 million. Today, studio executives say, top-end stars like Mel Gibson and Harrison Ford garner $25 million salaries. The more studios share their gross returns with stars, producers and directors, the tougher it is for the studios to reach a profit, many studio chiefs complain.

"It's hard enough to make interesting movies at a responsible price," Disney's president for production, Nina Jacobson, said. "Lord knows this deal doesn't make it any easier. At a certain point these movies collapse under their own weight, which is not good for anybody."`

At the top of the talent food chain, Hollywood executives say, are George Lucas, who turned his "Star Wars" millions into his own Bay Area movie studio, Lucasfilm, and the top effects house in the film business, Industrial Light and Magic; and Steven Spielberg, a partner in the DreamWorks film studio. Mr. Lucas writes, directs, produces, finances and owns his films; he releases them through 20th Century Fox's global distribution system. When Mr. Spielberg directs films for DreamWorks and other studios, several studio chiefs said, he collects 20 to 50 percent of the share of the gross returned to the studio by theaters.

Robert Zemeckis ("Forrest Gump," "Back to the Future") is said to be one of the few directors who earns more than a $10 million salary against 10 percent of the gross receipts. Because he is a veteran writer as well as a director with an ability to spin movie fantasies using special effects, Mr. Zemeckis landed 15 percent of the gross receipts for his coming "Polar Express," starring Tom Hanks, one executive close to the project said.

What Hollywood insiders once considered a luxurious deal now pales next to Mr. Jackson's. "The conversation is now changed on the starting point of negotiation with top-tier directors on franchise properties," said Chris McGurk, MGM's vice chairman and chief operating officer. The comforting news for studio executives is that few directors offer the tidy creative package that Peter Jackson does. "There aren't that many directors to whom studios would pay that kind of money," the producer Laura Ziskin said. "There aren't that many directors whose movies have stratospheric box office of $800 million to $900 million worldwide."

The directors whose prices could escalate include M. Night Shyamalan ("The Sixth Sense," "Signs"), who writes and produces his movies; the Wachowskis, who write, produce and micromanage their special effects; and the "Harry Potter" producer-director Chris Columbus, who also writes.

But what about an event-movie producer like Jerry Bruckheimer ("Pirates of the Caribbean: Curse of the Black Pearl"), who studio executives familiar with his deal said, gets 7.5 percent of the gross receipts? As he renegotiates his arrangement with Disney, he may now have an argument for demanding more. A lot more.

.

Email Anne Thompson

..Gary Dretzka
..Leonard Klady
..David Poland
..Ray Pride
..Patricia Vidal