Saying Bye-Bye to a Big Slice of ‘American Pie’

Studios typically rush to take out boastful ads in the Hollywood trade papers when one of their movies breaks a box-office milestone.

So it was unusual when Universal Pictures neglected to do so when its hit teen comedy, “American Pie,” recently crossed the $200-million mark in worldwide box-office receipts.

The reason seemed obvious to many Hollywood insiders: Universal didn’t want to draw attention again to its embarrassing decision last year to sell off the lion’s share of international rights to a low-budget movie that, judging by its testing with audiences, seemed destined to be a big hit.

By doing so, Universal left tens of millions of dollars on the table, underscoring how well-intentioned plans for reducing the risks of the volatile movie business can sometimes go awry.

While studios often defray the risks of big-budget movies by taking on financial partners to protect their downside, Universal’s sale, in retrospect, was unquestionably shortsighted. For one, at a cost of $11 million, “American Pie” was not a big bet, and international revenue can often account for more than half a film’s total earnings.

The move, made by a previous studio regime, was a result of a mandate by Universal management to raise quick cash to offset losses from a string of costly flops such as “Babe: Pig in the City” and “Meet Joe Black.”

But the puny $5 million or so that Universal received as a minimum guarantee for selling the rights to foreign sales outfit Summit Entertainment turned out to be a big price for the studio to pay. “American Pie” has grossed more overseas than it did domestically: about $114 million so far compared with $102 million.

Universal at least retained rights in the English-speaking countries of Britain, Australia, New Zealand and South Africa. Combined grosses from those territories total an estimated $34 million, which accounts for approximately 30% of the film’s overall international theatrical earnings.

Patrick Wachsberger, president of Summit Entertainment, said “American Pie” is still playing in some territories and will probably gross more than $120 million once its run is over.

In addition to advancing the $5 million to Universal, Summit, which sold the film to overseas distributors, has also paid the studio a bonus of more than $1.5 million because of the film’s strong domestic performance.

Universal Pictures’ former management team, led by President Chris McGurk, sold off rights or took on a financial partner for “American Pie” and several other films, acting on a mandate from Seagram Co. chief Edgar Bronfman Jr. to raise sorely needed cash.

Under former movie Chairman Casey Silver, the studio had suffered a two-year losing streak at the box office with such expensive duds as “Primary Colors,” “Mercury Rising,” “The Jackal,” “Dante’s Peak,” and finally, the “Babe” sequel and “Meet Joe Black,” starring Brad Pitt.

Universal also sold off rights last year to its upcoming March 17 release, “Erin Brockovich,” a $50-million drama directed by Steven Soderbergh and starring Julia Roberts--Hollywood’s biggest female star. Universal will have to split the profit on the highly anticipated movie with Sony Pictures, which was also its partner on the thriller “Bone Collector” starring Denzel Washington.

Universal Pictures’ recently named chairwoman, Stacey Snider, who was a top executive at the studio during the dark times of the “fire sale,” recalls a phone call with Bronfman in which she made a plea on behalf of herself and some of her colleagues not to indiscriminately sell off rights.

“He was sympathetic to my request, but said, ‘The magnitude of the hemorrhage warrants a one-time-only crisis management move,’ ” Snider said.

Given the circumstances, noted Snider, “Edgar Bronfman had every right to demand a short-term solution even though he knew it was not a long-time strategy going forward. He recognized that the normal rules did not apply.”

In fact, Universal’s fortunes began turning around last spring with such releases as “Life,” starring Eddie Murphy and Lawrence Martin; “The Mummy,” which grossed $150 million domestically and an additional $250 million internationally (which Universal had also come close to giving away); “Notting Hill” ($363 million worldwide); and “American Pie.”

By late summer, the studio had again stumbled with such flops as “Mystery Men” and “For Love of the Game.”

The studio’s rationale for selling “American Pie” at the time was that American teen comedies don’t ordinarily perform well in non-English speaking territories. That held true for such domestic comedy hits as Adam Sandler’s “The Wedding Singer” and “The Water Boy,” because they were targeted to younger audiences.

However, broader appeal hit comedies such as “There’s Something About Mary” and Universal’s own “Liar, Liar” and “The Nutty Professor,” did great business overseas.

The R-rated “American Pie”--written by Adam Herz; directed by Paul Weitz; and produced by Warren Zide, Craig Perry, Chris Moore and Chris Weitz--is about a group of high school seniors who make a pact to lose their virginity by prom night.

The film did, in fact, perform quite well in Universal’s two biggest territories--Britain and Australia--and lousy in the two smaller ones, New Zealand and South Africa.

It grossed around $10 million in Australia and $22 million in Britain, where it’s still in 140 theaters. The film grossed just under $1 million both in New Zealand and South Africa.

The strongest overseas market for “American Pie” has been Germany, where it has taken in nearly $30 million and is still playing in 700 theaters.

The film also fared well in Scandinavia and Italy, with close to $10 million in each of those territories, but performed poorly in France, Spain and Austria.

Its poorest business came in South Korea ($121,000) and the Philippines ($400,000).

You can bet that Universal held on to the worldwide rights to its planned sequel of “American Pie.”

The script is being written by David H. Steinberg and will pick up with the guys reuniting in the summer after their freshman year at college.

Snider, who said Universal has option deals with most of the original cast members, expects the sequel to cost less than $20 million. There is yet no director. Snider hopes the movie, which will be produced by Zide, Moore, the Weitz brothers and Herz, will be in production this summer for release in 2001.

If it’s lucky, Universal won’t have pie on its face this time around.