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When the ‘yes’ becomes a ‘no’

Times Staff Writer

THE real magic of Hollywood is not the knee-buckling resonance of a perfect screen kiss or the ability to conjure an army of Orcs from the plains of New Zealand. The real magic of Hollywood, as any agent, screenwriter, director, actor, producer or studio executive will tell you, is that movies get made at all. Especially now.

Some years back, a commitment from an A-lister, those actors or directors whose track records proved they could deliver a big opening weekend at the box office, usually guaranteed a big-budget project would get a green light. Then the formula changed -- it often took getting a star to commit to the project and then trying to get them to cut their fee. But now, apparently, even that is not enough, as filmmakers on a variety of projects are beginning to learn.

Whether the rupture of a film project is officially pegged as a disagreement over the script, the director or the star’s deal, the negotiations have simply gotten tougher, and the likelihood of compromise slimmer once the budget tops the $100-million watermark -- even though a few million dollars might be all that separates the sides.

Filmmakers have been complaining for years that they can’t get studio support for midlevel movies -- films with a budget between $25 million and $80 million. Although they have created indie divisions for small-budget films, the studios’ emphasis has turned to high-concept films, an increasing number of which have budgets that quickly top $100 million -- and a handful more that double that figure. With that much money at stake, it’s not surprising that studios have gotten more jittery.

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“The number of movies that cost more than $100 million is increasing,” says producer and former Twentieth Century Fox studio head Bill Mechanic. “And once you cross the $100-million mark, it’s just very hard to get your money out. Some make money, but a lot don’t. And that can be a pretty big don’t.”

In recent weeks, “Believe It or Not!,” a Jim Carrey project whose budget was estimated to be in the $150-million range, was shut down by Paramount. Although there were disagreements over the script -- Carrey and director Tim Burton wanted to take the film in a new direction -- the decision was driven by Paramount execs who didn’t want to pay production costs while the script changes were made. They pushed the project back a year, and while all involved have said they remain committed, a year is a very long time.

Two years ago, Universal famously shelled out $20 million to Denzel Washington to meet “pay-or-play” contracts (meaning an actor gets his fee whether the movie is made or not) after the studio pulled the plug on Antoine Fucqua’s “American Gangster” because the budget was creeping past $100 million.

“Used Guys,” a high-concept, big-budget comedy that was to star Carrey and Ben Stiller, provides one of the best recent case studies in how a $100-million-plus film can fall apart. A few months ago Fox, in partnership with Sony, pulled the plug on the project.

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Yanked just weeks before shooting was to begin, the “Used Guys” collapse caused not so much shock as dismay within the industry. This was a film that had already cleared all the hurdles -- it had three big-time moneymakers attached; everyone was happy with the script; Fox and Sony are in good health financially and, more important, they were prepared to break the $100-million barrier, despite it being a comedy.

“It just didn’t make any sense” to halt production, said an industry insider not directly associated with the project.

From where Fox sat, it made perfect sense. Yes, they were prepared to go over $100 million, but originally the budget had been closer to $106 million -- the trinity of Carrey, Stiller and director Jay Roach doesn’t come cheap, though they took pay cuts to work together. (Still, according to those familiar with the deal, their combined salaries made up more than half the budget.) Then the schedule was pushed back when Stiller’s work on another Fox movie went into overtime. The budget crept up to $110 million as Roach and his co-producers, Stiller and Stuart Cornfeld, realized that the movie’s setting -- a female-dominated future world -- added special-effects expenses that cost more than originially anticipated.

With $6 million already sunk into sets, Fox asked Roach to commit to a budget of $112 million. For a variety of reasons, he was not prepared to do so, nor was he willing to ask either Stiller or Carrey to further cut their deals. In May, figuring that the only way the studio would make any money on the film was if “Used Guys” became one of the top-grossing comedies in history, Fox decided to pass.

In the weeks after the decision was made, Roach, who directed the “Austin Powers” and “Meet the Parents” franchises, expressed great surprise; although “Used Guys” would have been his first $100-million-plus movie, he felt it had the potential to turn a profit.

Others in the industry were more surprised at how the director handled the negotiations.

“Any other director would have said '$112 million? Absolutely. You bet,’ ” said one Hollywood insider, “then just gone over budget if he had to. That’s just the way it works.”

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ROACH declined to speak on the record for this story because he is still hoping that “Used Guys” will be revived with all three principals attached. As of press time, Fox said there was no talk of resurrecting the film.

Still, it is not an impossible dream. Scratch any box-office smash or Oscar nominee and chances are you’ll find a back story that includes years in development hell or even a full-fledged shutdown. The famous sequel to “Chinatown,” “The Two Jakes,” got yanked after principal photography had begun, only to reemerge nine years later. And two years after its death, “American Gangster” has been revived, with Washington set to star again. Then-Chairman Stacey Snider had axed the film because she was concerned about the rising costs; after Snider left Universal last year, “American Gangster” was resurrected, this time with Ridley Scott, a veteran of such big-budget movies as “Gladiator” and “Black Hawk Down,” as director.

Even very expensive contentious behavior doesn’t necessarily spell career death. Six years ago, Mike Myers pulled out of a film based on his “Saturday Night Live” character Dieter, a tightly wound German film fanatic/talk-show host, because Myers said he didn’t like the script -- which he co-wrote. Universal, having spent almost $4 million in pre-production fees, sued for breach of contract; Myers countersued, and though things got ugly, it was resolved out of court and he eventually starred in “The Cat in the Hat.” For Universal.

But those cases are rare; more often if a movie dies after rewrites and A-list commitment, it stays dead, if for no other reason than the players involved have to move to their next projects.

“The problem is there are not enough movie stars right now,” says an agent who did not want to be named. “So now it’s standard that you’re selling a star’s slot. So sometimes a movie will get triggered before it’s ready just because the actor they want has a slot open.”

But a film built on a slot -- a specific spot in an actor’s schedule -- often doesn’t make it to production. Which is why the big stars now routinely demand pay-or-play deals. Why should they lose the money they might have made on another film just because the studio gets cold feet, the thinking goes. Or because the script rewrite doesn’t meet their standard?

“Two things tear a movie apart,” says the agent. “Out-of-control budget or a terrible rewrite comes in and the actor pulls out.”

Jeffrey Berg, who as chairman and chief executive of ICM sees deals coalesce and disintegrate daily, says there is no one answer and there never has been. Executives shift jobs, mergers occur and a studio that once seemed stable might begin axing certain projects, or, as in the case of Universal, resurrecting them.

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“There could be a change in studio management,” Berg says. “Or a change in economic fortune -- if the studio is experiencing a cold spell, a project that looked viable one month may not be the next.”

The propensity studios now have toward co-financing, either with another studio or outside sources, Berg says, makes the already intricate puzzle a bit more complicated. And while agencies such as ICM have long been involved in all aspects of a film deal, including financing, finding money has, Berg says, begun “occupying more of the firms’ resources” lately.

“The budgets are increasing in general,” he says. “And so you find yourself making the deal twice -- when you set it up to go into development and then again when it’s actually greenlit.”

THE BOTTOM LINE

ALTHOUGH the new financing sources have largely been considered a boon in the industry, it is not without its drawbacks.

“These are investors who believe you can still make money in movies,” says Mechanic. “They don’t necessarily have a passion for film. Chase them away and you’ll be hard-pressed to replace them. Then what?”

As a producer who was once the former head of Fox and a former top Disney executive, Mechanic has worked both sides of the ledger. He became a producer, he says, because he wanted creative freedom, “and now, of course, there is none,” he adds with a laugh. Studios are more conservative these days, he says. And while he concedes there are no easy answers, he points to the proliferation of the back-end deal as a turning point in the budget arms race.

The back-end deal, by which top talent “owns” a percentage of a film’s profits, began, ironically enough, as a cost-cutting measure.

“It came into fashion during the ‘70s, when it was cheaper to pay the stars out of the back end than to pay their salaries,” Mechanic says. “But then the budgets and salaries went back up, but the back end stayed. And not just for guys who had 20 years in the business, but for guys like Jim Carrey, who was a hot comedian with hardly any film experience.”

In fact, it was the back-end deals that Fox tried to negotiate down when the “Used Guys” budget neared $110 million. But Roach and others close to the project said that he, Stiller and Carrey had already dropped their usual percentages because they knew no one could afford them “at retail,” as one insider put it.

Still, many people point to Carrey’s deal for “The Cable Guy” -- $20 million against 10% -- as a watershed, not just for comedies but for all nonblockbuster films.

“I’ve seen a lot of barriers broken over the years,” says producer Michael Medavoy, a former agent who went on to co-found Orion Pictures and run TriStar. “I remember when Elizabeth Taylor got a million dollars to do ‘Cleopatra.’ But the $20-million comedy deal was a big one.”

“It used to be an either/or,” says Mechanic of high salaries versus back end. “Now it’s both.”

So what looks like a recent phenomenon -- studios either cutting budgets at the last minute or demanding all sorts of assurances from those films that go over $100 million -- is, according to Mechanic, an accumulation of issues.

“For the last few years, people just haven’t been paying attention,” he says.

The mentality at the studios today doesn’t help, either, says Medavoy. “It’s hard to get a movie made today because everyone’s looking for yesterday’s hit,” he says. “It’s very marketing-oriented, like politics based on polling. But the marketing budget for most films now is huge because they have such a short window to get everything back.”

With so much money at stake and so many studios having to answer to larger parent companies, new layers of decision-makers have emerged.

“Everyone has an assistant who has an assistant,” says Medavoy. “Now there are 20 people making notes, which means there are more people saying, ‘You know, I don’t think it’s going to work.’ ”

And when they’re dealing with a $100-million-plus film, the prime directive is to assess financial risk rather than the value of a movie’s content. Which is why Fox was willing to write off the millions spent on sets for “Used Guys” and Universal was willing to pay Washington’s $20 million rather than go further in debt and risk losing more.

“The studios are leaning more on the producers because they are suddenly remembering that they are in the business to make money,” says Mechanic.

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