Chapter 100: Robert's Surprise and Studio Upgrade

[Chapter 100: Robert's Surprise and Studio Upgrade]

After leaving Universal around 4 PM, Linton saw there was still plenty of time and invited Robert to join him back at the Linton Studio to discuss the next steps.

On the way, Robert kept looking at Linton with eager eyes, making Linton a bit uneasy. He asked, "Why are you looking at me like that?"

Robert said, "I was wondering if you have been touched by God or something -- how could you be this amazing? This being your first movie, you know, at first I worried it might flop, and even my most optimistic hope was just that the film would break even.

But now, we've achieved huge success. The movie easily crossed the $100 million mark in North American box office. Among all films released this year, it's ranked fifth in total box office, definitely making the top ten for the year.

More importantly, our return on investment is the highest. You've become a breakout star director, and through this film, my status as a producer has soared -- I'm now a well-known name in Hollywood, ha ha ha."

Linton modestly responded, "This is the result of all our hard work."

"You don't need to be modest," Robert replied. "While others might not realize it, I do. The entire creative team, including myself, were just average Hollywood folks. Even Naomi Watts was a complete newcomer. Ninety-five percent of the credit for this film's success belongs to you."

"Let's keep that between us, but don't say that out loud," Linton said, secretly agreeing.

"And Universal has treated you so well -- this isn't typical of one of the big seven Hollywood studios."

"What do you mean? They're usually very domineering?"

"Absolutely. They're the rule makers of the industry and hold near monopoly over film distribution. To film studios, they're like a mountain to climb."

"Tell me more."

"Take distribution contracts for example. Normally, a production company wouldn't get a distribution contract before the film is finished. Studios have to beg one of the big seven to evaluate the market potential. Only after their approval will they sign the deal, and their contracts are harsh -- distribution fees, including promotion costs, usually don't go below 35%. We got it at only 25%.

Beyond fees, distributors usually take 30 to 50% of the film's rights. TV rights and video rental sales splits could take up to 50%. Compare that, our contract is incredibly favorable.

For overseas income, the big seven completely squeeze the smaller studios. We can never tell where they fudge numbers. Some films make great box office money, but the studios claim high overseas distribution costs caused losses, leaving the producers with no payout. The billing is so complex and opaque, even the Big Four accounting firms can't audit it properly. It's so bad that even Wall Street has been fooled and forced to take the losses.

Payments come at least one to two years late, so studios often sell full overseas rights to the big seven to avoid worse losses. But they get unfairly low percentages -- normal studios struggle to get over 20% of North American box office revenue from rights transfer.

Also, payment settlements are slow. After the film leaves theaters, the big seven get the box office totals within a week, as well as the TV and video rights revenue. But producers often wait one to two years to get their payout unless they grease some palms.

But none of these headaches happened to us. How did you pull that off?"

Linton knew the real reasons: first, he was Universal's top star, part of the inner circle. Second, since Universal's acquisition by Japan's Matsushita Group, management was more focused on enriching themselves, with no real loyalty to the company's interests. Plus, Daniel was influencing matters from inside, smoothing the way through internal deals. Third, Universal's recent poor performance made them eager to boost revenue and they needed a sequel to Step Up. Fourth and the biggest reason, Linton secretly used Soul Induction ability, although no one knew.

Linton didn't reveal the truth to Robert, only said, "It probably has to do with me being Universal's lead star and the Step Up sequel. Anyway, it's good for us."

"With you around, producing is easy for me. By the way, when does the Step Up sequel start? Can I continue as producer?" Robert eagerly asked.

"Levitt makes a good point, let's start as soon as possible. I'm also thinking of rewarding the core team. How much do you think is appropriate?"

"No need for rewards -- the Hollywood system rarely does that. The film's huge success benefited everyone -- the studio, the producers, and all creators. Each of us got our contract payments, and our resumes got a big boost. Future paychecks will be higher too. The unions will handle distributing later revenues on schedule. Honestly, all the creators should be thanking you," Robert answered, surprising Linton.

"Well, the film's success is the result of everyone's efforts," Linton said.

"If you feel awkward, how about throwing a wrap party when the movie leaves theaters, so the team can celebrate?"

"Good idea. You arrange the party. Also, I have some new ideas for the studio, let's discuss them."

"Boss, please go ahead," Robert said excitedly, already guessing Linton's plans and taking himself as subordinate.

...

Because of Step Up's huge success, Linton started thinking about establishing his own film company. With so much inside knowledge of successful movies, he could invest and produce his own films, directing or starring when suitable, or just investing to profit. He could also support up-and-coming actresses to work with him.

Linton was very satisfied with Robert during the Step Up collaboration. He was very familiar with all producing processes, had strong coordination skills, and broad connections in Hollywood. He was a great producer. Linton wanted to keep him to manage the film company.

...

"Before, the Linton Studio was just a shell. Now, with Step Up's success, I've proven my ability. I want to upgrade the studio into a real movie company. If you're interested, you can be the general manager."

"Thanks for your trust, boss. I'll work hard to manage the company and not let you down."

Robert gained a lot from the collaboration. Step Up's success made him an overnight star producer. From an unknown small producer, he rose to a well-known figure in Hollywood. More importantly, with Linton's talent and presence, the new company would not have distribution problems. Hearing Linton's plans, Robert immediately agreed to join. Any hesitation would be an insult to his own intelligence.

Joking aside, grabbing such a partner tightly, especially as a founding member, was an obvious choice.

*****

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