This is the sexiest business document I’ve ever seen. I mean, your small business loan proposal has zero references to Twilight. But when Summit Entertainment puts together a prospectus to borrow $750 million in capital, they understandably tout the success of their flagship franchise. Notably, the studio expects $1.2 billion in revenues from both parts of The Twilight Saga: Breaking Dawn. (The last Twilight movie, Eclipse, earned $698 million worldwide.)
Most of this prospectus has been leaked online despite the “Confidential” watermark, and it’s fascinating to see the cash flow and business structure laid out in such detail for movie studios. Graphs and things after the jump:
UPDATE: Summit has asked us to take down the images/documents. Sorry if you missed them.
This is a good week to talk about the movie business. Universal’s passing on the $150-million R-rated monster movie At the Mountains of Madness sparked a debate as to whether the studio is “chickenshit” or simply making the logical move. I side with the latter camp. Movie studios are selling a product. We should not expect artistic risk unless there’s sufficiently high potential reward (see: Inception).
Summit is very proud of all the Oscars The Hurt Locker won. But Breaking Dawn is the property that will generate “$485 million in net cash flow over the next three years” to pay back $348 million of the loan.
A regression model that statistically predicts future box office is my holy grail. Summit stops short of that, but they do break down exactly why you can bet on Breaking Dawn. I wish they listed the qualifications for “comparable film franchise” in the first bullet. Harry Potter for sure. Star Wars? Batman? Saw?
A look at the opening weekend, domestic box office, and worldwide box office of the first three Twilight films:
This figure does a great job of tracking the production process from greenlight to release. I never would have though of “Initiate foreign sales” at the very first stage alongside budgeting discussions.
The full document has quite a few more interesting tidbits, but I’ll leave you with this table of the studio’s next exposure on the last few years’ releases. It looks like the studio became serious hedgers after investing so much in Push, but Red and Letters to Juliet joined Eclipse at nearly that level last year. Summit indicates that all but one 2010 release is expected to turn a profit (Furry Vengeance?).