Geoff Boucher links to this story by Rachel Abramowitz on the fight for the heirs of Tolkien to get a share of the movie revenue:
SO “THE LORD OF THE RINGS” made no money.
Let me amend that. The film trilogy, which grossed $2.96 billion worldwide at the box office and $3 billion or so more in DVD and ancillary markets, has not made any money for the heirs of J.R.R. Tolkien, author of the famous books.
Tolkien obviously isn’t Peter Jackson, who directed the franchise, or Liv Tyler or Viggo Mortensen, who starred in it, or New Line Cinema, the studio that financed it, or Miramax, which owned the film rights for a second but couldn’t get the movie made, or producer Saul Zaentz, who bought the rights in 1976. He’s just the guy who dreamed up the cosmology, the whole shebang of hobbits and dwarfs, orcs, ents, wargs, trolls, whatnot. “Three rings for the Elven-kings under the sky, Seven for the Dwarf-Lords in their halls of stone, Nine for Mortal Men doomed to die, One for the Dark Lord on his dark throne.” Those were old John Ronald Reuel Tolkien’s words.
Although Tolkien himself signed a deal for a piece of the gross from any movies made from his works, there just hasn’t been any gross revenue, say studios:
According to their lawsuit and lawyer Bonnie Eskenazi, Tolkien licensed motion picture rights to United Artists back in 1969 for a low six-figure sum and 7.5% of the “gross receipts.” Gross receipts are the money the distributor actually gets from the theaters and ancillary markets. (In the case of theatrical income, it’s usually about 50% of the box-office take.) “This is a deal under which we get a percentage of the gross once an artificial break-even is reached. The artificial break-even is essentially 2.6 times the negative cost of the film,” says Eskenazi.
New Line, which eventually secured the rights, was allowed to deduct some costs from its “Lord of the Rings” income such as taxes, but not the big-ticket expenses that studios like to take — such as distribution fees or overhead, according to Eskenazi. So even with all the loot that New Line has pocketed on the films, there is not a shekel, a ducat, a baht, a euro or a dollar for some elderly Tolkiens? Eskenazi estimates the family is owed $150 million, but even that number is a little fuzzy, because according to the lawsuit the family has never been allowed to audit the second or third films.
I guess they’re supposed to just trust the studio.
In a different piece, Abramowitz look at the state of George Lucas’s business plan:
According to lore (and Roffman), Lucas initially sold the merchandising rights to his creations to Fox along with the original movie.
There was such little anticipation for the title that no toys were actually available until a year after the original film premiered in the spring of 1977. That Christmas, the original toy manufacturer, Kenner, sold wrapped gift certificates for future action figures.
When negotiating the sequel with Fox, Lucas demanded the rights back, and Fox reluctantly acquiesced, as they had to, or else they weren’t going to get any of “The Empire Strikes Back.” Roffman says the toy sales actually “fell off a cliff in 1985” as the original audiences aged out of action-figure mania, and the company waited until the ’90s to bring back the merchandise, initially for the rabid fans (now young men), which meant comics, books and ultimately video games in 1993. Now it’s a well-oiled Force factory, with 100 global licensees and 100 domestic ones, and some 80 million books in print (including 75 New York Times bestsellers).