Metro-Goldwyn-Mayer is spending twice the usual amount to market Tom Cruise’s “Valkyrie,” in an effort to give it a fighting chance when it opens at the box office Christmas day.
“Valkyrie” [Read the review here]is the second film that MGM is releasing under the revived United Artists banner, and its success is critical from both a public relations and financial perspective.
UA’s first release, “Lions for Lambs,” lost money, which means that the studio was unable to replenish the cash it drew down from its $500 million film-financing fund to make the film.
Since the proceeds from each film released under the fund flow back into it, how well “Valkyrie” performs will determine the amount that UA is able to draw from the fund for future productions. Regardless of the film’s performance, however, the studio will continue to have access to the fund.
Sources with knowledge of the fund’s terms said that a profitable “Valkyrie” release could gain UA an extra $15 million to $20 million for its next production, while a poor showing could curtail the amount the studio can access by an equal amount.
That’s part of the reason why MGM is spending about $70 million to market the film in the US alone, according to three sources close to the situation. Studios typically reserve that kind of spending for films with blockbuster potential.
Films expected to generate less than $100 million – and industry watchers say “Valkyrie” fits into that category – generally get marketing budgets of around $35 million.
“They are betting the ranch and spending every available penny they have on advertising trying to make this film work,” said one source.
However, the more MGM spends to market “Valkyrie,” the tougher it will be for the film to break even.
MGM declined to comment on the amount of money it is spending to market the movie, but a source close to the studio characterized the marketing costs as “a healthy amount to get through the Christmas clutter, but appropriate for the season and the type of film.” This source said the studio spent around $35 million.
Increasing the amount of money UA can access from the fund also plays into the decision to move the release date for “Valkyrie” to Christmas from February.
Sources said releasing the film this year allows MGM to receive payment for it under its output deal with Showtime, which expires on Dec. 31.
Had MGM waited until next year, it would have risked guaranteed ancillary revenue since the studio doesn’t have a cable-television deal in place for 2009. Instead, it would have to bank on getting money for carriage from cable operators for the new movie channel MGM plans to launch with Paramount and Lionsgate to replace the revenue it is losing from Showtime.
MGM President Mary Parent disputed the notion that the studio moved “Valkyrie” ‘s release date to take advantage of its Showtime deal.
“Once ‘Valkyrie’ was complete, it was clear that it was strong enough to be released during the holidays, when more people go to the movies,” she said.