The ban was just a skirmish at Hollywood's top tier—it didn't ripple down to the regular crowd.
Dunn Films' acquisitions of Good Machine and Dick Clark Productions were chugging along smoothly. The Good Machine deal was on track to wrap up by the end of the month. Dick Clark Productions, being a public company, was a slower grind—privatization would likely take over three months.
At the office, Bill McNick told Dunn he'd already chatted with the heads of the major studios. They'd all voiced support for Dunn Films.
Dunn had seen that coming a mile away. He snorted, "Crocodile tears for the mouse!"
Bill blinked, thrown off. "What's that supposed to mean?"
Dunn waved it off. "Let Ovitz handle this one. I'll fill you in on the details later. Bill, I need you to pull together some info for me by this afternoon—I'm meeting Michael Ovitz."
"Files?" Bill sounded surprised. He was the president of Dunn Films, not Dunn's personal assistant. Digging up paperwork wasn't exactly his gig, right?
Dunn clarified, "You ran 20th Century Fox back in the day. I need a rundown of their profits over the past few years—nothing confidential, just the internal rate of return on their movies. And with your connections, see if you can get a read on the other studios too."
…
At 2 p.m., Dunn showed up at AG Agency with the compiled files, escorted by his secretary.
Michael Ovitz was ready, a thick stack of papers in front of him. He'd been waiting.
Today's meeting was a big deal. They needed a plan to pull Dunn Films out of its mess and chart a solid path forward for AG Agency.
After a quick hello, they dove right in. Ovitz kicked things off. "Dunn Films is in a tight spot. The Big Six might team up without even planning it, and they'll hit harder than they did with DreamWorks."
Ella Fisher, the petite secretary sitting next to Dunn, tensed up. Her pen, scribbling notes, started to tremble.
Dunn stayed cool as ever. "No permanent enemies, just permanent interests. There's no thawing things with Disney—even if they back off, I'm not letting it slide. So, we've got to show the other five majors some real, tangible benefits."
Ovitz gave him an approving nod. "Exactly! These old-school studios have deep roots and huge audiences. Small-time perks won't even register with them."
Dunn agreed. "Right. We need something big enough to make them sit up and take notice."
"What do movie studios need most?" Ovitz asked, glancing at Dunn instead of answering. Dunn grinned, and they said it together: "Cash!"
Yup, money!
Hollywood movies might rake in a third of the global box office every year, but do they actually turn a profit from tickets alone?
Dunn had the numbers in hand. Over the past few years, less than 7% of Hollywood films made money purely from box office revenue!
In other words, without side income like licensing, over 93% of Hollywood movies would lose money!
That's why traditional studios either got swallowed by media giants or turned into media giants themselves. Movies only paid off through intellectual property earnings pushed across wide channels.
For giants like Sony, Time Warner, Viacom, and Disney, their film divisions weren't the cash cows. In fact, studios like Columbia, Universal, and Paramount weren't exactly swimming in profits.
So why were these conglomerates so gung-ho about movies? Because they brought unmatched advertising clout and prestige. In short, filmmaking was their "image project"!
That setup led to one big catch: the parent companies wouldn't pump cash into their film arms. The studios' output was modest anyway—just enough to keep going, churn out movies, and polish the corporate image. No one expected them to be profit machines.
So, cash flow was every studio's headache.
Tax rebates and pre-selling rights were the go-to fixes.
Take this summer's Warner Bros. disaster flick The Perfect Storm. Budget? A whopping $140 million!
Even with Warner's deep pockets, they weren't betting the farm. Of that $140 million, Warner only shelled out $65 million.
Where'd the other $75 million come from?
Tax rebates from Germany and the UK handed Warner $25 million free and clear. Germany's rebates were especially clutch—Dunn himself had leaned on that loophole when cash got tight shooting Spider-Man.
Then there's pre-selling rights.
When The Perfect Storm got off the ground, Warner tapped its global reach and George Clooney's star power to pre-sell rights.
Deals with Japan, the UK, Australia, Italy, and France netted them $50 million upfront. Sure, they'd miss out on box office cash from those countries, but it slashed the risk if the movie tanked.
And it paid off—The Perfect Storm had already pulled in $140 million in North America. Warner recouped its costs from that alone.
The rest—overseas ticket sales, DVDs, VHS, TV rights? Pure profit.
But The Perfect Storm wasn't the norm.
This "financing game" only worked for big-budget blockbusters with A-list casts and top-tier crews.
Tax rebates hinged on future profits—how much could niche films really promise?
And pre-selling rights? Overseas buyers usually waited for a rough cut before committing. Only heavy-hitter commercial films gave them the guts to pay up front.
"Hollywood's financing tricks are unreal," Dunn said with a sigh.
Ovitz shrugged it off. "Dunn, it's the 21st century now. Times have changed!"
"Oh? How so?"
"I'll give you some numbers. Ten years ago, Hollywood could pre-sell rights to cover 80% of a movie's budget! Some films didn't even cost Hollywood a dime to greenlight. But this year? That number's down to 47%!"
Dunn nodded, getting it. "It's the way things are going. A decade ago, Hollywood films were the blockbusters—everyone worldwide was hooked. Now, tons of countries have their own booming film markets. Korea, Japan, Australia, Germany, even Eastern Europe—they're growing fast. Hollywood's not the only game in town anymore."
"Spot on," Ovitz said. "Lots of countries are pushing policies to boost their own films and curb Hollywood's reach. That old pre-sale financing trick? It's getting tougher to pull off."
Ovitz's words jogged Dunn's memory. "I heard Germany's tweaking its tax laws—movie investments won't be able to hide behind copyright loopholes anymore. If that door shuts, Hollywood's not getting big rebate cash anymore."
"Exactly!" Ovitz nodded enthusiastically. "After a decade of this, the Germans have wised up to Hollywood's playbook. German marks have been the fall guy for too long. Take Mission: Impossible—a third of the first film's budget came from German investors. But once Paramount saw the payoff, they ditched them for the sequel."
Dunn sighed. "Money's the root of all evil. If Hollywood keeps this up, overseas funding's gonna dry up!"
Ovitz grinned. "That's why I saw the writing on the wall. I'm taking CAA's old packaging model and building AG into a one-stop shop."
Dunn gave him a thumbs-up. "Smart move—I'm in!"
Right now, with overseas cash tightening, Hollywood was facing a financing crunch.
Not for companies—for movies.
Middle Eastern and Asian tycoons were happy to bankroll studios. A board seat at a big film company gave them a voice in Hollywood.
But funding a movie? That's straight-up venture capital. Investors can't meddle in production or company decisions. They just get a cut—if that. No rights, no control.
Even if it pays, the mega-rich don't bite.
If Dunn and Ovitz could team up to solve this financing riddle for the studios, forget crushing Dunn Films—they'd be treating Dunn like royalty!
Ovitz's smile turned bittersweet. "It's a solid idea, but a one-stop shop needs big stars and sharp agents first. Without that, good luck reeling in investors."
Dunn's eyes flickered, a smirk tugging at his lips.
For the first time since meeting Michael Ovitz, he felt a quiet surge of superiority.
His foresight gave him an edge—even over a Hollywood legend like Ovitz. He had the know-how to steer him right.
That's the perk of seeing what's coming.