The day after Simon met with Jack Valenti, Daenerys Entertainment's first quasi-independent release, 'Elvira: Mistress of the Dark', premiered in North America with 553 screens.
Although it was a leftover project from New World Entertainment, the media still paid considerable attention to it.
On the second day of its release, many mainstream North American newspapers published reviews of the film. However, the film's reputation was mostly negative, not even reaching a passing grade. 'The Hollywood Reporter' unceremoniously criticized the film as 'a horror movie that tries to imitate various horror genres but ends up being neither here nor there.'
Since he decided to release the film in theatres, Simon didn't just go through the motions. He specifically approved a $2 million marketing and distribution budget for print copies and advertising. In the 80s, such an expenditure was already quite substantial.
However, over its opening three-day weekend, 'Elvira: Mistress of the Dark' still only grossed $2.21 million, with an estimated total first-week box office of around $3 million.
With a $3 million opening week, based on the typical box office trends of that era, the film's total North American box office would likely be between $8 million and $10 million.
'Elvira: Mistress of the Dark' had a production cost of $7.5 million, and with the $2 million marketing and distribution budget, the total investment was $9.5 million.
Based on box office alone, this film clearly couldn't recoup its costs. Even if it could break even or even make a small profit through later international distribution channels, videotape, and television platforms, factoring in the time cost, it was ultimately a failed project.
Daenerys Entertainment's executives had anticipated this outcome and were not surprised. However, after the box office figures for 'Elvira: Mistress of the Dark' were released, many media outlets began to propagate theories of Simon Westeros 'falling from grace,' suggesting that 'Elvira: Mistress of the Dark' might be the beginning of Daenerys Entertainment's descent into mediocrity.
'The New York Times' even published an article analysing Simon's massive acquisition of New World Entertainment as a complete misstep, arguing that overly eager expansion would only lead Daenerys Entertainment to a rapid collapse and decline.
Simon was not affected by these media comments; he had clearly felt the benefits that acquiring New World Entertainment brought him in establishing a foothold in Hollywood during this period.
By purchasing this company, Daenerys Entertainment gained an experienced film and television production and distribution team, acquired a valuable catalogue of film and television project copyrights, solidified its position as a television content provider, and most importantly, obtained Marvel. All of this was completely worth the $250 million investment.
Although Simon didn't mind the failure of 'Elvira: Mistress of the Dark', the executives from New World Entertainment didn't see it that way.
Following the box office failure of 'Elvira: Mistress of the Dark', Robert Rehme and others appeared visibly nervous when facing Simon in the following days. However, Simon did not offer words of comfort to these individuals; pressure creates motivation, and the failure of 'Elvira: Mistress of the Dark' served as a kind of impetus for them.
While 'Elvira: Mistress of the Dark' was generating media discussion, Daenerys Entertainment submitted 'Scream' to the MPAA for rating for the third time on the new Monday. Additionally, post-production for 'Rain Man', 'Dead Poets Society', and 'Steel Magnolias' was all completed. Simon was still awaiting a statement from the traditional Hollywood powers and was not in a hurry to submit these three films for review.
Daenerys Entertainment Burbank Branch.
The date was October 5th, Wednesday.
Unlike 'Scream', due to the subject matter of 'Rain Man', 'Dead Poets Society', and 'Steel Magnolias', the MPAA, even if they were difficult, could not give a rating higher than R. Therefore, even though they hadn't been rated yet, Daenerys Entertainment had already begun arranging for representatives from major North American theatre chains to participate in test screenings in order to sign exhibition agreements.
Inside the screening room, as the end credits of 'Steel Magnolias' rolled, Robert Rehme, who was personally hosting this test screening, stood up and invited Richard Hill, Vice President of Film Acquisition for United Artists Theatres, to the adjacent reception room.
This was the second screening of the day; they had already watched a sample of 'Dead Poets Society' that morning.
The large-scale integration of North American cinema chains had not yet begun in the 1980s. United Artists Theatres, which had been spun off from United Artists after the Paramount Decree, was still the largest cinema chain in that era, owning over 2,200 screens across North America, with a market share approaching 10%.
To compensate for any negative impression the box office failure of 'Elvira: Mistress of the Dark' might have left on Simon, Robert Rehme had been tirelessly pushing forward the distribution of several films scheduled for the end of the year. For three consecutive days, he personally accompanied executives from various cinema chains to watch samples and negotiate cooperation agreements.
Moreover, Robert Rehme also vaguely sensed that his boss might have laid down the cards during his meeting with MPAA chairman Jack Valenti last Friday. Several major film studios' directly-owned cinema chains, which had initially been interested in cooperation, had recently rejected his test screening invitations. Robert Rehme could now only secure screen resources from cinema chains outside the Big Seven system.
However, Robert Rehme wasn't overly concerned about the current situation.
Due to the previous Hollywood strike, North American cinema chains were generally experiencing a shortage of films during this period, and the quality of films being screened could not compare to the same period in previous years. For three consecutive weeks prior, the total weekly box office in North America had been severely reduced, remaining below $30 million. Coupled with the box office miracles created by Daenerys Entertainment over the past two years, Robert Rehme had full confidence in securing enough screens for the company's films without relying on the resources of the Big Seven cinema chains.
"Charlie, including 'Scream', which we've already seen, all three films were personally selected and supervised throughout production by Simon. 'Scream' was actually Simon's original idea. So, for these three films, Daenerys Entertainment needs to ensure a combined 55% box office split".
"I've already heard about the rating issues 'Scream' is facing", Richard Hill said, holding a cup of coffee with a confident expression. "Bob, you probably don't know yet if 'Scream' can be released on time. 'Dead Poets Society' and 'Steel Magnolias' might not have this problem, but companies like Universal-controlled Cineplex and Columbia's Loews Theatres probably won't open their screens to you. So, 40%, that's all we can offer.
Also, if 'Scream' gets approved for rating, we can sign a single exhibition contract for all three films, but in core cities like New York and Chicago, United Artists Theatres will need exclusive exhibition rights".
Due to attendance rates, box office split contracts signed between film companies and cinema chains usually decrease in a tiered fashion. In the first few weeks of release, film companies can receive at least 60% or more of the box office revenue, and as attendance rates decrease, the percentage of revenue received by the film company gradually decreases.
However, generally speaking, the final box office split that mainstream film companies' commercial films can receive is roughly between 40% and 55%. The North American film industry has developed for over half a century, and the industry has very mature calculation formulas for this. Therefore, Robert Rehme and Richard Hill did not dwell on specific details but directly discussed the final split ratio.
Robert Rehme heard Richard Hill's demand and shook his head, saying, "Charlie, our company's situation might not be great, but your situation is actually worse. All cinemas are currently short of films. Moreover, if the Big Seven could achieve Daenerys Entertainment's box office results from the past two years, they would demand an even higher box office split, and you might even have to pay huge guarantees to get films, as in the past. So, 55%, if you agree to this, we can continue to talk".
Richard Hill retorted, "Past achievements don't guarantee future ones. 'Scream' might be decent, after all, it's Westeros's own idea, but he didn't even get a credit for it. As for 'Dead Poets Society' and 'Steel Magnolias', if it weren't for big stars like Robert De Niro and Jessica Lange, they'd actually lean more towards art-house films and wouldn't have many selling points at all".
"Back when 'When Harry Met Sally' came out, all the major Hollywood studios also thought it lacked selling points, but that film still grossed $110 million at the North American box office", Robert Rehme continued, showing no sign of backing down. "Charlie, if you want to make this deal, it's best not to consider external factors like the Big Seven. The Big Seven film companies' suppression of Daenerys Entertainment won't help you earn more money, but working with us can. You need to understand, it's not just these three films now, Daenerys Entertainment will produce more films in the future. If we have a pleasant cooperation this time, Daenerys Entertainment will definitely prioritize United Artists Theatres as our exhibitor in the future".
Richard Hill heard Robert Rehme's last words and, looking at his expression, immediately understood the subtext.
If this cooperation was not pleasant, United Artists Theatres would definitely be ostracized by Daenerys Entertainment in the future.
In recent days, Richard Hill had successively received calls from executives at some major Hollywood film companies, asking United Artists Theatres not to cooperate with Daenerys Entertainment.
Clearly, for some as yet undisclosed reasons, the relationship between Daenerys Entertainment and the Big Seven had begun to sour.
Robert Rehme had initially thought that Daenerys Entertainment's stance this time would be relatively weak, but he hadn't expected Robert Rehme, who had been mild-mannered during his time at New World Entertainment, to suddenly become so assertive.
Richard Hill inexplicably thought of Simon.
He was truly a sharp and ambitious young man.
Perhaps, like boss, like employee.
After further efforts, Robert Rehme remained unyielding on the revenue split, and Richard Hill realized that he truly didn't have the leverage to fall out with Daenerys Entertainment.
After all, United Artists Theatres only owned less than 10% of the screens in North America. Even the Big Seven, after the Reagan administration lifted restrictions on film companies operating theatres a few years ago, only acquired a total of about 15% of the screens. Although these were the most prime screen resources, across North America, 75% of movie screens were still controlled by other large and small theatre operators.
The long-standing network of interests gave the Big Seven a very strong influence over the entire North American exhibition market. If it were other second or third-tier film companies, and the Big Seven simultaneously exerted pressure, the various cinema chains, out of apprehension, might indeed implement a boycott.
However, Daenerys Entertainment was not among them, because this film company was simply too dazzling.
In two years, they produced six films, all of which landed in the top ten annual charts, with five grossing over $100 million domestically. If such impressive box office performance could continue, who would have the confidence to reject the enormous profits it contained?
Although he had vaguely responded to the calls from the Big Seven, Richard Hill had never considered cooperating with them to boycott Daenerys Entertainment. He believed that many other cinema operators in the industry would not do so either. Perhaps only those cinemas directly owned by the Big Seven, due to the overall interests of their parent companies, could not cooperate with Daenerys Entertainment, but Richard Hill felt that the managers of those cinemas must be cursing under their breath.
As professional managers, everyone has performance targets.
Thinking these thoughts, Richard Hill glanced around the reception room and suddenly understood something else.
Under normal circumstances, film companies would usually invite representatives from multiple cinema chains to participate in test screenings together, but this time, Robert Rehme had only invited him. This was clearly not just because United Artists Theatres was the largest cinema chain in North America; Daenerys Entertainment did not want to give the various cinema chains an opportunity to collude.
Without the leverage to fall out with Daenerys Entertainment, the cooperation terms proposed by Daenerys Entertainment were not overly harsh. In the subsequent negotiations, Richard Hill's attitude softened unconsciously.
By closing time, both parties had essentially finalized the exhibition agreement.
Having reached an agreement, Richard Hill declined Robert Rehme's dinner invitation and left. Robert Rehme had also planned to go home after work but received a call from Simon. The headquarters had just received the new studio logos for their three companies: Daenerys Pictures, New World Pictures, and Highgate Film. Simon wanted him to come over and take a look.
Since his boss was still working after hours, Robert Rehme had nothing to complain about and drove from Burbank to Santa Monica.
Upon arriving at Daenerys Entertainment headquarters in Santa Monica, Robert Rehme quickly went up to a conference room.
Simon and Amy were already there. After exchanging greetings, everyone sat around the conference table. Seeing Simon's female assistant adjusting the projector, Robert Rehme proactively brought up the results of the afternoon's negotiations.
"United Artists Theatres agreed to sign for all three films, with a combined box office split of 55% and a guaranteed four-week exhibition period. Richard Hill initially wanted exclusive exhibition rights for some core cities, but I refused. However, United Artists Theatres is not optimistic about 'Steel Magnolias'; they are only willing to offer 200 screens. If 'Scream' passes the rating review, they can provide 500 screens for that film and subsequently for 'Dead Poets Society'. Also, Simon, the internal test screenings for 'Steel Magnolias' and 'Dead Poets Society' last week went very well. I'm wondering if we could adopt an early, small-scale release strategy to build word-of-mouth, similar to Disney's 'Good Morning, Vietnam' last year?"
Theoretically, films like 'Dead Poets Society' and 'Steel Magnolias', which lean towards art-house genres, should participate in film festivals for pre-release publicity. However, the schedules for these films were very tight, leaving no time for similar marketing activities.
Simon listened to Robert Rehme's suggestion, considered it briefly, and then nodded, saying, "Okay, you guys can discuss a plan first".