Joe Roth has risen again to be one of Hollywood’s most prolific producers, so it’s easy to forget that he undertook one of the most disastrous studio ventures in recent times with Revolution Studios.
TheWrap obtained the confidential financial documents given to prospective buyers of the Revolution library, which has been for sale since 2008.
The documents tell the story of a bygone, free-spending decade in Hollywood, when Roth paid big money to stars for movies that audiences no longer wanted to see, among them "Mona Lisa Smile," "Hollywood Homicide" and "Rent."
“I would do everything differently,” Roth told TheWrap when called about the library documents. “Our model — what we were asked to do, and agreed to do — was 6, 7, 8 movies a year. I didn’t have a big enough company to do that. I would have been better off working on a few movies, bigger titles, than doing a piece of Sony’s slate.”
That, of course, is what Roth has gone on to do since winding down Revolution at the end of 2007, making huge hits mainly for Disney: "Alice in Wonderland" with Tim Burton, and the upcoming “Oz: The Great and Powerful” and Universal's “Snow White and the Huntsman.”
But first, a lot of money was lost along the way. As an object lesson, the story of Revolution is instructive: 46 films, from “Gigli” to “Black Hawk Down,” costing a staggering $2.6 billion to produce, according to the documents. (The budgets are consistently higher than what was publicly acknowledged, though that is a well-worn Hollywood tradition.)
The movies yielded $3.7 billion in worldwide box office, which any movie executive will tell you is a dismal return on investment. For starters, approximately half of the sum goes to exhibitors.
The company was certainly hurt by declining home-entertainment revenue, starting in the middle of the decade. But the documents show that spending was high on movies that, one after the other, yielded a thin box-office return.
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When Roth launched Revolution, the New York Times reported that his goal was to make movies that were “inexpensive and entertaining.” And he raised nearly $1 billion to fund his ambitious venture.
But that’s not what he made. By TheWrap’s count, the library includes no fewer than 16 movies that cost upward of $70 million each. (Sony paid for marketing costs.)
There are a few worthwhile projects in the Revolution canon, such as the Oscar-nominated “Black Hawk Down” and the Adam Sandler hit “Anger Management,” but for the most part the films are too forgettable to have long shelf lives.
The studio was, in many ways, the victim of shifting tastes in movies. As the head of Walt Disney Studios in the nineties, Roth thrived by matching big name actors such as Bruce Willis and Nicolas Cage with star driven projects like “The Sixth Sense” and “Con Air.” Thanks to those films, when Roth stepped down, Disney had the highest box-office share in the industry.
It was that track record and his good relationships with Hollywood’s highest grossing actors that helped the former studio chief raise some $250 million out of the gate from Starz, Fox and Sony, who collectively own 25% of the company.
By the time Roth started revving up the production pipeline, tastes had changed with superheroes and boy wizards replacing the likes of Willis and Cage at the box office.
“The assignment made sense going in,” Roth said. “Midway through it was clear the marketplace was changing. And there was no apparatus, even if I could figure it out, to change it. So I stopped it, a year before I had to.”
When the studio launched in 2000, Roth touted production deals with the likes of Julia Roberts, Sandler and Willis. The results of those partnerships were underwhelming, with only Sandler producing with the $194.6 million grossing “Anger Management” and the $237.6 million grossing “Click.”
Willis’ lone Revolution effort “Tears of the Sun,” cost $100.5 million to produce and grossed a measly $86.2 million worldwide. Roberts managed a double with the $161 million grossing “America’s Sweethearts,” but her drama “Mona Lisa Smile” cost $72.3 million to make and only brought in $141.9 million.
Instead of snapping up rights to the graphic novels and comic books that were driving the box office throughout the last decade, Roth continued to gamble on star power, sometimes past their prime. Harrison Ford and Tim Allen's appeal had waned by the time Roth tapped them for the duds “Hollywood Homicide” and “Zoom.”
When Revolution finally did successfully launch what could have been its first in-house film franchise, with the $274.9 million grossing spy thriller “XXX,” its efforts were stymied when the original star Vin Diesel was replaced by Ice Cube for a poorly-received sequel.
“XXX: State of the Union” cost $113.1 million to produce and brought in a mere $70.6 million worldwide.
The library documents show a few positive notes.
Although Revolution exchanged home video and pay-per-view rights to Sony, Fox and Starz in return for hundreds of millions in equity capital and licensing fees, ownership of the titles returns to the company 15 years after each movie is released.
The library has not sold. Before the bottom fell out, Roth estimates that his library was worth $600 million. Now with disc sales waning, the value has shrunk to $450 to $500 million.
In the meantime, Roth said he has been feeding the company with revenue from new media, Netflix, and mining the rights to titles such as “Anger Management,” which is slated to become a television vehicle for Charlie Sheen.
Roth anticipates that the bank and debt holders would be paid off by 2015, although the downturn in the DVD market has meant that payments have been later than expected.
“Revolution didn’t turn out the way I wanted it to,” Roth said. “But it exists, it’ll pay off, though it will take much longer than I wanted. And I survived it.”