Graham King, one of Hollywood's most fearless figures, has taken his biggest risk yet as distributor of indie films and producer of big-budget projects.
But the results of his latest foray may leave him teetering on the financial edge.
"Hugo," GK Films' latest and most ambitious project to date, is struggling at the box office despite critical acclaim. Shot at a monumental cost of around $170 million, including $70 million from GK Films, it now appears to be the latest in a series of box-office duds including "The Rum Diary," released through King's FilmDistrict, and "London Boulevard."
This weekend "Hugo" took in just $7.6 million after opening to a disappointing $15.4 million over the Thanksgiving holiday. The whimsical 3D film by Martin Scorsese about a boy in Paris had a lower take despite increasing its domestic theater engagements by 523 locations to 1,840.
“He’s a great risk-taker,” said Stuart Ford, CEO of the film company IM Global. “He has taken creative risks throughout his career. He’s taken financial risks. It's tough to bet against him.”
But others see King's choices as out of step with what works in today's business environment.
"Graham has upcale tastes, which is to be admired. He's an old-fashioned moviemaker, but it's a big risk as a business when it's your own money," said a prominent producer who declined to be named. "Graham's big projects may topple the ship."
King declined to be interviewed for this article as did his business partner, Texas oil baron Timothy Headington. An executive with the company said that King hopes "Hugo" will build over the holidays like "The Aviator" did in its time and ultimately be a success.
But "The Aviator," which also won great critical acclaim and was directed by Scorsese, was not profitable. (King later produced "The Departed" with Scorsese, and won Best Picture at the Oscars.)
"Hugo" is the latest in a string of money-losing projects starring A-list talent.
Debuting in late-October, King's “The Rum Diary," which starred Johnny Depp, flopped, grossing just $20.8 million worldwide on a $45 million budget.
An individual close to King said that only marketing costs will create a loss on “Rum Diary” because of the pre-sold international rights to the film.
Released Nov. 11, crime drama “London Boulevard” starring Colin Farrell and Keira Knightley has been a huge disaster. Released in two theaters by IFC, it took in only $10,484 but costs $28 million to make.
Earlier in the year, another Depp project, the animated "Rango" — which GK Films produced but did not finance — grossed a solid $123.3 million in the domestic market. But the quirky film's $121.9 million international performance was not big enough to render any significant profits once a production budget of $135 million and global prints and advertising costs were considered.
Last year’s “The Tourist,” starring Depp and Angelina Jolie, got by on the strength of its international box office. With a budget of $100 million, it grossed only $67.6 million domestically, but it took in $210.7 million abroad.
In fact, GK Films has had only one unquestioned box office hit since 2007, “The Town.” That film, written and directed by Ben Affleck, grossed $92 million domestically and $144 million worldwide on a $37 million production budget. It was released by Warner Bros.
Now there’s “Hugo,” a Scorsese film based on the children’s book “The Invention of Hugo Cabret" and named Best Picture by the National Board of Review last week.
The film needs to gross about $100 million domestically for King to recoup his investment. So far, it has grossed only $25.2 million.
The upcoming foreign release of "Hugo" will be crucial for King.
GK, like most independent film companies, mitigates its risk by selling films internationally before starting production. But when a company’s movies perform badly overseas, it makes international distributors less likely to invest with them.
With "Hugo's" international release still to come, difficulties could lay ahead for GK Films, especially at a time when, as an executive at another company noted, it’s getting more difficult to pre-sell movies internationally for big sums.
Meanwhile FilmDistrict, the indie distributor that King launched last year, has had variable results. "Drive" was a success with $66 million worldwide at the box office, as was "Soul Surfer." But King recently pushed out distribution president Bob Berney in the wake of "Rum Diary's" disappointing performance.
The results put extra pressure on the company's upcoming films.
Two of them, “World War Z” and “Dark Shadows,” boast star power: “World War Z” is a big-budget sci-fi movie starring Brad Pitt and directed by Marc Forster; “Dark Shadows” is a gothic horror film starring Depp and directed by Tim Burton.
Other films in the pipeline, such as the Bosnian war movie “In the Land of Blood and Honey” — which is written, directed and produced by frequent GK collaborator Jolie — appears to have dubious commercial potential.
King has been buoyed by his unique relationships with talent – Scorsese, Depp, Affleck and Jolie.
But his most important relationship is with Headington, the oilman whom Forbes lists as the 420th richest person in the world, with a fortune estimated at $2.7 billion.
“He’s in the Johnny Depp business,” a marketing executive told TheWrap. “And if you’re in the Johnny Depp business, you can get people to give you large briefcases of cash. How long does that continue? Will ‘Hugo’ count against him?”
King is in the Scorsese business, too. The filmmaker is slated to direct Daniel Day Lewis and Benicio Del Toro in the company’s “Silence,” about two Jesuit priests who encounter persecution and violence in 17th century Japan.
To insiders, that too sounds like an ambitious, but old-fashioned project.
“I don’t know how many cards he’s really got in his deck, and I think the ones he keeps playing are running into some real limitations,” a producer told TheWrap. “He keeps returning to the same players and for a while, that looked like an incredibly sexy hand. It’s obviously now looking much less so.”