Universal Pictures signed its financing and distribution deal with Legendary Entertainment in 2013, with two things in mind: Money and China. And Jeff Shell, chairman of Universal’s Filmed Entertainment Group, said Thursday during the Bank of America Merril Lynch media, communications and entertainment conference that the studio no longer needs either from Legendary.
“There were two reasons we did the Legendary deal originally: One was it was a pure financing deal and the second was at the time they were bringing big original movies that we had not shown an ability in the past at Universal to do successfully,” Shell said.
“If you fast forward now five years, we don’t need either of those things,” he continued. “We love the people at Legendary, I think it’s been a good relationship, but I’m happy for them they found a new home over at Warner Bros.”
Legendary is taking its deep pockets and its slate of films back to Warner Bros. after five years in bed with Universal. In December last year, Legendary tapped veteran Hollywood lawyer Joshua Grode to take the reins as CEO, and Grode was quick to bolster the company. In May, the company secured a $1 billion loan from a collection of banks led by J.P. Morgan.
The deal replaced a previous $585 million credit facility, but with better terms, including industry-low interest rates and significant production credits that will allow the studio to borrow on the estimated performance of an upcoming film or TV release.
Universal’s last blockbuster with Legendary was Dwayne Johnson’s “Skyscraper,” which flopped in North America, grossing $67.4 million, compared to $98.2 million in China. The film had a production budget of $125.0 million.
But Shell pointed out that the two highest grossing U.S. films in China are Universal films, on which the studio didn’t partner with Legendary. “The Fate of the Furious” is No. 1, which made $392.8 million in China, with “Furious 7,” which brought in $390.9 million, at No. 2.
“We have a deal with Perfect World in China, so we don’t need the Legendary money, and separately, we’ve shown the ability in the last five years to be pretty successful at making big tent pole movies and don’t really need help with that.”
Shell said that parting ways with Legendary doesn’t really change Universal’s approach to the Chinese market. He’s out on following the trend of big co-production deals and said Universal wants to cultivate relationships with filmmakers in China as a way to learn how to better navigate the Middle Kingdom.
Universal teamed with an early group of filmmakers in China and licensed the rights to them the rights to remake the 1985 comedy “Brewster’s Millions,” starring Richard Pryor and John Candy.
The film is about a minor-league pitcher, Montgomery Brewster (Pryor) who learns his great-uncle left him $300 million. To inherit it, he has to spend $30 million in 30 days under a complicated set of rules. The filmmakers changed the pitcher to a soccer goalkeeper, titled it “Hello Mr. Billionaire,” and the film has earned roughly $370.0 million in China so far.
“So I think we’re doing just fine in China,” Shell said.