Dunn Films' acquisition of Universal Pictures was bound to shake up its management. Dunn had seen this coming years ago.
That's why he spent the last few years building a tight personal connection with Ron Meyer and fostering collaboration between Dunn Films and Universal. At the same time, he worked hard to boost his influence through box office success, awards, and industry relationships, ensuring that when the time came to lead Universal, he'd have the credibility and clout to do it smoothly.
He didn't want a repeat of the chaos when Sony bought Columbia Pictures or Panasonic acquired Universal, with senior execs quitting en masse.
Right now, things were looking good for Dunn. At the very least, he had Universal's structure under control.
Key players like Chairman Ron Meyer, President Adam Fogelson, and Vice President Donna Langley had all expressed their support for Dunn and endorsed his leadership.
But there's always an exception. Just yesterday, Peter Adee, Universal's head of global marketing, officially resigned.
MGM's $120 million war film Windtalkers had been out for three weeks and only pulled in a dismal $33 million at the North American box office—a total flop.
MGM's stock price took a hit from Windtalkers' massive losses, plummeting over 22% in the past two weeks alone.
MGM's global marketing and distribution president, Robert Levin, resigned to take the fall, and the new exec stepping in was none other than Peter Adee, who'd jumped ship from Universal.
Of course, Windtalkers wasn't the only culprit behind MGM's stock slide. Three other films—The Man Who Wasn't There, Rollerball, and Hart's War—were also to blame.
Four straight money-losing movies had put MGM under serious pressure.
MGM's films had been struggling for years. Last year, only Hannibal starring Anthony Hopkins and Legally Blonde with Reese Witherspoon turned a profit. This year? Not a single profitable film so far!
Windtalkers, directed by hotshot John Woo and carrying big expectations, had crashed hard, scraping together just $33 million after three weeks. For comparison, Big Fat Liar, with a budget one-fourth the size, opened with $37 million.
The string of deficits had pushed MGM to the edge of bankruptcy.
Now, there was just one film that might pull them out of the crisis—Die Another Day, the next James Bond installment.
Die Another Day was set to hit theaters in late November.
But here's the problem: two weeks earlier, Harry Potter and the Sorcerer's Stone had premiered, and two weeks after, The Lord of the Rings: The Two Towers would drop.
Sandwiched between those two massive blockbusters, how much room would Die Another Day have to breathe?
With that release schedule, MGM was in deep trouble!
Right now, DVD sales were a goldmine, and MGM owned the rights to 4,200 films—2,000 solely theirs, and 2,200 shared with other studios.
Those films brought in nearly $500 million a year from disc sales.
But if Die Another Day tanked at the box office, even that $500 million lifeline might not save MGM.
Dunn had his own plans. He was eyeing content rights, especially MGM's James Bond series, Hannibal series, and distribution rights to The Hobbit—all major assets.
If MGM slid into a bankruptcy crisis and its stock kept dropping, that'd be great news for him!
Dunn was quietly rooting for Harry Potter 1 and The Two Towers to dominate the box office.
MGM's film library, even after Warner snatched up half of it, was still massive—a treasure trove.
Forget the Christmas season—Dunn Films had already locked down the summer.
After Spider-Man 2's buzz faded, Pirates League: Curse of the Black Pearl took off, raking in $82 million over its opening three days and another $80 million the following week.
Of that $162 million total, the 75 IMAX theaters alone contributed $7 million.
Pirates League was playing in 3,585 theaters across North America, with 13,951 screens total. The 75 IMAX theaters, with just 75 screens (0.5% of the total), accounted for 4% of the box office!
Those numbers hit the industry like a lightning bolt, showcasing IMAX's potential.
As the head of IMAX, Dunn got a report: within 10 days of Pirates League's release, requests for theater chain partnerships had started pouring in from around the world.
In North America, there were plans for 150 new IMAX theaters. Developed countries like the UK, Germany, France, Italy, Japan, and South Korea sent proposals for over 120 new IMAX builds or conversions.
Building an IMAX theater is pricey. Beyond rent, seats, office supplies, soundproofing, and AC, the core IMAX equipment alone is a fortune.
That includes the IMAX screen, surround sound system, projector, and server—totaling over $2.2 million!
In other words, Pirates League's release had landed IMAX roughly $600 million in orders!
That's a staggering figure.
Of course, in reality, theater chains don't buy outright to reduce risk. Instead, they partner with IMAX, sharing revenue.
So, ticket sales get split with the film studio, then with IMAX, and whatever's left goes to the theater.
IMAX provides the equipment, services, and tech support.
Typically, IMAX takes 3-10% of ticket sales, usually landing between 7-10%.
If a theater chain doesn't pay a dime for equipment and gets it free from IMAX, they fork over 10% of ticket sales. If they cover part of the equipment cost upfront, their share drops.
Even if a chain shells out $2.2 million to buy the gear outright, they still owe IMAX 3% of ticket sales for tech support and branding rights.
That's just how it works in countries where intellectual property reigns supreme—patent holders have the upper hand!
The merger between Dunn Films and IMAX was a win-win deal!
IMAX was swimming in orders, and Dunn Films couldn't be happier.
On top of that, Dunn got more good news.
Dunn Films' talks with George Miller about the Mad Max project, with help from Aussie film legend Mel Gibson, had made a breakthrough.
George Miller had finally agreed to team up with Dunn Films to make Mad Max 4.
But the details were giving Dunn a headache.
"Boss, what you're asking for is impossible," said producer Grant Hill, who was handling the project. He shot down Dunn's idea flat-out. "Mad Max is to George Miller's production company what Star Wars is to Lucasfilm. Buying out the series rights? Not happening."
Dunn shrugged it off. "Star Wars is on the verge of being auctioned off. I can't buy Mad Max?"
Grant Hill replied, "Give me $1 billion, and I'll make it happen."
Dunn's face darkened instantly.
Grant Hill got serious. "George Miller's career has been rough lately—he's been stuck making animated films. He's banking on Mad Max to stage a comeback. He's not letting it go easily."
Dunn frowned. "What's his angle?"
Grant Hill explained, "He wants to invest in the project and use the Mad Max rights as his stake."
"Huh?"
"He wrote the script for the fourth film ages ago, but Mel Gibson's salary is sky-high, and his demands are tough. That's why the sequel's been stalled."
"Tough?" Dunn raised an eyebrow. "What's he asking for?"
Grant Hill said, "Miller estimates Mad Max 4 will cost at least $100 million to make. He's willing to put in $10 million and take 20% of the profits."
"No way!" Dunn shut it down immediately.
A 20% profit share—covering box office, DVDs, TV, and merchandise—was way too much for a 10% investment.
George Miller wasn't Tom Cruise.
And Mad Max wasn't anywhere near Mission: Impossible in terms of clout.
Grant Hill quickly added, "This was just our initial talk. There's room to negotiate. Dropping the profit share to 15% should be doable."
Dunn's tone was firm. "This project isn't just about George Miller—there's Mel Gibson too. Mel didn't take a box office cut for The Patriot, Mr. & Mrs. Smith, or Signs, but for Mad Max, he's definitely going to want one."
Grant Hill nodded. "That's just how it goes with sequels—it's the market."
Dunn thought for a moment before saying, "Miller says he'll invest $10 million? Tell him I don't need it. When I fund a movie, I don't need others sharing the risk. In return, his profit share has to come down. Hmm… it's best to negotiate with him and Mel Gibson together."
"Get Miller's production company to drop the investment?" Grant Hill sounded surprised.
After all, in Hollywood, co-productions between multiple companies were the norm and the trend.
Mad Max had a big name, but it was an Australian series that felt a bit dated in the U.S.—Mad Max 3 had bombed.
Plus, it was an R-rated film.
Spending $100 million on an R-rated movie was a huge gamble, which is why other studios had passed on working with Miller.
Dunn said, "The series rights can stay with Miller, but I want the rights to the individual film to stay with Dunn Films."