Star Deals Raise Price of Success for Next ‘Lethal’ Sequel

The scariest part of this summer’s movie lineup is not lizards threatening New York or Texas-sized asteroids threatening Earth, but whether the Hollywood studios behind them will come out alive.

After two mega-budgeted films, Sony Pictures’ “Godzilla” and Disney’s “Armageddon,” opened to softer-than-expected attendance, along comes Warner Bros.’ entry, “Lethal Weapon 4,” into the box-office derby.

On Friday, the studio dusts off its wildly successful comedy-action cop franchise teaming Mel Gibson with Danny Glover, hoping the series that last appeared in theaters when George Bush was president can draw big audiences for the fourth time.

As the movie gods know, Warner could use a big hit after a series of costly, high-profile star vehicles that included “Fathers’ Day,” “Mad City,” “The Postman” and “Sphere” flamed out at the box office in the last year.

Given the current economics of the movie business, “Lethal” will have to be a big hit--reaping more than $300 million worldwide--to earn a respectable return. Close to one-third of the studio’s potential gross profit is spoken for by the film’s star, director and producers, an unusually high proportion.

The profit arrangement reflects what a lot of industry insiders believe is wrong with the movie business today.

That makes the overriding question not so much whether the 11-year-old franchise can still perform adequately at the box office, on television and in video stores, but whether Warner can make the killing it expects.

As one top industry player asked, “At what price success?”

Warner’s financial position on “Lethal” is by no means unique in today’s Hollywood, where to get top audience-drawing actors and directors into their films, studios make substantial “back-end” deals, allowing talent to share in the spoils when a movie is a hit. Major international stars like Gibson get the biggest percentages.

With the soaring costs of production and marketing today often chewing up potential profits, these huge deals seem to make little, if any, sense if very little profit is left on the table for the studio.

The three major profit participants in “Lethal Weapon 4” are Gibson (who by far has the biggest share), director-producer Richard Donner and producer Joel Silver. Gibson’s normal deal for movies in which he stars is $20 million against 20% of the studio’s gross earnings; Donner’s is $6 million against 10%; and Silver’s is $1.5 million against 5%. Such deals can vary, but major stars are guaranteed a certain dollar amount and can make much more from a hit film if they have a deal for a percentage of the studio take.

But a Warner spokesperson insisted that “all agreed to take less upfront and on the back end, with the possibility that the movie will do as well or close to the last one, ‘Lethal 3,’ which was the most profitable movie in the history of Warner Bros.” It was also highly lucrative for all the parties. The 1992 sequel grossed about $320 million worldwide and was a huge hit on video.

Furthermore, the Warner official said, “the talent was even more flexible this time than the last time” in terms of their respective deals. “Each one of their gross deals kicks in at a different time and not one of them is from first dollar.”

For the first time in the series, Glover is guaranteed a profit position, although Warner sources said it is minimal and kicks in only after the film has made a significant amount of money.

Warner executives insist that the production budget, rumored to be north of $135 million, is less than $120 million, with worldwide marketing costs at around $50 million.

As pricey as that is, “Lethal 4” is believed to only be Hollywood’s third-most-expensive film this summer, eclipsed by “Armageddon” and “Godzilla.”

Unlike those two, which were loaded with high-tech visual effects, “Lethal” is decidedly low-tech, full of explosions, smashed fenders, broken glass and daring stunts. In addition, “Lethal” was shot mostly in L.A. rather than on location--all of which contributed to keeping the budget from soaring even higher.

However, costs for “Lethal” were boosted by an accelerated production and post-production schedule to rush the film into theaters. That’s because last year the studio committed to releasing the sequel in July, putting the producers, who began shooting only in mid-January, under enormous pressure to complete the film. The movie started without a finished script, didn’t wrap principal photography until May 6 and was still getting finishing touches last week.

But in “Lethal,” it’s mainly the talent that costs.

In addition to the bucks for Gibson, Donner, Silver and Glover, co-star Joe Pesci is getting $3 million to return, while Rene Russo is earning $4 million to reprise her role. Newcomer Chris Rock, in his first major big-budget film role, is collecting more than $1 million.

While the incremental costs of the “Lethal” films have risen over the years, so have their worldwide take. The original, which debuted in 1987, grossed $120 million worldwide (including $65.1 million domestically). The first sequel, two years later, grossed $231.2 million (including $147.2 million in the U.S.). And “Lethal 3” grossed $319.7 million (including $144.7 million domestically).

More than most of the major studios, Warner’s style has always been to rely on big movie stars and its stable of veteran big-budget producers such as Donner and Silver to supply it with hits.

In the past, the approach worked well, as the studio churned out such franchises as “Batman” and “Lethal Weapon” as well as releasing star-loaded hits such as “Robin Hood: Prince of Thieves” with Kevin Costner, “The Fugitive” with Harrison Ford and “Maverick,” teaming Mel Gibson and Jodie Foster.

But over the last year, the formula began wearing thin. The studio suffered a string of disappointments or outright failures, not the least of which was “The Postman,” one of Hollywood’s biggest all-time bombs.

Some of the studio franchises, including “Batman,” “Free Willy” and “Major League,” also began showing signs of fatigue. “Batman and Robin,” which cost more than $200 million with marketing, opened strongly but soon collapsed, ultimately grossing just over $100 million domestically. Warner officials dispute the widely held view that the movie lost money. Nonetheless, it didn’t perform nearly as well as expected.

For years, Warner made no secret of wanting to make yet another “Lethal” installment, even though it’s a rare franchise--”Star Trek” being one of the few exceptions--that can sustain success beyond three films.

But Gibson, the key to the film, initially did not want to do the sequel and even said so on national TV, explaining at the time that Warner couldn’t get a script that interested him. Then Donner came up with a story he liked. Last year, Variety reported that Gibson’s change of heart also was linked to a favor Warner Bros. did for him in giving up domestic rights to a Gibson film, “Parker,” to Paramount Pictures so Gibson could fulfill a commitment to that studio. Donner supposedly talked Gibson into shaving some points off his take to get “Lethal” made.

There is some value for Warner Bros. in making such an expensive movie, beyond the money it earns at theatrical box office and in videocassette sales, which is where the studio stands its best chance to eventually turn a profit.

For one thing, the movie adds to the value of its overall “Lethal Weapon” franchise and its film library. Warner can package all of the “Lethal” films together, for example, or bundle any of them with less popular titles when making overseas sales to foreign television networks. In one of the more unique packaging and promotional ventures by a studio, Warner is currently selling via infomercial a video package of the first three films, along with a videocassette of outtakes, using the half-hour spot to promote “Lethal 4” as well.

Warner executives argue that “Lethal” is the closest thing to a sure bet that a studio can get. They also note that early test screenings show the film is being received well, and that surveys tracking awareness are strong.

And, despite the age of the franchise, Gibson is an even bigger star than when the first films were released, and consistently draws big audiences to movie theaters. Since making the last “Lethal” film, Gibson directed and starred in the Oscar-winning epic “Braveheart” and starred in “Ransom” and other hits.

Casting the hip, young Rock, one of the industry’s hottest comedians, is also considered a savvy move by the studio to draw the younger male audiences that may not have been old enough to see the first three installments.

But as one prominent agent noted, with industry profit margins as slim as they are today, “it’s playing a very big bet.”