Like the great ship itself, everything about the movie "Titanic" has been huge and record-setting, but there has been one iceberg in the film's full-speed-ahead success story: the deal cut by NBC to acquire the television rights to the movie.
In the four months since that deal was negotiated, it has been labeled the biggest bargain in television history. It has also been called the biggest disaster in the history of selling movies to television. The story behind the negotiations has a classic theme: a long voyage marked by broken hearts, intrigue and lots of high-profile passengers.Taking the side of disaster are executives at the 20th Century Fox film studio, who are so upset by the relative pittance of $30 million that NBC negotiated with Paramount Pictures, Fox's partner in the financing of the picture, that they are considering filing a legal claim against Paramount.
Siding with Fox are executives at CBS and ABC, who formally complained to Paramount about being excluded from the bidding process on "Titanic." These executives now say they would have paid far more than $30 million for the picture, suggesting that Paramount may have left as much as $30 million to $40 million more on the table.
NBC, on the other hand, acknowledges that it has ended up with a spectacular bargain, the biggest money-making picture of all time at a price that has been far eclipsed by several recent, less successful films, like "Men in Black" and "The Lost World: Jurassic Park." But NBC executives say they succeeded by being aggressive and by having more faith in the movie than Fox itself did.
They also say that Paramount is being unfairly accused by some sour-grapes second-guessers.
Like many hotly debated stories in the entertainment industry, this one has numerous colorful versions, none of which can be labeled definitive because almost all the parties involved declined in interviews to be quoted by name.
- ACT ONE: The television rights to "Titanic" were never expected to be available to any network other than Fox, which had an exclusive first negotiation period, five days before the film was released in December. For reasons having to do with the structure of the Fox network, the makeup of its audience (largely young men) and the risks involved in a movie 3 hours, 15 minutes long (it probably will have to play over two nights), Fox decided to pass at a figure in the range of $20 million.
This all took place before the film opened and came in an atmosphere of high anxiety at Fox over its investment of more than $135 million in the movie. Was the decision to pass an indication of a certain lack of faith in the film on Fox's part, an unwillingness to throw good money after bad? Fox executives concede in hindsight they would love to have the movie now.
Paramount had gained the opportunity to sell the television rights to "Titanic" as part of its deal with Fox to help defray the enormous production costs on the film. Paramount's ability to cap its costs at $65 million, for which it acquired all American distribution rights, had already been a source of friction between the two studios; two executives almost came to blows over the deal at the Cannes Film Festival.
Once Fox passed on the television rights, Paramount was free to sell "Titanic" to the highest network bidder; but it never opened an auction.
This is one of the main questions about Paramount's strategy. Almost every recent hit film has been auctioned, and the prices have often reflected intense bidding. For example, "Men In Black," which grossed $250 million in the domestic market, was sold to NBC for $55 million. "Lost World," the sequel to "Jurassic Park," grossed $229 million domestically and went to Fox for a staggering $80 million (though in that case, unlike the others, there was no previous window of sale to a pay cable channel like HBO).
- ACT TWO: Don Ohlmeyer, who runs the NBC en-ter-tain-ment division, decided to attend "Titanic" in a theater on opening night. He wanted to gauge the public response - and hearing teenage girls reacting that night, he was hugely impressed. NBC executives were soon aggressively chasing a deal, even though it was nearing Christmas week, when much of Hollywood sheds its Guccis for skis.
The inital box-office returns, Paramount executives argued, was reason for Paramount to seek an early television deal without waiting to see what might happen in subsequent weeks. After all, they reasoned, most films see their returns decline as weeks go by.
Fox executives now describe this analysis as totally unsophisticated. Because of "Titanic's" length, they said, theaters could run it far fewer times in a weekend, limiting its total ticket sales. Theaters were sold out for screenings during the first weekend, they said, a highly promising indication of things to come.
- ACT THREE: The howls began as soon as word of the deal got out. CBS and ABC, armed with increasing evidence of raging box-office returns, wanted to know how NBC could steal the film for $30 million when neither of them even got a phone call from Paramount. It's hard to make a deal, NBC responded, when you're out skiing.
Hints were loudly dropped that NBC and Paramount had included something else in the deal, money for other movies or commitments for more situation comedies from Paramount. Both NBC and Paramount stren-u-ously denied the "Titanic" deal had any strings attached.
Still, Fox executives said they harbored suspicions. One, Ira Kurgen, the executive vice president of business operations for the Fox network, suggested that the deal might have guaranteed a Paramount show - for example, "Frasier" - the highly prized Thursday-at-9 slot being vacated by "Seinfeld."
"Was it a coincidence that the deal was done over Christmas when a certain big star announced that he was leaving NBC?" Kurgen said.
Highly curious, from Fox's point of view, was the decision not to add an escalator clause. According to executives at every other network, such clauses are absolutely routine in these movie deals. One network executive labeled them "idiot insurance," because they protect a studio from underselling a film that eventually hits big at the box office - or that goes on to win a lot of Academy Awards.
Given what happened at the box office and the Academy Awards in this case, the omission of an escalator takes on a titanic size of its own. With "Titanic" now approaching $600 million in domestic ticket sales, an escalator could have driven the price for television rights to $65 million, one network executive said. A Fox executive put it at $80 million.