The Money Power of Religious Films

After 'Passion,' no need for Gibson to work again

By Martin A. Grove

"Passion" power: Before Newmarket Films' mega-blockbuster launch of Mel Gibson's "The Passion of the Christ," insiders were speculating that the controversial film might hurt Gibson's acting career.

Although some wondered if he'd ever work again, as it turns out the real question is whether Gibson will ever need to work again given "Passion's" divine profits. Not only has "Passion" managed to turn around what was a decidedly lackluster year at the box-office, it's also impacted on Hollywood in ways that are likely to alter how the film industry does business for years to come.

With about $214 million in hand through last weekend, there's no question "Passion," which Gibson made through his and Bruce Davey's Icon Productions, will gross north of $300 million in domestic theaters. In fact, for several reasons it seems quite likely to reach $350-400 million. To begin with, "Passion" should continue to benefit from favorable word of mouth, which has helped drive it at the box-office since it opened. The more people who see the film, the more people there will be out there who will be talking about it. There also is a strong curiosity factor that typically kicks in when people who originally had no interest in a movie -- whatever movie it might be -- suddenly realize that everyone else has seen it and is talking about it. No one wants to feel left out of conversations, whether they're at school or work or on the golf course, so at some point people get curious enough to find out for themselves what it's all about. Continuing media coverage of how well "Passion" is performing at the box-office can also be expected to boost interest in seeing it. Moreover, the calendar should also work in favor of "Passion" because with Palm Sunday on Apr. 4, Good Friday on Apr. 9 and Easter Sunday on Apr. 11 the picture will suddenly become more timely than ever to its core audience of Christians around the world.

If "Passion" were to generate $400 million domestically, that could translate into $100 million or more of profits to Gibson and Icon. The rough math that gets you to this number comes from calculating Newmarket's film rentals as being around 45 percent of that $400 million -- or about $180 million. Rentals, of course, vary by picture and by distributor and they also reflect how long a given film takes to generate its grosses. Distribution terms favor distributors earlier in the run and exhibitors later in the run.

So while Newmarket could wind up getting an even higher percentage of the gross as its rentals, let's be conservative here and use 45 percent as our number. From rentals of $180 million they'd have to recoup Gibson's production costs, which have been widely reported as $30 million. That's about $5 million more than the $25 million negative cost that was being reported before "Passion" opened, but let's say $30 million is what it turned out to be at the end of the day. That would leave $150 million.

Then there are distribution fees to be paid to Newmarket, which has done a spectacular job releasing the film. While we don't know for sure what percentage fee Newmarket is getting, various reports have put it at 10-12 percent. Using a conservative 10 percent here leaves about $135 million. And then there are Icon's marketing costs (prints and advertising) to be recouped. Here, too, no one's telling us exactly what was spent, but some accounts have put "Passion's" opening and pre-opening marketing budget at a relatively modest $15-20 million. If we use the high end of that number to repay Icon's marketing costs, we've got -- well, really, Mel's got -- $115 million.

Of course, the longer a film plays the more marketing costs it generates since it needs some level of advertising support. As the Easter holiday period approaches it's likely that Icon will need to spend more on television spots and print ads. If the film enjoys the long run it seems to be on track for, those marketing costs along with other overhead costs will keep adding up over time. So let's knock that $115 million down to a mere $100 million in profits to Gibson and/or Icon.

Needless to say, that's just the tip of the iceberg. If a film grosses $400 million domestically, it could easily do twice that internationally. It could, of course, even do more. "Titanic," for instance, did about $1 billion abroad compared to about $600 million in the U.S. and Canada. "Passion" is likely to do extremely well in parts of the world like Latin America and South America where it will benefit from having a very large core audience of Christians. It could wind up in those territories as the biggest blockbuster of all time. On the other hand, how it performs in Japan and other Asian territories remains to be seen. While there isn't a huge Christian audience base to draw from in the Far East, the curiosity factor combined with global media coverage of the film's mushrooming domestic success could give it strength.

If it winds up doing $800 million internationally, Icon would undoubtedly be looking at overages to be paid to it on the contracts it's done on a territory by territory basis around the world. Unlike a major studio worldwide deal in which losses in one territory cut into profits from other territories, Icon would benefit from having done specific deals with individual local distributors for each territory.

In the U.K., where "Passion" doesn't kick off until Mar. 26, it's likely to perform very well, driven again by the country's large core audience of Christians. In fact, in the U.K. the arrival of "Passion" is apparently being seen as a way to attract new parishioners. News reports Monday said four churches in England's southeastern county of Kent have block-booked some $37,000 worth of tickets that they plan to give away at no cost in an effort to add people to their congregations. Reuters quoted an official of one of those churches, Russ Hughes, the director of worship and prophecy at St. Luke's, as saying, "This is the greatest opportunity for the Church in the last 30 years and if we did not use it we may not get such an opportunity again."

In any event, Icon's international profits should be very considerable. If we're looking at $100 million in domestic profits, it's not unreasonable to figure $200-250 million (and possibly more) in international profits.

While "Passion" is still a long way away from its DVD and home video release, it's clear that home entertainment revenues will represent yet another major profits stream for Gibson and Icon. At this point, it's hard to calculate what those profits will be since we don't know when the DVD will be released, what bonus features it will have or how it will be priced. Nonetheless, the film clearly has a built-in audience that can be expected to want to own a copy of it. If we're looking at $400 million in domestic theatrical grosses, we could be looking at $400 million more in DVD and home video sales.

Distributors typically keep more dollars from home entertainment sales than they do from theatrical ticket sales. Icon and whatever home entertainment company winds up distributing "Passion" could end up with 60 to 70 percent of the gross from DVD and video sales. If that number is $400 million, that could generate somewhere around $260 million more for Gibson. That number would then be reduced by manufacturing, distribution and marketing costs associated with the DVD/home video release. It's a guess, but $60 million in costs probably isn't too far off base.

And that, by the way, isn't the end of the line. There are, of course, revenue streams from the film's soundtrack album and also from related merchandising deals that could be done in the future, perhaps as tie-ins with church groups worldwide. Moreover, because "Passion" is, in Hollywood genre terms, a period piece costume drama, it will never become dated. There's no reason it can't be re-released theatrically every year for decades to come. Gibson's film could become permanently linked with how Christians observe the Easter season.

While churches in the U.K. see a benefit from "Passion" in terms of bringing in new parishioners, Hollywood distributors see the film helping their business by perhaps reawakening interest in movies in people who aren't regular moviegoers. "People who haven't been to theaters for ages are coming to this movie," one distributor told me Sunday morning as we focused on box-office estimates. "It's bringing people in to see new stadium theaters they haven't seen before. The experience (of movie-going) has changed over the last five to 10 years. No more flat floor theaters. No more looking into the back of the head of the guy in front of you. This is a whole new experience."

His message, appropriately enough considering "Passion's" subject, was one of hope. It's widely believed that Gibson's initial audience for "Passion" was largely people who usually don't go to see films. This core audience, driven by Christian evangelical leaders, made seeing "Passion" their top priority. The fervor they exhibited for seeing it as early as possible in its run brings to mind the same frenzy that accompanies the opening of new "Star Wars" episodes or the latest comic book driven summer popcorn movies. Just as Hollywood's blockbusters get that way by achieving a broader audience once the core audience gets things off to a sizzling start, Newmarket managed to do the same with "Passion." After the Christian Right immediately put it on the blockbuster charts, "Passion" began to attract whoever else was left.

This was not what anyone anticipated, especially not the distributors who turned Gibson down when he was trying to put a domestic deal together for the film. While no one is saying precisely who those distributors were, they clearly know who they are and they're likely to be kicking themselves for a long time to come. It's hard to fault them, of course, because nothing about this film should have convinced them to do anything but try to distance themselves from the controversy it was generating from the get-go.

They had to have had in mind the TV news images of angry pickets protesting in front of then-MCA chairman Lew Wasserman's home when Universal Pictures released Martin Scorsese's "The Last Temptation of Christ" in 1988. To the global media moguls who rule Hollywood today, the upside-downside considerations here were clearly weighted in favor of protecting the downside from the effects of religious controversy when there was apparently so little upside potential at the box-office. After all, religious theme films aren't known -- correction, weren't known -- for doing big business.

Now it's quite another ballgame. With an upside as mouthwatering as the one Gibson's enjoying from "Passion," Hollywood isn't likely to stay on the sidelines for long. As literary material goes, the Bible is attractive to Hollywood because not only does it feature well developed storylines and colorful characters, but it's a brand name book that's in the public domain. Studios looking to develop franchises could undoubtedly get a few good ones going here. While it's true that many of the Bible's most familiar stories have been mined by Hollywood in the past, producers who now address the same material the way Gibson's done in his R rated "Passion" could find themselves satisfying the movie-going appetite of this newly emerging audience.