Tuesday, December 29, 2015

Another Small Tale About Leverage

As CNBC tells it.

Studios on average take about 55 cents of every dollar of tickets sold in the U.S. Eric Wold, analyst at B. Riley & Co., said the average has been 53 percent since 2008. But when it came to striking a deal for the new "Star Wars," Disney was able to secure more than 60 percent of ticket sales, sources told CNBC.

The split that theaters and studios negotiate generally slides over a film's lifespan. The studio gets a slightly bigger cut toward the beginning of a film's release, which then generally slides in favor of the theater over time. This is one reason studios are incentivized to spend big on advertising to get a huge opening weekend. For "The Force Awakens," Disney likely holds onto its bigger-than-usual piece of revenue throughout its run. ...

This, ladies and gents (and children of all ages) is what happens when you have a red hot property, a lot of eager theater chains, and the mojo to extract more money for the privilege of screening it.


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