Did MGM goose up “Valkyrie” marketing spend to trigger third-party monetization?
Corporate decisions about how much marketing spending a movie gets often hinge on hidden considerations, which a New York Post article says is the case with “Valkyrie–the Tom Cruise-fronted thriller set in the Nazi high command.
In a story headlined “MGM goes for broke on ad campaign for Cruise film,” the article by Peter Lauria says that the studio is committing a rich marketing campaign because the financial performance of this film will set how much MGM can get for future films from a movie finance fund that supplies it with capital.
The “New York Post” article estimates a domestic theatrical release spending range for Valkyrie of $35-70 million, citing various sources. The book Marketing to Moviegoers: Second Editon says that top-end that major studio films get for marketing campaigns is $20-50 million. That’s for the U.S. and Canada, and also covers non-ad buying expenses such as audience research, cost of creating ads and trailers.
The “New York Post” article notes: “Sources with knowledge of the fund’s terms said that a profitable ‘Valkyrie’ release could gain UA an extra $15 million to $20 million for its next production, while a poor showing could curtail the amount the studio can access by an equal amount.”
The article also notes that, if MGM had delayed the film’s release into 2009, it would have missed a pay day from Showtime, the premium pay TV service. MGM’s output deal with Showtime expires in 2008 and the studio is creating a premium pay service with Paramount and Lionsgate to replace the Showtime tie.
“Marketing to Moviegoers: Second Edition” notes that an assortment of behind-the-scenes issues impact marketing spending decisions, which can be highly political in a studio. These include clout of talent involved in the film, escalations in TV output contracts that hinge on BO performance, promotion for the follow-on DVD release and financing from third parties.
UPDATE: Cash-strapped MGM files for bankruptcy reorganization less than two years later.
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