EC

Confidential Role Information for Joe Cool (Millennial Productions Owner)

You are Joe Cool, the owner of Millennial Production, a major television and motion picture studio, who specializes in blockbuster films. You are very excited about a script that you recently purchases for a new production entitled “The Lost Holiday,” a romantic/action movie in which the star is accidentally stranded on what first appears to be a deserted South Pacific island but turns out to be the home of a lost colony of adventurers. Your studio’s first choice for the leading role is Rock Rolls, one of Hollywood’s top box office attractions. Fortunately, Rolls has told the studio that he likes the script and is very interested in the part, pending negotiations over the key contract terms. Your task is to negotiate these terms with Rock.

Six issues must be decided: Rock’s salary, his percentage of the movie’s box office revenue (if any) you will receive, the location of the movie’s filming, the length of time filming will take, who will have the right to select the director, and the number of publicity tours Rock will be obligated to participate in to promote the movie.

(1) Salary: The minimum amount of money that the studio could pay a star of Rock’s caliber is $3 million. Offering any less than this would be insulting and would not be taken seriously. You would be quite happy if Rock would agree to a $3 million salary. The studio could pay up to $4 million, but lower is obviously better. $3.25 million would be better than $3.5 million, which would be better than $3.75 million, which would be better than $4 million.

(2) Percentage of Revenues: Often, but now always, major stars of Rock’s caliber will negotiate for a percentage of the movie’s revenues. The highest percentage that major studios will consider giving to their star actors is 5%. Here again, the studio would rather keep all the revenues for itself rather than share them with Rock. However, the studio would tend to prefer to compensate Rock with a percentage of the take than with an equivalent amount of cash, on the theory this will give Rock an incentive to turn in his best performance.

(3) Production Location: The studio is considering four locations for filming: Los Angeles, Hawaii, Australia, and Thailand. Thailand is far and away the studio’s preferred location because of that country’s extremely low cost of labor and scenery suitable for the movie’s tropical setting. Los Angeles is the studio’s last choice because the cost of labor is high and Rock may have too many distractions in his home town. Australia is the second choice because it offers appropriate scenery, but labor and transportation costs would be higher than Thailand. Hawaii is the third choice because of the appropriate scenery and Millennial is trying to break into that market but the costs would be almost as expensive as L.A.

(4) Filming Schedule: Many of the expenses involved with making a major motion picture are incurred on a per-day basis. Consequently, the studio saves money if it packs all of the filming into a short period of time. With long days and hard work, “The Lost Holiday” could be filmed in as few as four weeks, so a four-week schedule would be optimal for you. The film could be shot at a less frenzied pace in six, eight, or ten weeks, but each additional week costs more money, and is thus less desirable.

(5) Choice of Director: Top stars like Rock often demand control over the selection of directors for their movies. Rock is known to be very opinionated and finicky about his directors, to be fair, he is also known for selecting only top-quality directors. You would prefer to have control over the choice of directors for obvious reasons. Joint control, in which both the studio and Rock would have to approve of the director, is also a possibility, which would be less desirable but not terrible. Giving Rock full control is the least desirable possibility.

(6) Publicity Tours: There is no question that for blockbuster films, the star’s appeal sells tickets. Consequently, it is very important for the star to go on as many publicity tours as possible to promote “The Lost Holiday” far and wide. One of two such tours is expected by the public and media. More tours, up to five are possible, would create a large amount of “buzz” about the film.

“The Lost Holiday” is a strong script, and Millennial is a major studio. There are many popular leading actors who would be delighted to play the starring role. Millennial will not give away the store just to get Rock in the movie. On the other hand, Rock is probably the biggest star in Hollywood at the moment, and you would definitely prefer him to the other possible leading men, assuming he will agree to a reasonable set of terms.

Based on this information, you have constructed the attached chart that lists the possible contract terms related to each issue and assigns a number of points to each possible term that coincides (as best you can estimate) with your relative preferences. You should study this chart carefully before negotiating with Rock Rolls. You may refer to the chart during the negotiations, but you may not show it to Rock. You should attempt to negotiate a contract that gives you as many points as possible – every additional point will make you happier with the contract. You should not agree to any deal that give you less than 4000 points (in the absence of such a deal, you will find another leading male actor).

Information Sheet for Millennial:

Issue Options Points

Salary $3 million 4000

$3.25 million 3000

$3.5 million 2000

$3.75 million 1000

$4 million 0

Box Office Percentage 1% 1600

2% 1200

3% 800

4% 400

5% 0

Filming Location Thailand 3200

Australia 2400

Hawaii 1600

L.A. 800

Filming Schedule 4 weeks 600

6 weeks 400

8 weeks 200

10 weeks 0

Director Control Millennial (you) 1200

Joint Control 600

Rock 0

Publicity Tours 1 tour 0

2 tours 600

3 tours 1200

4 tours 1800

5 tours 2400

Maximum Possible 13000