Disney Is Counting on Major Disaster

Disney has a lot riding on the end of the world.

The studio is counting heavily on the Wednesday release of “Armageddon”--its most expensive movie ever at over $200 million in production and worldwide marketing costs--to catapult it out of the box-office doldrums it’s been stuck in since late last year.

If “Armageddon” hits big, it would “pay for a lot of losses,” said Disney Studios Chairman Joe Roth, acknowledging that a number of the company’s late 1997-1998 releases, including “Deep Rising,” “Krippendorf’s Tribe,” “Meet the Deedles,” “Mr. Magoo” and “Kundun,” all lost money. The last film to make even a marginal profit for the studio was the Thanksgiving release “Flubber,” starring Robin Williams.

Analyst reports citing lower-than-expected results from Disney’s most recent live-action releases, “The Horse Whisperer” and “Six Days, Seven Nights,” contributed to the company’s recent stock slide. But Disney executives argue that those two films will ultimately gross around $75 million domestically, so they won’t end up in the red.

Nonetheless, Disney could use a big shot in the movie arm.

The studio’s new animated feature, “Mulan,” which has grossed more than $50 million through its first two weekends, undoubtedly brought a huge sigh of relief to the Magic Kingdom. Now, it’s “Armageddon’s” turn to prove whether or not the PG-13-rated, high-octane action film about an asteroid headed toward Earth can deliver the goods for older audiences this weekend when it plays in more than 3,000 theaters.

Roth is confident it can, and that with a number of potentially strong performers behind it, like Jim Abraham’s comedy “Jane Austen’s Mafia,” the Adam Sandler comedy “The Water Boy,” Jonathan Demme’s drama “Beloved,” the animated feature “A Bug’s Life,” Tony Scott’s “Enemy of the State” with Will Smith, and “A Civil Action,” starring John Travolta, Disney’s currently paltry market share will shoot up to the top.

“We had a horrible first five months of the year,” Roth admits. “We clearly under-performed on every single movie, but with the movies we have coming up, I always thought we’d end up by the end of the year No. 1 or 2 in market share, like we’ve done for the last 10 years.”

Disney is gambling more financially on “Armageddon” and putting more of a mega-sized promotional push behind this film than any of its previous non-family offerings.

The Touchstone Pictures’ production alone cost an estimated $150 million, with worldwide marketing running at least another $75 million.

“This is a huge risk,” admits Roth. “But there are huge potential rewards. It’s like the old-fashioned movie business,” he said, referring to a long-ago era in Hollywood when the studios had movie stars under contract, took all the financial risk on the movies they made and consequently reaped all the profits.

If successful, “Armageddon”--which stars Bruce Willis, Billy Bob Thornton, Liv Tyler, Ben Affleck and Steve Buscemi--would be a particular windfall for Disney, since the studio is in the unusual position of being entitled to nearly all the profits. Today, with a big star-driven movie like “Armageddon,” a studio would more commonly have to share a sizable portion of a film’s earnings with the principal players.

A more typical example of how the economics of Hollywood work today is “Lethal Weapon 4.” Sources say Warner Bros. has more than 35% of the studio gross promised to the film’s two stars, Mel Gibson and Danny Glover, director-producer Richard Donner and producer Joel Silver, making it that much more difficult for the studio to make money.

Not so “Armageddon.” Only the film’s producer, Jerry Bruckheimer--one of Hollywood’s most successful filmmakers--is guaranteed 6% of the gross earnings. The rest of the profits are Disney’s.

Sources said Willis, who ordinarily collects an even higher percentage of the gross on his big movies (15%-17.5%), is not getting his normal deal on “Armageddon” because of a debt owed to Disney. Last summer, the studio bailed him out by paying $17 million to Cinergi Productions when, as a producer, Willis pulled the plug on “Broadway Brawler” following conflicts with director Lee Grant. Consequently, Disney spread his deal on that movie (which did not include a back-end position) to three future films, one of which is “Armageddon.” On a pro rata basis, sources said Willis will get $9 million a picture.

“Armageddon” director Michael Bay, whose only two previous feature credits are Disney’s 1996 hit “The Rock” and, before that, Columbia Pictures’ “Bad Boys,” is not entitled to share in the gross until his next movie, say Disney sources.

Even so, “Armageddon” still must perform handsomely for the studio to see a profit, since its costs are so hefty. The film would have to take in at least $240 million in worldwide receivables (that’s after exhibitors take their cut of the box office), to see even the smallest return.

But Hollywood insiders say that’s not inconceivable, and some predict “Armageddon” will be the biggest movie of the summer, unseating the two highest-grossing movies so far, “Godzilla” and “Deep Impact,” each of which are expected to top out at around $140 million domestically.

Industry sources estimate that “Armageddon” will gross around $175 million in the U.S. and more than $200 million overseas. Based on those figures, additional revenues from such ancillary areas as worldwide video and television, would yield Disney a profit of around $75 million.

For a time, one of the nagging questions in Hollywood was whether “Armageddon” would be hurt by the unexpectedly strong box-office performance of Paramount/DreamWork’s current action hit “Deep Impact,” a similarly themed film about a comet streaking toward Earth.

Roth was admittedly concerned when “Deep Impact” proved to have staying power. But, now, based on audience research, a successful test screening and strong tracking, the studio chief says, “I’m less worried than I was.” Roth said Disney’s research shows that moviegoers who saw “Deep Impact” are more likely to see “Armageddon,” simply because “people like to go to big movies.”

Polling a focus group of 20 people who attended a preview of “Armageddon” in Newport Beach earlier this month for 1,200 moviegoers (300 others were turned away), Disney found that 19 of them had seen “Deep Impact.”

Said Roth: “It’s so clear to the audience that these are different movies and experiences--moviegoers intuitively understand that.”

Roth stopped short of admitting that the aggressive moves Disney took in recent weeks to spruce up “Armageddon” by shooting additional special effects and extra footage overseas to give a more international flavor to the film had anything to do with trying to top “Deep Impact.”

He did, however, acknowledge that Disney held back its major marketing push 10 days beyond its planned Memorial Day launch, “because we didn’t want our advertising to be confusing to the consumer.”

To be sure, the studio is putting such a huge sales effort behind the action picture that, if the consumer didn’t know better, he or she might think “Armageddon” was Disney’s latest animated feature.

“It’s true. This movie involves our whole company,” said Roth, affirming that’s more akin to a Disney-brand family film than any live-action adult film the company has produced in the past.

For starters, “Armageddon” is being backed by a nearly $150-million promotional campaign with tie-ins from such corporate partners as McDonald’s and Mattel, which includes $40 million worth of television advertising.

“We have easily equaled anything we’ve ever done on any animated film,” said Brett Dicker, Disney’s senior vice president of promotions. “It is unusual to get this kind of breadth of promotion on a live-action movie, especially from McDonald’s,” Disney’s biggest promotional partner, which tends to associate with younger, more family-audience fare.

Concurrent with the film’s release, McDonald’s is launching an unprecedented six-week promotional campaign with sweepstake prizes, special meal deals and, of course, the usual promotional cups and French fry cartons, all themed to the film.

There will also be merchandise galore, including a major toy line coming from Mattel.

Nestle created two special candy products to support the film, including a “nuclear chocolate bar.”

Disney’s other main promotional partners include Nokia Telephones, Big Dog Motorcycles, Swiss Army Sunglasses and Planet Hollywood, of which Willis is one of the celebrity shareholders.

Among the other promotional accompaniments that make “Armageddon” look more like an animated event film than a live-action one is a planned attraction at Disney/MGM Studios in Orlando, Fla., featuring set pieces from the movie and footage from the film. Monday night, Disney held a multimillion-dollar world premiere at the Kennedy Space Center.

“Although this is not a Disney-branded film, it’s being perceived that way,” Roth said.

Now, if only it can deliver the kind of revenues that tend to make those kind of movies so darn profitable.