Did You Like Avatar?: So did Murdoch, News Corp. will Net $400M on Film!

Murdoch Nets Up to $400 Million From ‘Avatar’ as Risk Is Spread
By Michael White and Sarah Rabil

March 15 (Bloomberg) -- News Corp. will earn $350 million to $400 million from James Cameron’s “Avatar” once the world’s top-grossing film is also released on pay television and DVD, said two people with knowledge of its financial performance.

The sum represents News Corp.’s about 40 percent cut of as much as $1 billion that the film is expected to earn for its Twentieth Century Fox and “Avatar” investors, said the people, who declined to be named because the projections are private. Fox also collects a distribution fee on the box-office revenue.

News Corp.’s share amounts to almost half of the New York- based company’s average quarterly operating profit in the past year. It also highlights what Chairman and Chief Executive Officer Rupert Murdoch gave up when he took on investors to hedge the risks on the movie, produced for about $300 million, according to one of the people. New York-based Dune Entertainment LLC owns about 40 percent and London-based Ingenious Media Holdings PLC has the rest.

“Jim Cameron’s pictures tend to go over budget,” Murdoch said on a Feb. 2 conference call. “It is very easy to drop $100 million in a hurry on a film, and we like to lay off a lot of the risk.”

One of the people said “Avatar” will make about $350 million for News Corp.; the other estimated $400 million.

News Corp. hasn’t made public profit forecasts for “Avatar,” leaving analysts to estimate how much the company will make. The projections range from $380 million including distribution fees, from Soleil Securities’ Alan Gould, to $737 million from Anthony DiClemente, a Barclays Capital analyst, who includes about $220 million from distribution.

Some costs were offset by New Zealand tax credits, the New Zealand Herald reported in January, citing producer Jon Landau.

‘Far and Above’

Chris Petrikin, a spokesman for News Corp., which also owns the Fox television network, TV stations and the Wall Street Journal, declined to comment on the projections.

Joshua Eaton, Dune’s general counsel, declined to comment. James Clayton, chief executive of Ingenious’s movie investment unit, didn’t return a call.

Fox spent about $350 million distributing and marketing the film, in addition to production costs, estimates Gould, who is based in Greenwich, Connecticut. The analyst owns News Corp. stock and recommends it.

More:

http://www.bloomberg.com/apps/news?pid=20601108&sid=al91AqUa...