Generous distribution fee makes Universal’s ‘Bruno’ deal look a lot sexier

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When Universal Pictures agreed in October 2006 to pay $42.5 million for the rights to distribute ‘Bruno’ domestically and in eight key overseas markets, many in Hollywood scoffed.

After all, star Sacha Baron Cohen was an untested talent on the big screen: His first U.S. theatrical release, ‘Borat,’ based on a character from his ‘Da Ali G Show,’ hadn’t even opened yet. Moreover, the pre-release audience polls were less than enthusiastic, making the film’s box-office prospects highly uncertain.

And ‘Borat,’ which 20th Century Fox distributed, cost only $18 million to produce. By shelling out more than twice that for rights to the follow-up, Universal seemed to be grossly overpaying, even by Hollywood’s profligate standards.

As it turns out, Universal executives might not have been as crazy as they looked at the time. That’s because the studio negotiated a highly favorable deal point that helped justify the big upfront payment it made to the film’s financier, Media Rights Capital.

According to two people familiar with the terms, the studio’s distribution fee for releasing ‘Bruno’ is 25%, which is at least twice the current industry standard. DreamWorks Animation and Marvel Studios, for instance, each pay an 8% distribution fee to Paramount Pictures to release such films as ‘Shrek 3’ and ‘Iron Man.’

A person close to MRC disputed that the ‘Bruno’ fee is 25%, contending the figure was lower.

Distribution fees are based on a percentage of revenues studios receive from releasing movies in theaters, on DVD and in other media. Typically, those fees do not exceed 15%, and are often much lower.

Universal gets to collect its distribution fee and recoup the $42.5 million and the tens of millions it spends to market the movie before it must pay MRC any cut of potential profits. MRC, which declined to say how much it spent to make ‘Bruno,’ will then divvy up its share with Baron Cohen and other profit participants.

Of course, now that ‘Bruno’ is projected to sell more than $30 million worth of tickets this weekend in its U.S. debut and match or exceed that overseas, it’s likely everyone involved in the film will profit quite handsomely.

‘Bruno’ grossed $1.7 million from Thursday midnight shows and has had strong matinees today across the country. It has also done well in overseas markets, including Australia, where it has generated $4.6 million since opening Tuesday.

‘We’re overjoyed that all the partners are going to make a lot of money,’ said MRC co-chairman Modi Wiczyk.

It’s still not clear, however, whether ‘Bruno’ will ultimately do as well as ‘Borat,’ a surprise hit that grossed $128.5 million at the domestic box office, $133.1 million from international markets, and sold more than an estimated 5.5 million video units in the U.S.

-- Claudia Eller and Ben Fritz

Picture: Sacha Baron Cohen at the Hollywood premiere of ‘Bruno.’ Credit: Frazer Harrison, Getty Images.