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Patrick Goldstein and James Rainey
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Jim Cameron's 'Avatar' price tag: How about a cool $500 million?

November 9, 2009 | 11:36 am

You'd have to say that the New York Times' Michael Cieply is a pretty crafty reporter. He knew that the best way to get us to read a sober, intricately detailed financial analysis of 20th Century Fox's economic involvement in "Avatar" was to stick something in the lede that would grab our attention -- like the news that the movie's price tag was approaching $500 million.

Avatar-movie-poster How did he get that number, you may wonder. According to his story, the Jim Cameron-masterminded film (due out next month and still under lock and key) has a reported production budget of $230 million, but Cieply says that the price tag "would be higher if the financial contribution of Mr. Cameron and others were included." He says that when you toss in the cost of global marketing for the film -- he says Fox itself is planning to spend $150 million around the world -- the film would cost its various backers $500 million.

Cieply's story makes a compelling point about modern-day studio economics. When it comes to a mega-blockbuster like "Avatar," studios like Fox don't just hedge their bets. They involve a wide variety of partners who provide financial and marketing support for the studio's behemoth. According to the piece, a pair of private equity partners -- Dune Entertainment and Ingenious Media -- are picking up 60% of the film's budget. But Fox also has built-in protections from Cameron himself. If the film's final production costs topped $300 million, for example, Cameron would "effectively defer much of his payout until the studio and others were compensated."

Cieply says the film also qualified for tax rebates in New Zealand, since much of its digital work was done there. It also benefits from $25 million worth of technological and marketing aid from Panasonic, which pitched in to help the film in return for assistance from Cameron on Panasonic's upcoming 3-D home video systems.

It just goes to show that when you're in the blockbuster business these days, you can always count on a little help from your friends, who are all hoping to make a little money -- or enjoy some reflected benefits -- from a mega-event that casts a giant shadow over the entire Hollywood landscape.

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