Paramount rides ‘Avengers’ Success!

Paramount rides Avengers SuccessThe super success of Walt Disney’s ‘The Avengers’ has landed a healthy payday for Viacom’s Paramount Pictures too which is its silent partner even though the studio didn’t spend a dime to produce or market the film.

Paramount has already gained $57.5 million since its international release in April and it further stands to gain another 8% through theaters, DVD’s and internet sales. Under a distribution agreement in 2005 between Paramount and Marvel, Paramount receives a distribution fee for theatrical distribution of ‘The Avengers’ as well as the distribution of its home video, internet, and TV rights which was later transferred to Disney when it acquired Marvel for $4 million in 2009. In 2010 both the companies decided to amend the agreement giving the rights to distribute Marvel-produced ‘The Avengers’ and ‘Iron-Man 3’ to Disney. The agreement stated that Disney would pay Paramount a $115 million advance against future fees that Paramount would have earned. When ‘Avengers was released in April internationally, half of that fees was paid. Robert A. Iger, Chairman and CEO of the Walt Disney Company said that Paramount does not have rights to merchandise from the Marvel movies. He told investors after closing the deal that he had signed the agreement because getting the movie rights allows them to rev up Disney’s marketing machine. “Not only will we distribute it and market it, but we know that Marvel is working really hard with the cooperation of a number of entities at Disney to turn The Avengers into a true franchise”, he said at the earnings call. Usually studios and theater owners split the ticket sales 50-50 which means that out of the  $641.8 million that ‘The Avengers’ earned in worldwide ticket sales Disney has collected $320.9 million and Paramount’s $25.7 million stake would be applicable against the pre-paid fee from Disney.

The two companies have also agreed to air the movie on the Epix online and premium TV service that is jointly owned by Paramount, Lions Gate Entertainment and MGM studio. This is a big boost to the three-year old channel as Disney is obligated to show most of its movies on the Starz pay channel. The enormity of Paramount’s take will depend on how big a hit ‘The Avengers’ becomes and the deal gets even better in 2013 when the third installment of Iron-Man is scheduled for release and Paramount will get 9% share in the money the film will generate.

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