How Sony Could Lose James Bond After Bloated 'Spectre' (Analysis)

The film, with a $250 million-plus budget, marks the last in a deal with MGM, which is expected to court many distributors as a major franchise could change hands.

This story first appeared in the Oct. 30 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

James Bond is about to become a free agent, setting off a scramble among studios eager to win distribution rights to one of Hollywood's few seemingly gold-plated franchise.

Sony Pictures opens Spectre, the 24th official Bond movie, on Nov. 6 in North America (the Brits get an early look Oct. 26), as the 007 adventure chases box-office records established by 2012's Skyfall, which grossed $1.1 billion worldwide to become the biggest film in the series' 53-year history. With early tracking pointing toward an $80 million-plus domestic bow, the movie has Skyfall's $88 million debut in its sights.

But even if the film proves a big success, as most believe it will, it could mark the end of the Sony/MGM collaboration. Spectre is the last in a two-picture deal that Sony struck in 2011 with MGM, which controls rights to Bond along with Eon producers Barbara Broccoli and Michael G. Wilson. Sources say MGM expects to pursue an especially tough bargain once other studios come calling.

Sony established a successful track record with the first two 007 movies starring Daniel Craig as the tuxedoed superspy, Casino Royale (2006) and Quantum of Solace (2008). But it still had to fend off competition from rivals when it sat down with MGM, headed by CEO Gary Barber, in 2011 to renew its deal. Paramount came close to snapping up Bond but walked away from MGM's demands and the relatively low 8 percent distribu­tion fee MGM was willing to pay. Sony prevailed by throwing other movies into the pot, taking on MGM as a co-financing partner on The Girl With the Dragon Tattoo and Total Recall. But while Sony had been 50-50 partners on Casino and Quantum, it capped its investment in Spectre (the movie takes its name from the shadowy criminal organization that looms large in Bond lore) to 25 percent of the movie's negative cost. In exchange, it has a 25 percent stake in the new movie plus distribution fees for overseeing its worldwide rollout.

When it came to agreeing on Spectre's budget, though, Barber effectively called the studio's bluff in June 2013 as a press release announcing the 2015 release date was about to be issued. Although a firm budget was not in place, Barber told Sony brass that if they wanted their studio mentioned in the release, they had to opt in immediately. As the movie's start date approached a year later, one Sony exec advised his colleagues that it was looking as if the budget — thanks to exotic locations and raises for Craig and returning director Sam Mendes — would climb into the $260 million range.

At MGM, alarm bells had begun to sound: In November, Jonathan Glickman, president of the MGM motion picture group, sent an email to Broccoli and Wilson, among others, arguing for cuts in stunts and location work since the budget had grown $50 million beyond the $210 million for Skyfall. "The current gross budget sits in the mid $300Ms, making this one of the most expensive films ever made," wrote Glickman in the email, which was revealed in the Sony hack.

While producers resisted many of the requested cuts, they did secure tax incentives and rebates — Mexico, for example, ponied up at least $14 million, with production agreeing to give Mexico City an appealing big-screen close-up. Sources insist that the final net budget now stands in the neighborhood of $250 million. But even if that's true, and if the film turns into the expected blockbuster, Sony isn't going to see an enormous windfall. In an email last October, Andrew Gumpert, who heads Sony's business affairs, predicted that if Spectre grosses $1.1 billion worldwide, and assuming a budget between $250 million and $275 million, Sony would realize about $35 million. Even so, Spectre still would give a boost to the struggling studio, still reeling from a string of 2015 flops including Pixels and Aloha (though recent family films Goosebumps and Transylvania Hotel 2 are doing well). Sony's new film chief Tom Rothman and Sony Pictures Entertainment CEO Michael Lynton are under pressure to prove that the studio should remain MGM's partner. Both Sony and MGM declined comment on Bond's future.

"As far as MGM is concerned, Bond is the lifeblood of the company right now," notes analyst Hal Vogel. "It's of lesser importance, but it's still important for Sony because it gives them distribution fees they might not otherwise have had, and they're obviously in need of cash flow as they try to execute a turnaround at the box office."

Of course, Spectre's ultimate performance will impact any new deal, with Sony or another studio, so negotiations are not expected to begin until 2016. If Bond does go on the open market — some rival execs suspect MGM might just be floating that idea to strengthen its bargaining position with Sony — there still are big questions about the franchise. An exhausted Craig told Time Out London in early October that he'd rather "break this glass and slash my wrists" than reprise the character in another Bond film. Similarly, Mendes tells THR in an interview, "The one thing I learned from the last one is that you're in no fit state to make any decision about your career or any form of creative involvement in Bond until at least six months after you're finished."

So where might Bond land? MGM and Paramount already are working together, having partnered on Ben-Hur, which Paramount will release in February. MGM also has teamed with Warner Bros. on the recent Hobbit movies. And the company has close ties to Fox, which handles MGM titles on home entertainment — though that deal expires in March.

Even as the latest Bond was getting underway, Broccoli, in an email to then-Sony co-chair Amy Pascal, seemed to acknowledge that the franchise's days at the studio could be numbered. "Amy, I can't bear the idea of this being our last Bond together. I don't know why Gary [Barber] should want to make a change after all the success we have had together," she wrote. Responded Pascal, "This doesn't really have to be our last Bond movie. If we do a really good job for you guys why wouldn't MGM want to stuck [sic] with us and by the way who else is gonna make such a one sided deal with MGM."

Pascal was forced out of her job in February. Now, the question is whether Bond will follow.