I'm kidding of course. The trades are reporting that Warner and Fox have reached a settlement over Watchmen that will involve an up-front payment of $5-$10 million, plus a chunk of revenue points of about 5-8% (and financial incentives on any sequels and spin-offs... which is about as likely as a sequel to Titanic).
Glad to see that peace has returned to our village. This could be a surprisingly good deal for Warner Bros. With the minimum numbers at play ($5 million upfront, 5% of the gross), Watchmen will have to make at least $250 million worldwide for the pay out to equal the $17.5 million that WB handed over back in summer 2005 over The Dukes Of Hazzard film. If the maximum pay off is in order ($10 million upfront, 8% of the worldwide gross), Watchmen has to gross just $94 million worldwide to equal $17.5 million in pay out. If you recall, they had to pay $17.5 million cash for forgetting to get the rights to the movie Moonrunners, the 1975 film that the original show was based on. The article does not clarify whether DVD/Blu Ray business is included in the percentage, but if they are, then things of course look better for Fox. But, risking a bigger pay off for a % of the cut does have a risk. Yes, that's right, for all the huffing and puffing about mean ol' Fox trying to bully poor Warner Bros., this is the second time the legal department has made this very basic mistake in three years.
If I may completely speculate for a moment, if the film does monster business worldwide (at $500 million worldwide, Fox stands to gain $50 million at maximum pay out, $30 million minimum), Warner could theoretically argue that they should only pay the smaller amounts (or a different, even smaller amount) on the fact that the film's success is due to Warner Bros' superior marketing department. And, considering the mediocre year that Fox had last year, versus the superior year that WB had (albeit, without The Dark Knight it would have been pretty glum), that seems like a plausible argument. And, furthermore, if the film flops, Warner could then argue that the 'negative media coverage' brought about by the public litigation hurt the gross of the film. Complete garbage of course, but it would be worth a shot if the film flops.
Also amusing is the fact that, according to the article, Fox spent just $1.4 million in development fees on the Watchmen project before it was put in turnaround. So, had Warner just done their basic, entertainment law 101-level homework, they could have just cut a check for $1.4 million a couple years ago and saved themselves quite a bit of headache and drama.
Look, I love Warner Bros, and they have a solid reputation for letting filmmakers pretty much do what they want with major properties, be it the Matrix series, the Harry Potter series, or the recent Nolan Batman films. Sometimes this makes them just under a billion dollars worldwide (since The Dark Knight was not released in China), sometimes it brings them Speed Racer (yes, my favorite film of 2008, but I will not dispute the financial detestation that resulted). But this is legal acquisition 101 - don't develop a property that you're not absolutely sure, 100% in writing certain that you have the rights to. Whoever messed this up in the legal department deserves to be fired and counter-sued for complete malpractice.
I'm glad the matter is resolved, and I look forward to seeing the picture. But, there is a small part of me that kind of wished that Fox had out and out won at court; that they had won the distribution rights to the picture and then decided to cut the film to a more 'audience-friendly' PG-13, and edited it down to 90 minutes. I mean, issues of artistic freedom and what not aside, could you even imagine the sheer insanity that would have caused in the geek community? Can you imagine how hilarious the AICN talk back boards would be, or the comments boards at the various other geek-centered movie sites? It would be absolute nerd pandemonium, with riots in the streets, runs on the comic book stores, and worldwide boycotts of upcoming Fox films. Nerd brother would turn against geek brother, with Joss Whedon being called in to try to quell the masses (after which Fox would thank him by canceling Dollhouse after two episodes). But, of course, they'd all still go see the 'kid-friendly cut' of Watchmen on opening weekend just the same.