DIS Walt Disney Co

By R.T. Watson 

Record returns for "Joker" have the movie's backers laughing their way to the bank, but the studio that made the film, Warner Bros., could have reaped even bigger profits if it hadn't unloaded a substantial share of the film to outside investors, according to people familiar with terms of the film's financing.

On Thursday, the movie became the top-grossing R-rated film of all time after reaching a total of $788.3 million world-wide, according to Warner Bros., a unit of AT&T Inc. The previous record of $782.6 million was held by "Deadpool," released in 2016 by Twentieth Century Fox, now part of Walt Disney Co.

Mixed reviews for "Joker," which stars Joaquin Phoenix, have failed to deter moviegoers since the film soared to $96.2 million in the U.S. and Canada during its opening weekend earlier this month.

During its development, "Joker" was considered by Warner executives unlikely to generate the same kind of blockbuster returns as the studio's more conventional DC comic-book movies such as "Aquaman" and "Wonder Woman," according to one of the people familiar with the matter. "Joker" is a brooding character-study considered a "hard" R for its strong language and violence. Further limiting its commercial prospects, "Joker" was conceived as a stand-alone film rather than a piece of a larger narrative structure of sequels, spinoffs and prequels -- a model perfected by Disney's Marvel Cinematic Universe.

As it turned out, "Joker" has resonated with audiences across the globe.

"I think 'Joker' worked because people are fascinated with this character. The source material was great," said Eric Handler, an analyst at equity research firm MKM Partners. "The film was also very different from all other movies out right now."

But the film's uniqueness was initially met with skepticism. Before moving forward, Warner Bros. executives enlisted BRON Studios and Village Roadshow Pictures as financial partners to help share the film's risk, with each shouldering between 20% and 25% of its roughly $60 million production budget, according to another of the people familiar with the matter. Marketing the film around the world cost more than $100 million.

The studio previously shared the spoils on the Dark Knight Batman trilogy with Legendary Pictures, which helped finance the hit films. After that, Warner Bros. committed to a strategy of accepting only limited outside financial backing on its most promising releases, such as its DC Comics and Harry Potter titles.

Now, the outside backers on "Joker" stand to take home together between 40% and 50% of the film's profits, the person familiar with the financing deals said.

The initially iffy financial outlook for "Joker" helped director Todd Phillips and Mr. Phoenix, the movie's star, secure generous profit participation deals, according to a another person familiar with the deal. Such bonus structures are increasingly uncommon on titles that studios are confident will generate significant returns.

"Joker" -- which follows the origin story of the most iconic of Batman villains -- also had to overcome pre-opening concerns over its plotline, in which a social outcast's violent rise to notoriety has been interpreted by some critics as similar to the biographies of real-world mass shooters. Debate arose as to whether the film might incite off-screen violence, and some theaters beefed up security to opening-weekend screenings.

Such measures made it more difficult than usual to forecast how the film would perform, said Comscore senior media analyst Paul Dergarabedian.

"Joker" hasn't toppled every possible record. "The Passion of the Christ" -- director Mel Gibson's bloody 2004 depiction of the Crucifixion -- remains the highest-grossing R-rated film in the domestic market, with $370.8 million, according to Box Office Mojo, well ahead of "Joker's" $258.7 million.

(END) Dow Jones Newswires

October 26, 2019 09:34 ET (13:34 GMT)

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