The Dawn of a New Night Shyamalan

In a deal with Media Rights Capital, the independent film and television studio, M. Night Shyamalan is poised to make the jump from master of suspense to mini-mogul.

Under the partnership struck in July, Shyamalan and Media Rights Capital will collaborate on three movies in three years via a new production company, The Night Chronicles. This week, the first of those projects, Devil, was announced.

But unlike Shyamalan's previous projects, Devil and the two movies that follow it won't feature his scripts or direction. Though the movies will be based on stories by the filmmaker, hired guns will write and direct.

Most significantly, Shyamalan will co-own the films' copyrights -- formalizing his evolution from writer/director/sometime-actor to big-time producer, with huge potential upside opportunities.

Depending on the details of the Media Rights Capital deal, which aren't public, Shyamalan's ownership stake could give him control over licensing and marketing the films, and a piece of the pie from selling ancillary and overseas rights, DVD sales, TV series or cartoon spin-offs based on the projects.

If the deal also includes back-end profit participation -- meaning a guaranteed cut of the movie's box office take -- Shyamalan's profit could grow even richer, says Jeff Bock, who analyzes box-office sales for Exhibitor Relations, a Los Angeles-based entertainment-research firm.

"In the fiscal sense, M.R.C. made this deal because they wanted to be in the M. Night business. To do that you have to pay," says Bock. He estimates that from producing alone, without any ancillary revenue, Shyamalan could make $3 million to $5 million on box office take of $30 million to $40 million for these movies.

It all seems like a pretty good deal for the filmmaker, especially considering a recent spate of less-than-stellar box office results.

Horror is one of the easiest film genres for making money: the budgets are typically low, around $10 million to $12 million for films like the ones from Media Rights Capital, Bock estimates.

Because of that, the profit thresholds for films like these are low, too. Whether the partnership is a good deal for Media Rights Capital is a separate question.

"It depends if you think the guy has another Sixth Sense in him," says David Scardino, referring to Shyamalan's 1999 breakout Bruce Willis hit, which grossed more than half a billion dollars at box offices worldwide.

None of Shyamalan's subsequent movies have approached that level of success, although The Happening, released this summer -- and the first of Shyamalan's films in which he had an ownership stake -- has grossed $163 million worldwide and represents his first box office hit in years.

If Shyamalan can recapture that Sixth Sense magic, "it's a great deal for M.R.C., and him too, because he has an ownership position," says Scardino, an entertainment analyst for the advertising agency RPA in Santa Monica, California.

If all goes according to plan, and Shyamalan delivers hits for Media Rights Capital, look for other budding film-world auteurs to angle for copyright ownership before forking over scripts or story ideas.

On the other hand, "if it doesn't work out, everyone's in trouble." Scardino predicts that if this partnership doesn't produce another super-profitable hit along the lines of The Sixth Sense, the filmmaker's subsequent deals will become "progressively less sweet."

In the meantime, however, the arrangement does one thing: pave the way for Shyamalan to dominate theaters with multiple films at a time.

Under the deal, Shyamalan and Media Rights Capital will release one film a year for three years (Devil goes into production in 2009). In the meantime, he can work on his own films -- ones that he writes or directs -- for big studios. At the moment, he is directing Paramount's Avatar: The Last Airbender, set for a 2010 release.

Potentially, "he'll have two movies out a year under the "M. Night" banner," says Bock. "This furthers his branding. Not very many writer-directors can work outside the system this way."

Of course, the softening economy could throw a wrench into the works of the increasingly well-oiled M. Night Shyamalan machine. Despite the popular wisdom that the movie business is recession-proof -- in an interview with Time magazine last spring, Dan Glickman, president of the Motion Picture Association of America, joked that movies were better therapy, and cheaper, than psychiatrists -- there are signs that Hollywood might not be immune, after all.

An excerpt from Dreamworks' 10-Q form picked up by Footnoted.org today read, in part:

"Any decline in economic conditions may reduce the performance of our theatrical and home entertainment releases and purchases of our licensed consumer products, thereby reducing our revenues and earnings."

Entertainment executives from the notorious, like Sumner Redstone, to the obscure, like Michael Burns, at Lions Gate, have been forced to sell off huge portions of stock in margin calls.

And the stocks of the media conglomerates that own the major movie studios have taken enormous hits over the past several months.

If consumers decide to stash their money in their mattresses instead of splashing out for $10 tickets and another $5 to $10 on popcorn at the movies, profits for anyone in the movie business could fall precipitously. Even for someone like Shyamalan, who trades in keeping moviegoers on the edge of their seats, that's scary.

by Sophia Banay