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Century City, the headquarters of WMA.
In the lobby, rarely open to the press, a temporary podium had been set up where Christopher Nolan and Ari Emanuel sat at two tables, picking up pens and signing their respective contracts.
From the doorway of a rest room slightly to the back, Martin and Thomas watched Nolan officially sign with WMA, changing his agency.
This prominent Hollywood director had already parted ways with CAA at the end of last month.
Thomas glanced at Nolan, who was signing the contract, then at Martin standing next to him, and raised his hand to touch his balding forehead.
Although he had undergone the drastic transformation from meadows to desert in just seven years, he did not regret it at all.
When he had a full head of hair, he was just one of many junior agents at CAA.
As his hairline receded to reveal a Mediterranean balding pattern, he had become a top Hollywood agent, a formidable figure with a seven-figure annual income!
Who wouldn't be envious?
Martin suddenly spoke, "CAA couldn't keep Nolan after all."
"Yeah," Thomas agreed, but then suddenly startled.
The affair between CAA and Nolan was a perfect bad example, one that he must take to heart.
An agent is merely a servant to the client, especially when dealing with A-list clients. Pressuring a client like Nolan, as CAA did, only leads to being ruthlessly discarded.
Thomas looked at Martin, thinking that, perhaps due to his background, Martin might value loyalty to his own people more than most others in Hollywood.
As long as he didn't lose his head, he was secure in his position.
Thomas then said, "I heard that Director Nolan is preparing to sue CAA?"
Martin replied, "CAA has been withholding a payment from his earnings last year, and still dragging their feet."
Thomas sighed, "CAA isn't what it was at the beginning. With so many top clients leaving, there must be problems with their internal management."
In recent years alone, numerous A-list clients, such as Spielberg, Martin Scorsese, Leonardo, Halle Berry, and Christopher Nolan, had left CAA one after another.
After some thought, Martin said, "With the same company, being a startup and becoming number one in the industry changes your mentality. In the eighties and nineties, CAA considered themselves the clients' servants, but now, some senior agents at CAA might see themselves as the masters of their clients."
At that moment, a sense of familiarity emerged; this seemed like a situation he had witnessed before.
With slight recollection, Martin remembered many property management companies from his previous life displaying similar attitudes.
Thomas commented, "That's true. To land Sean Connery and Spielberg as clients, the founders of CAA made huge sacrifices, nearly selling themselves out, and Michael Ovitz practically begged to get their contracts. But now..."
After the signing was over and the media interviews concluded, Nolan, Ari, and Emma Thomas and others came into the rest room.
Martin approached Nolan for a handshake and said with a smile, "Chris, welcome to WMA."
Nolan responded, "We'll be fighting side by side soon."
Martin nodded, "Over at Warner Bros., I don't even know what to say anymore."
Ari joined the conversation at the right moment, "WMA will fully support you, defending our legitimate interests!"
Nolan appeared somewhat emotional, "I never thought it would come to this with Warner Bros."
Martin stated, "Last year's earnings, they're already 40 days overdue. My lawyer sent a formal letter, but Warner Bros. has been stalling, trying to delay further."
Ari elaborated, "Their reason is that international market payments are delayed, asking us to wait longer."
Nolan shook his head, "We've been waiting for over forty days; it's not possible to wait indefinitely."
Although Martin no longer worked with Warner Bros., he had starred in several Warner Bros. films and retained a percentage of the residuals for movies like "The Dark Knight".
Starting with "Insomnia", Nolan had regularly worked with Warner Bros., involved in even more films.
Up to the present, Warner Bros. had yet to pay either of them the residuals for the year 2011.
Of course, it wasn't just them; many companies and individuals were involved.
Once the reporters outside had dispersed, the group went upstairs for discussions.
Shortly after, Martin's lawyer Hamlin and Nolan's lawyer both rushed to WMA.
```
After sending cease and desist letters to no avail, Nolan and Martin both opted for legal action.
It wasn't just them; many high-profile stars and directors who had business dealings with Warner Bros. made the same choice.
In the past decade, Warner Bros., once the most successful in Hollywood, seemed to run into some trouble after a change in leadership.
......
In the chairman's office of the Warner Building, Kevin Tsujihara said to his subordinates, "The legal department notified me that the company has received lawyer's letters from many individuals, including Leonardo, George Clooney, Daniel Radcliffe, Matt Damon, Christian Bale, Martin Davis, and Christopher Nolan, demanding payment of overdue profit shares and the interest incurred."
Jon Berg, the president of Warner Bros., immediately tried to deflect responsibility: "The delay in the return of funds from the distribution channels and exceeding the planned budget in multiple projects have led to a liquidity crisis in the film business. I can't possibly reallocate funds from other business units to pay these people their profit shares."
As soon as Daniel, who was in charge of distribution, heard this, he became enraged: "Why is there a delay in recouping film business funds? Because of several film failures last year, North American box office receipts fell short of expectations, leading to delayed releases in multiple overseas markets, and even withdrawal from some of them. This triggered a series of chain reactions!"
"Enough!" Kevin Tsujihara interrupted Daniel's words: "Are you only capable of blaming each other and shirking responsibility?"
Jon Berg turned to Daniel, What happened to our alliance? What about sharing the responsibility together?
Daniel tempered his tone a bit and continued, "If it's just the films released last year that are having issues with distribution returns, I'll take responsibility. But why are there issues with older films too? I remember clearly that there were no issues with returns from the older films, and that the distribution company transferred the funds on time."
The film business is only part of Warner Bros, but it is also one of the foundational pillars of the company. That's why Kevin Tsujihara entrusted Warner Bros. Pictures to his brother-in-law, Jon Berg, hoping he could stabilize it quickly.
Kevin Tsujihara rarely intervened directly in the film business. Hearing Daniel's comment, he looked at Jon Berg, expecting a reasonable explanation.
Jon Berg admitted frankly, "The post-production of 'Jack the Giant Slayer' was at a critical stage when additional investment had to be made. Due to tight deadlines and heavy workloads, in order not to affect the company's regular operations, I temporarily redirected some of the returns from older films to the post-production funding of this movie."
Daniel fell silent, because such actions were not uncommon within Warner Bros.
This was also within Jon Berg's normal scope of authority, and Kevin Tsujihara didn't express any opinion.
Jon Berg continued, "Once the channel funds start coming in, paying off the overdue shares won't be an issue. We can just give them a bit of interest, or even negotiate to not pay any interest."
Both Kevin Tsujihara and Daniel thought there was no problem with that statement, because such situations were commonplace in the industry, and also because Warner Bros. is one of the top companies in Hollywood.
The star directors mailing lawyer's letters and resorting to legal action would find that Warner Bros., by merely stalling for some time and reaching a settlement with them, could resolve the matters quite easily.
However, since the people and funds involved were somewhat substantial, Kevin Tsujihara was still attentive, "It can't be overdue for too long, find a way to settle part of it first."
Jon Berg, a naturally gifted individual, was capable of launching epic reforms in production models while utilizing Hollywood's established rules to innovate: "The actor ensemble of 'Harry Potter and the Deathly Hallows – Part 2', headlined by Daniel Radcliffe, Emma Watson, and Rupert Grint, is owed a huge sum of money for their profit shares..."
He glanced at Kevin Tsujihara and phrased it differently, "If we follow the contracts based on box office and profits, they would take away hundreds of millions of dollars."
When Kevin Tsujihara heard this, he understood what Jon Berg meant, "Did this project really make a profit?"
Jon Berg shook his head, "'Harry Potter and the Deathly Hallows' suffered heavy losses."
In the past, Warner Bros. had to coddle the Harry Potter cast, and even spoiled actors like Emma Watson into acting like divas.
But with the Harry Potter series concluded, the once invaluable appeal of these typecast actors had diminished to virtually nil, and there was no longer a need to indulge them.
Jon Berg looked at Daniel, "You must have incurred a lot on publicity and distribution costs..."
On matters like this, Daniel couldn't possibly hinder the group's progress, and replied, "Don't worry, the publicity and distribution costs are much higher than the production costs."
The distribution was handled by Warner Bros. itself, with much of the advertising done by Warner-owned media. When it came to the box office revenue going to Warner Bros., the first deductions were publicity and distribution costs as well as management fees.
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To put it simply, it's basic practice to have global publicity and distribution costs exceed production costs.
Jon Berg added, "The crew had $150 million in production costs, funded by loans from the distribution company. Don't forget to calculate the interest on those loans."
Daniel waved it off nonchalantly, as these were not matters to be discussed; he had already figured out that regardless of how the income of 'Harry Potter and the Deathly Hallows – Part 2' was calculated, it would result in a loss for the production company.
The profit-sharing contracts signed by the actors wouldn't stand a chance of being honored.
A film with a global box office of $1.356 billion and DVD sales topping the charts in 2011, showing a net loss is both reasonable and legitimate.
Without the substantial shares owed to the Harry Potter crew, the amount due to others would not be much for Warner Bros. Pictures—a slight delay, and everything could be settled smoothly.
Leaving the chairman's office, Jon Berg and Daniel, the pair of production and distribution heads who both loved and contended with each other, chatted together for a while.
Soon, experts would set out to prepare the financial report for 'Harry Potter 9' in the Hollywood accounting style, proudly and responsibly announcing to the world that the film lost money!