In Hollywood, when it comes to paying profit shares, most companies are not particularly enthusiastic delays of a year or more are common, and it's not unusual for indefinite delays to end up in court. Therefore, from the moment Harry Potter and the Deathly Hallows: Part 2 was taken off theaters, the agents of a British agency representing the young actors of Harry Potter and director David Yates flew to Los Angeles, persistently chasing after Robin Grand and the heads of the Harry Potter Studio to demand payment.
Since a profit-sharing agreement had been signed, it naturally had to be honored otherwise, the relevant laws weren't just for show.
However, calculating the profits of Harry Potter and the Deathly Hallows Part 1 and Part 2 takes time.
At present, Warner Bros., as the distributor, has received a total share of $800 million from the box office of the two films.
Based on this amount, the Harry Potter Studio began financial reconciliation.
The Harry Potter Studio was only the production side of the films. It had signed a distribution agreement with Warner Bros., under which 10% of the total box office revenue of Harry Potter and the Deathly Hallows Part 1 and Part 2 would be Warner Bros.' distribution fee. That's 10% of $2.4 billion—roughly $240 million.
This portion of the money would be deducted by Warner Bros and even though it was essentially paying itself a service fee, no one could find fault with it.
Next came the promotional and marketing expenses. In Warner Bros submitted reports, Harry Potter and the Deathly Hallows: Part 1 had a spend of $120 million in this area, while Part 2 had related expenditures of $130 million.
This funding was essentially Warner Bros. paying itself again, as most of the marketing channels used belonged to Time Warner.
After deducting this total of $490 million, the remaining $310 million was transferred to the Harry Potter Studio's account.
But those who had signed a box office profit-sharing agreement still couldn't participate in sharing this amount because the Harry Potter Studio still had to deduct production costs.
In this regard, the Harry Potter Studio didn't play any tricks. Since both films were shot together, they saved quite a bit. The total production cost of Harry Potter and the Deathly Hallows Part 1 and Part 2 was $300 million…
But that still wasn't the end of it.
The Harry Potter Studio did not have sufficient funds to invest in the films. The $300 million investment came from a loan—the Harry Potter Studio had borrowed the money from one of Duke's film funds.
Now, more than three years had passed since the loan, and the Harry Potter Studio needed to pay $47 million in interest to Duke's fund.
This, of course, was a left-hand-to-right-hand financial cost. But the Harry Potter Studio was a financially independent company. Paying interest on loans was not only proper—it fully complied with the relevant legal standards.
Thus, from an accounting standpoint, Harry Potter and the Deathly Hallows Part 1 and Part 2 were completely unprofitable at the box office.
In this way, those who had signed net profit-sharing agreements with the film studio would receive nothing.
"Losses?"
Inside the Harry Potter Studio, the British agent who heard Robin Grand's answer exploded in anger. "How is that possible?! How could this film possibly lose money?!"
He planted both hands on the table, eyes burning as he stared at Robin Grand like a beast ready to devour him.
Robin Grand ignored his aggressive attitude and pushed a thick financial audit report across the table. "These are the relevant audit documents. Inside is the box office revenue from all regions and a detailed list of all expenses. If you don't believe it, you can hire professional lawyers and accountants to verify it."
From a legal and financial perspective, the Harry Potter Studio's actions were entirely lawful and reasonable.
It was precisely because of this understanding that Robin Grand didn't care what the agent thought. "Sorry, I have other work to attend to."
Hearing this near-expulsion remark, the agent became even more furious. "What you've done is outrageous! Don't forget—they are Daniel Radcliffe and Emma Watson! They're top-tier superstars right now!"
Lifting his head, Robin Grand simply looked at him without saying a word.
The agent's momentum gradually faded. Staring at the seemingly indifferent Robin Grand, he slowly began to understand something.
Daniel Radcliffe, Emma Watson, and the other young actors under the company had indeed become stars thanks to the Harry Potter series. The first two, in particular, were at the peak of their fame.
However, the Harry Potter series had concluded. Their value to the Harry Potter Studio…
Taking a deep breath, the agent suppressed his fury and said, "This won't be the end of it, Mr. Robin Grand. Do you really want to see this end up in a lawsuit?"
Robin Grand smiled faintly. "This financial report fully complies with legal regulations. If you want to sue the Harry Potter Studio, go ahead."
With that, he pressed the intercom, summoned his secretary, and had the British agent escorted out of the office.
Neither Robin Grand nor the powers behind him—Duke and Warner Bros were afraid of a lawsuit. From a legal standpoint, the Harry Potter Studio's accounting calculations were bulletproof.
This matter involved hundreds of millions of dollars. Duke and Warner Bros. wouldn't back down easily, and those actors and their agents, of course, wouldn't give up either.
They were actively moving around Hollywood, trying to exert pressure on the Harry Potter Studio, and even found lawyers to prepare for filing a lawsuit in the Delaware Court of Chancery.
Just like most Hollywood companies, the Harry Potter Studio was also registered in the state of Delaware.
"No profit from the box office at all?"
Inside a Warner Bros. production office, J.K. Rowling who had come specially from London sat across from Duke, holding a coffee cup as she asked, "Duke, this isn't fair to Emma and the others."
"Jo…"
Looking at J.K. Rowling, Duke said slowly, "You can also obtain the relevant data compiled by the Harry Potter Studio. You're free to have your accountants and lawyers verify it."
J.K. Rowling didn't respond.
"Our collaboration has always been smooth, and not a single penny of your profit share has ever been missed," Duke continued. "And I believe our cooperation will continue."
Unlike the actors, J.K. Rowling had the right to share in all related income, and the box office profit or loss didn't affect her earnings in the slightest.
"Cooperation?" J.K. Rowling looked at Duke.
"Of course," Duke raised his eyebrows slightly. "Both I and Warner Bros. hope to continue working with you. Our cooperation has always been pleasant. Jo, I suppose you wouldn't want to work with those unfamiliar companies, would you?"
No matter what, neither Duke nor Warner Bros. had ever tampered with the income that J.K. Rowling rightfully deserved.
After thinking for a few seconds, J.K. Rowling smiled, "Of course I want to continue working with you."
If there hadn't been a platform like Time Warner, there wouldn't have been the Harry Potter craze, and she wouldn't have achieved such fame and fortune.
J.K. Rowling was no fool; she knew how important a media group was to her.
Between a media conglomerate and those actors who were basically of little value, the choice wasn't difficult at all.
After that, J.K. Rowling never mentioned the matter of the actors' box office share again. Instead, she discussed some of her ideas for her new work Fantastic Beasts and Where to Find Them with Duke.
However, the Harry Potter film series had just ended, and Fantastic Beasts and Where to Find Them was still in the conceptual stage. To adapt it into a film belonged to the future.
After seeing J.K. Rowling off, Duke shifted his focus back to the preparations for The Avengers, but he had only looked at the storyboard sketches for half an hour before Tina Fey knocked on the door.
"Emma Watson is here. She wants to see you."
Hearing Tina Fey's words, Duke thought for a moment and said, "Let her in."
A few minutes later, Tina Fey brought Emma Watson into the office.
"Hello, Director Rosenberg."
She took off her sunglasses and greeted Duke proactively.
Duke nodded at her and pointed to the chair opposite his desk. "Have a seat, Miss Watson."
After Emma Watson sat down, Tina Fey brought over a cup of coffee. She didn't leave but sat at another desk in the office.
Duke, busy with work, got straight to the point. "What's the matter?"
The two were merely acquaintances—let alone having any relationship, they weren't even familiar with each other.
Clearly, Emma Watson held some expectations about Duke. "Director Rosenberg, I don't know if you've heard, but there's been an issue with the contract I signed with the Harry Potter studio."
Hearing this, Duke frowned slightly. "Sorry, Miss Watson. Though I was a producer on the Harry Potter series, it was just in name only. The specific matters were handled by Robin Grande and the Harry Potter studio. You're looking for the wrong person."
Emma Watson wanted to say more, but Duke raised his hand to stop her. "I'm in the middle of preparing The Avengers, and what you're talking about has nothing to do with my work."
Before she could continue, he gave Tina Fey a look. The assistant walked over and made a "please" gesture.
Her eyebrows tightly furrowed, Emma Watson looked at Duke in confusion, as if she hadn't expected this outcome.
Perhaps this actress had been too pampered by the Harry Potter crew and her agency she was clearly a bit naïve.
But this kind of naïveté was misdirected. Duke wouldn't be moved by just a few of her words. After Tina Fey showed her out, he threw the matter to the back of his mind and refocused on work related to The Avengers.
....
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