How Lions Gate Won 'Hunger Games'

(Reuters) – Little Lions Gate Entertainment beat out its bigger and better funded rivals to win the right to make a film of “The Hunger Games,” which opens on Friday with blockbuster expectations.

Personal appeals for the rights began back in 2009, with schmoozing that included calls from Lions Gate CEO Jon Feltheimer and vice-chairman Michael Burns to “Hunger Games” author Suzanne Collins.

But what really sealed the deal for Collins was the assurance that Lions Gate would stay true to her novel, set in a dystopian future where a totalitarian state televises fights to the death by teenagers.

“They had everyone but the valet call us,” said Jason Dravis, who has represented the 49-year-old author since her days as a staff writer for animated TV shows in the early 90s.

“When Tim Palen, their head of marketing, told us he had mapped out exactly how they would market it, she felt it would be in good hands.”

For Lions Gate, which won its Hollywood reputation by producing lower budget horror flicks and Tyler Perry films, “The Hunger Games” represents its biggest opportunity yet to prove it can develop a blockbuster franchise film with mass appeal.

The movie is expected to post an outsized $100 million or more in ticket sales in its first weekend. According to Evercore Partners analyst Alan Gould, the film could exceed the box office performance of the first installment of the teen vampire franchise “Twilight,” which grossed $392.6 million worldwide in 2008. Twilight was made by Summit Entertainment, which was acquired by Lions Gate in February.

“The Hunger Games” first appeared on Hollywood’s radar in early 2009, recalls Joe Drake, the president of Lions Gate’s studio who green lit the project. At the time the book had sold less than 100,000 copies, he says.

But there was a strong buzz it was on the brink of breaking out, and studio executives eager to find the next “Twilight” seized on it. Since then, the franchise has grown to three books with U.S. sales of more than 24 million copies.

At the time, the book was being shopped around Hollywood by Nina Jacobson, a former Walt Disney studio president who had a handshake deal with Collins after “30 or 40” producers had expressed interest, says her literary agent, Dravis, even though he hadn’t sent out copies of the book, as is customary.

To get an edge on other producers in the Collins sweepstakes, Jacobson enlisted director Peter Hedges, with whom she worked on the movie “Dan in Real Life” while at Disney. Hedges had attended a writers’ workshop in North Carolina with Collins a few years earlier, and Jacobson pressed him to emphasize that Collins could trust her.

But the big factor working in Jacobson’s favor was that “she had worked on big franchises before,” Dravis said. “This novel had the potential to get very dark very quickly and she understood how to keep it from doing that.”

By March, Jacobson had interest from Warner Brothers; New Regency, which produces films for Fox; and Spyglass Entertainment, which had produced “The Sixth Sense” and “Star Trek,” among others, and whose managers have since merged with and manage MGM.

During the bake off for the rights to the property, Lions Gate not only matched the offers from New Regency and others, but also offered Collins a piece of the film’s profits, says Drake. The studio went a step further, said Dravis, also promising to let her be part of the screenwriting team and to protect her “vision” of what the movie should be.

Collins and director Gary Ross wrote the final script together, says Dravis, and the author received a screenplay credit.

“We called her Mother Hunger Games,” says Alli Shearmur, Lions Gate’s president of motion picture production, who had championed the film and pressed Drake to make the picture.

Drake also knew he had a sales job ahead of him to overcome a certain squeamishness about the studio. “She knew that we were the studio that had made (the horror series) ‘Saw,'” he said. “We told her that it was also important to us that we maintained what had made her book so popular.”

While Lions Gate was negotiating to acquire the franchise it was simultaneously fending off investor Carl Icahn, who had taken a 14.5 percent stake and would the following year launch an unsuccessful proxy fight to elect five board members to the studio’s board of directors.

Ichan had criticized Lions Gate for straying from its business model of small-budget films to make riskier and more expensive productions, but execs Feltheimer and Burns saw “The Hunger Games” as a key part of their plan to make franchise movies that spawn sequels, spinoffs and merchandise sales.

“The Hunger Games gives us the rare opportunity to take an exciting brand with a built-in frequent filmgoing audience and construct it from the ground up into a potential franchise,” Feltheimer said in an August 2009 earnings call with analysts.

The film was budgeted at $88 million, which Lions Gate reduced to $80 million by receiving tax credits in return for filming in North Carolina. The studio then sold off the distribution rights in foreign markets other than Britain to reduce its cost to about $30 million. That reduces the risk, but also limits the amount of money Lions Gate would get from overseas sales.

To reach the film’s core audience of younger viewers, its $45 million marketing budget made aggressive use of the Internet, including a game on Facebook, YouTube videos and a blog on the site Tumblr dedicated to the film’s fashion.

With every “Hunger Games” magazine cover, Lions Gate’s stock seemed to soar. In the six weeks leading up to the film, its share price had skyrocketed by 43 percent, from $10.95 on February 8 to $15.68 as of March 21.

Estimating the movie’s opening weekend has become a Hollywood parlor game, starting at $70 million two weeks before its opening night and now reaching as high as $125 million, which is what Phil Contrino, editor of Boxoffice.com, forecasts for its total take this weekend.

“It’s like the Lions Gate stock price,” said Paul Dergarabedian, head of the box office division of Hollywood.com. “It keeps going up every day.”

(Additional reporting by Lisa Richwine; Editing by Gary Hill)