The day after Simon's meeting with Jack Valenti, Daenerys Entertainment's first fully self-distributed film, Elvira: Mistress of the Dark a project inherited from New World Entertainment opened in North America on 553 screens.
Despite its origins, the media paid considerable attention.
The day after release, many major North American newspapers published reviews. The consensus, however, was harshly negative; the film failed even to reach a passing standard. The Hollywood Reporter did not mince words, calling it "a horror film that attempts to mimic various subgenres yet ends up a muddled mess."
Having committed to a theatrical release, Simon had not cut corners; he approved a $2 million marketing budget for prints and advertising—a substantial sum by 1980s standards.
Over the opening weekend, however, Elvira: Mistress of the Dark grossed only $2.21 million, with a projected first-week total of around $3 million.
A $3 million debut typically translated, under the era's standard box-office curves, to a domestic total of $8–10 million.
With a production cost of $7.5 million plus $2 million in marketing, the total investment stood at $9.5 million.
Box office alone would not recoup that. Even with eventual overseas, home video, and television revenue potentially breaking even or turning a small profit, factoring in the time value of money, the project remained a failure.
Daenerys executives had anticipated this outcome and were not surprised. Yet once the numbers were out, numerous outlets seized the opportunity to proclaim that Simon Westeros had "fallen from the altar," suggesting Elvira might mark the beginning of Daenerys Entertainment's slide into mediocrity.
The New York Times ran an analysis declaring Simon's expensive acquisition of New World a colossal misstep; overly aggressive expansion would only hasten the studio's collapse.
Simon remained unmoved by the commentary. In recent months he had clearly felt the benefits of the New World purchase in solidifying his foothold in Hollywood.
The acquisition delivered an experienced production and distribution team, a valuable library of film and television rights, a strengthened position in television supply, and—most crucially—Marvel. All of it easily justified the $250 million price tag.
While Simon was unbothered by Elvira's flop, the former New World executives felt otherwise.
In the days following the disappointing results, Robert Rehme and others visibly shrank in Simon's presence. Simon offered no reassurances. Pressure bred motivation; the failure would serve as a spur.
As Elvira fueled media chatter, Daenerys submitted Scream to the MPAA for the third time that Monday. Post-production on Rain Man, Dead Poets Society, and Steel Magnolias had also wrapped. Simon awaited a response from the traditional powers and held off submitting those three for rating.
Daenerys Entertainment, Burbank division.
Wednesday, October 5.
Unlike Scream, the subject matter of Rain Man, Dead Poets Society, and Steel Magnolias made anything stricter than R impossible, even if the board wished to obstruct. Though not yet rated, Daenerys had begun scheduling private screenings for theater-chain representatives to secure exhibition deals.
In the screening room, the end credits of Steel Magnolias rolled. Robert Rehme, who had personally hosted the event, rose and invited Richard Hill, United Artists' vice president of film acquisition, to an adjacent lounge.
It was the second screening of the day; that morning they had watched Dead Poets Society.
The widespread consolidation of North American theater chains had not yet begun in the 1980s. United Artists Theatres spun off from United Artists Corporation decades earlier following the Paramount Decree remained the largest chain, with over 2,200 screens nationwide and nearly 10 percent market share.
Eager to offset any negative impression Elvira's failure might have left with Simon, Rehme had spent the past days tirelessly pushing the year-end slate. For three straight days he had personally accompanied executives from various chains to screenings and negotiations.
He also sensed that his boss's Friday lunch with MPAA chairman Jack Valenti might have involved an ultimatum. Several major-studio-affiliated chains had recently declined screening invitations. Rehme now focused on independent operators outside the Big Seven's direct control.
Yet he was not overly concerned.
The recent writers' strike had left theaters across North America short on product, with overall quality well below previous years. Domestic weekly grosses had languished under $30 million for three consecutive weeks. Combined with Daenerys's extraordinary track record over the past two years, Rehme felt confident securing ample screens without relying on the majors' own chains.
"Charlie, including Scream which you've already seen, all three films were personally selected and supervised by Simon. Scream originated as his own concept. For the package, Daenerys requires a combined 55 percent revenue share."
"I've heard about the rating issues with Scream," Richard Hill said, cradling a coffee and looking assured. "Bob, you may not even know yet whether it will open on schedule. Dead Poets Society and Steel Magnolias probably won't face the same problem, but chains like Universal's Cineplex or Columbia's Loews won't open their screens to you. Forty percent that's the most we can offer. If Scream clears rating, we'll sign for all three, but United Artists wants exclusive rights in key cities like New York and Chicago."
Standard exhibition deals featured sliding scales: studios typically took 60 percent or more in early weeks, with the share declining as attendance dropped.
For mainstream commercial releases, final studio takes generally ranged from 40 to 55 percent. With decades of precedent, the industry had refined formulas; Rehme and Hill skipped granular details and negotiated the overall split directly.
Rehme shook his head. "Charlie, our position may not be ideal, but yours is worse—every theater is starving for product. If the majors had posted our numbers the past two years, they'd demand even higher splits, and you'd still pay the hefty guarantees you're used to. Fifty-five percent. Agree to that, and we can keep talking."
Hill countered, "Past performance doesn't guarantee the future. Scream might do well it's Westeros's original idea, after all, even if he didn't take credit. But Dead Poets Society and Steel Magnolias lean arthouse without stars like Robert De Niro and Jessica Lange carrying them."
"When When Harry Met Sally came out, every major studio thought it lacked selling points yet it grossed $110 million domestically," Rehme replied, unyielding. "Charlie, if you want this deal, ignore the majors' pressure. Their suppression won't earn you a dime, but partnering with us will. This isn't just about these three films Daenerys will produce many more. A smooth collaboration now means we'll prioritize United Artists going forward."
Hill caught the subtext immediately: an unpleasant negotiation would see United Artists sidelined in the future.
In recent days he had received calls from several major-studio executives urging him not to work with Daenerys.
Clearly for reasons not yet public relations between Daenerys and the Big Seven had soured.
Rehme had expected a softer stance from Daenerys, yet the normally mild-mannered executive shaped by years at New World was suddenly uncompromising.
Hill's thoughts drifted to Simon Westeros.
That was a young man who never hid his edge.
Employees inevitably reflected their boss.
After further haggling, Rehme refused to budge on the split. Hill realized he lacked the leverage to risk a breakdown.
United Artists controlled less than 10 percent of domestic screens. Even the majors, after the government relaxed ownership restrictions a few years earlier, held only about 15 percent—prime locations, certainly, but fully 75 percent of screens remained in the hands of smaller operators.
Long-standing ties gave the majors enormous influence over the entire market. Against a second- or third-tier studio, coordinated pressure might indeed trigger a boycott.
Daenerys, however, was different too prominent to ignore.
Six films in two years, all landing in the annual top ten, five breaking $100 million domestically. Anyone confident enough to turn away that kind of money?
Hill had brushed off the majors' calls but never seriously considered joining a boycott. He suspected most other chains felt the same. Only the majors' directly owned theaters bound by corporate interests would likely stay away, and their executives were probably cursing under their breath.
Everyone had performance targets.
Glancing around the lounge, another realization struck him.
Typically, studios invited multiple chains to joint screenings. This time Rehme had invited only him deliberately preventing coordination.
Lacking the stomach for a fight, and finding Daenerys's terms reasonable, Hill softened as negotiations continued.
By quitting time, the two sides had essentially finalized the deal.
Hill declined Rehme's dinner invitation and left. Rehme had planned to head home himself when Simon called: the new studio logos for Daenerys Pictures, New World Pictures, and Gaumont Film Company were ready, and Simon wanted him to come see them.
With the boss still working past regular hours, Rehme had no complaints. He drove from Burbank to Santa Monica.
Arriving at headquarters, he soon joined Simon, Amy, and a few others in an upstairs conference room.
After greetings, they took seats around the table. Seeing Simon's assistant Jennifer setting up the projector, Rehme volunteered the afternoon's results.
"United Artists agreed to all three films 55 percent overall revenue share, guaranteed four-week play. Richard Hill initially wanted exclusive rights in major cities; I refused. They're lukewarm on Steel Magnolias only 200 screens but if Scream clears rating, they'll give 500 each to it and Dead Poets Society. Also, Simon, internal screenings last week went very well for both Steel Magnolias and Dead Poets Society. I'm wondering if we could open them limited first to build word of mouth, like Disney did last year with Good Morning, Vietnam?"
In theory, films of this type benefited from festival exposure beforehand, but the schedule was too tight for such marketing.
Simon considered briefly and nodded. "Yes work up a plan."