Smurfs tie with Cowboys & Aliens at the box office –with bonus Platinum SEC filings

It was a battle of the comic book movies at the box office this weekend as Peyo’s resilient Smurfs faced off against COWBOYS & ALIENS, the long-brewing Platinum property. And to everyone’s surprise it was a tie! Let’s face it, we’ve been making fun of the Smurfs 3D movie with its weird Azaria Gargamel and Neil Patrick Harris regular guy whose life is turned upside down by his new blue friends for over a year, but if you’re a tired parent, taking the kiddie to something harmless whose cereal you once enjoyed is a win-win. Nikki Finke runs down the match-up:

What is crystal clear is that Smurfs is overperforming way beyond expectations while Cowboys & Aliens is way behind expectations to the point of tanking. What’s more humiliating than Hollywood execs overestimating the opening for Cowboys and having it fall short? Having their well-pedigreed motion picture with big Hollywood writers (Roberto Orci & Alex Kurtzman), stars (Daniel Craig & Harrison Ford), director (Jon Favreau), and producers (Steven Spielberg & Ron Howard & Brian Grazer) beaten at the box office by Smurfs. Especially with Smurfs playing in 355 fewer North American theaters than Cowboys but charging higher 3D ticket prices. Smurfs even beat Cowboys on CinemaScores: ‘A’ vs ‘B’.

At $32 million apiece, nether film is a blockbuster, but this has to be seen as the second Comic-Con underperformer in a row for Universal, following SCOTT PILGRIM.

The tie left Sony crowing:

“I don’t know why people underestimated this movie to such a degree. We were always very bullish on it,” Sony distribution President Rory Bruer said. “It has a huge following and not just with kids — there’s a nostalgia factor and a cool factor that is kind of making the film resonate for us.” Audiences who saw “The Smurfs” this weekend loved it, assigning the PG-rated film an average grade of A-minus. Not surprisingly, the movie — which cost about $110 million to produce — appealed mostly to a family audience, as 65% of the crowd was composed of parents with their children. The film didn’t sell an overwhelming number of 3-D tickets, with about 45% of the crowd opting to see the film in the pricier format.

It’s worth remembering that the Smurfs are a longterm worldwide hit — the movie was initially picked up at Sony by President Michael Lynton who grew up in the Netherlands and was very familiar with the material as a kid.

In some ways the underperformance of COWBOYS & ALIENS is a sobering reminder that new material has a tough go of it in Hollywood compared to sequels and reboots. But the movie has such a strange history — an earlier Deadline story by Michael Fleming has a thorough rundown of its origins:

Scott Mitchell Rosenberg, who owned Malibu Comics when that imprint sold Men in Black to Sony, met Gasmer to pitch comic ideas that would be generated by his new imprint, Platinum Studios. “He’d flip over a poster, and then another and another,” Gasmer recalled. “When he got to the third one, I said, what’s that? He said, it’s Cowboys & Aliens. I said, that’s your movie. Even though he had nothing written down, I grabbed Rob, who pitched it to his client Steve Oedekerk. Steve immediately said he was in, and that he would figure out the movie. We went out basically with an illustration and Steve, and we had five offers right away from Disney, Fox, Sony, Universal and DreamWorks until the latter two joined together and bought it. That’s how business was done back then.”

Back then — C&A’s development goes all the way back to 1997! Although the title seemed like a slamdunk, various takes and over a dozen writers later there was finally a film, although not until an actual comic book by Fred Van Lente, Andrew Foley, Luciano Lima and Denis Calero came out. It seemed this little detail was needed to give Hollywood types the vision required,

So where does this leave the rivals? Well, the Smurfs will go on to remains beloved worldwide icons, and we’ll probably see SMURFS 2: THE HERETIC sometime in 2013 or so.

As for COWBOYS & ALIENS, it seems to have been the driving motivation for the entity known as Platinum Studios for several years now — they aren’t publishing any more, and let go of their last employee, Dan Forcey back in June. The utter flop that was DYLAN DOG: DEAD OF NIGHT probably didn’t help, either. You’ll recall that Platinum has come under some scrutiny here for years over their signing tons of creators to work-for-hire contracts, not publishing anything for most of a decade, and in general living up to the stereotype of the “publisher” who’s only in it for the movie deal in spectacular fashion.

So what now? You can check out all their SEC filings here (the company is public). The last quarterly report in May included such ominous language as this:

During the three months ended March 31, 2011, the Company had a net loss of $1,226,145 and utilized cash in operations of $309,662. At March 31, 2011, the Company had a working capital deficit of $20,343,243 (excluding its derivative liability) and a shareholders’ deficiency of $17,291,894. The Company is also delinquent in payment of $120,026 for payroll taxes as of March 31, 2011 and in default of certain of its short term notes payable. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company intends to raise funds to finance operations until the Company achieves profitable operations. The Company’s capital requirements for the next 12 months will continue to be significant. If adequate funds are not available to satisfy either medium or long-term capital requirements, the Company’s operations and liquidity could be materially adversely affected and the Company could be forced to cut back its operations. Subsequent to March 31, 2011, the Company raised $50,000 through the issuance of convertible notes payable and borrowed $128,000 from entities in which Scott Rosenberg, the Company’s CEO and Chairman, holds an economic interest. (see Note 13)

There’s also a fun rundown of legal proceedings, including unpaid printers bills and rent.

Transcontinental Printing v. Platinum. On or about July 2, 2009, Transcontinental Printing, a New York corporation, filed suit against the Company in Superior Court, County of Los Angeles (Case No. SC103801) alleging that the Company failed to pay for certain goods and services provided by Transcontinental in the total amount of $106,593. The Company settled the suit agreeing to pay $92,000 plus interest at 10% per annum with a payment schedule of $2,000 per month for five months and then increasing to $10,000 per month until paid in full. The company has made all scheduled payments to date. As of December 31, 2010, the accounts payable of the Company included a balance of $27,318 for this settlement. As of March 31, 2011, the accounts payable of the Company include a balance of $18,256 for this settlement.
 
Rustemagic v. Rosenberg & Platinum Studios. On or about June 30, 2009, Ervin Rustemagic filed suit against the Company and its President, Scott Rosenberg, in the California Superior Court for the County of Los Angeles (Case No. BC416936) alleging that the Company (and Mr. Rosenberg) breached an agreement with Mr. Rustemagic thereby causing damages totaling $125,000. According to the Complaint, Mr. Rustemagic was to receive 50% of producer fees paid in connection with the exploitation of certain comics-based properties. Rustemagic claims that he became entitled to such fees and was never paid.  The matter was settled thru arbitration in April, 2011 with only minimal liability to the Company.  Under the settlement agreement, the Company has guaranteed additional payments due by Scott Rosenberg in the amount of $77,000.
 
Harrison Kordestani v. Platinum. Harrison Kordestani was a principal of Arclight Films, with whom the Company had entered into a film slate agreement. One of the properties that had been subject to the slate agreement was “Dead of Night.” Arclight fired Mr. Kordestani and subsequently released Dead of Night from the slate agreement. In late January 2009, Mr. Krodestani had an attorney contact the Company as well as its new partners who were on the verge of closing the financing for the “Dead of Night.” Mr. Kordestani, through his counsel, claimed he was entitled to reimbursement for certain monies invested in the film while it had been subject to the Arclight slate agreement. Mr. Krodestani’s claim was wholly without merit and an attempt to force an unwarranted settlement because he knew we were about to close a deal. We responded immediately through outside counsel and asserted that he was engaging in extortion and the company would pursue him vigorously if he continued to try and interfere with our deal. The company has not heard anything further from Mr. Kordestani but will vigorously defend any suit that Mr. Kordestani attempts to bring.  The Company has not reserved any payable for this proceeding.
 
Douglass Emmet v. Platinum Studios On August 20, 2009, Douglas Emmet 1995, LLC filed an Unlawful Detainer action against the Company with regard to the office space previously occupied by the Company. The suit was filed in the California Superior Court, County of Los Angeles, (Case No. SC104504) and alleged that the Company had failed to make certain lease payments to the Plaintiff and was, therefore, in default of its lease obligations. The Plaintiff prevailed on its claims at trial and, subsequently, on October 14, 2009 entered into a Forbearance Agreement with the Company pursuant to which Douglas Emmet agreed to forebear on moving forward with eviction until December 31, 2009, if the Company agreed to pay to Douglas Emmet 50% of three month’s rent, in advance, for the months of October, November and December 2009. As of January 1, 2010, the Company was required to pay to Douglas Emmet the sum of $466,752 to become current under the existing lease or face immediate eviction and judgment for that amount. Prior to January 1, 2010, Douglas Emmet agreed to a month-to-month situation where Platinum pays 50% of its rent at the beginning of the month and the landlord holds back on eviction and enforcement of judgment while they evaluated whether they will consider negotiating a new lease with the Company that would potentially demise some of the Company’s current office space back to the landlord as well as potentially forgive some of the past due rent. As of June 30, 2010, the Company has abandoned the leasehold and moved to new offices. In January, 2011, Douglas Emmett served the Company a new lawsuit to recover unpaid rent and damages.  The Company has responded to the summons and requested a settlement conference.  The accounts payable of the Company include a balance to Douglass Emmet sufficient to cover the liability, in managements’ assessment.

Gotta love SEC filings! If you’re wondering why the name Ervin Rustemagic sounds familiar, it’s because he’s the subject of Joe Kubert’s graphic novel FAX FROM SARAJEVO. He’s also a European comics agent who represents such properties and DYLAN DOG and JEREMIAH — both previously produced by Platinum. Not too hard to connect the dots there.

While finances may have improved since May, the lukewarm box office thus far of COWBOYS & ALIENS may only cover pert of the rent.