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Buying Star Wars

If there's one thing to be said about George Lucas it's that he is a very clever business man. He's so clever, in fact, that much of the business manipulation going on behind closed doors is not even reported. Such is the case with a highly important yet never completely understood case in the history of the franchise: how Lucas ended up personally owning the films in the series.

One huge repercussion of this is that the original versions of the films have so far not been released since 1995 (unless you count the Laserdisk-imported bonus feature from 2006--I don't). While films like Blade Runner, Apocalypse Now, Close Encounters, Aliens, Brazil, Dawn of the Dead--and pretty much every film that has ever been altered since its original release--have all been restored and released in high-quality and most of them in high definition (the small size of the market is to blame for any current no-shows rather than deliberate withholding), it is a sad and frustrating reality that the most popular film of all time, Star Wars, is not available, nor are its two important sequels. Instead, there is only a twice-bastardised Special Edition that has effects updates from 1997 and 2004 shoehorned into the films, to varying degrees of success; what's even more perplexing is that this version is plagued with audio miscues, visual glitches and improper color timing to such extent that it's hard to even appreciate this as a "Special Edition" of the films (though the 2004 SE was re-color timed so as to deliberately look different, the pink lightsabers, colorless engine glows, video noise, color bleeding, crushed blacks and other such errors are assuredly due to poor workmaship--what's even more perplexing is that this was screened for Lucas, and has been several times since, such as at Celebration IV, to which he approved and gave the go-ahead). Were Fox in control of the property, the film would assuredly be meticulously restored in 8K resolution to its original release version and available on Blu Ray in an elaborate box set, perhaps with poster and lobby card reproductions and a commemorative book, much like what Warners did with Blade Runner or Universal did with Close Encounters or Fox did with its gorgeous John Ford at Fox collection.

But--Fox is not in control of the property. Lucasfilm is. What's even more interesting is that Fox still was at the time of the Special Edition in 1997--it was they who owned the copyright, and as the studio that owned the film it was their responsibility to pay for the restoration and enhancement of the film for its 1997 release. This pricetag came to the tune of roughly $20 million, almost twice what Fox payed in 1977 to make the film. But how did Lucasfilm end up with ownership by the time of the next video release? How did George Lucas and his inflated ego get to the position where he could say "the special edition, that's the only [version] I want out there"--and be able to get away with it?

When the original contract was finalised in 1976, George Lucas was able to retain ownership of any sequels, since Fox thought of them as less important negotiating items than, for example, the director's salary. But it was Lucas who had the last laugh in 1977 when Star Wars became the most successful film of all time. But owning the copyright didn't mean much if Lucas still had to go through Fox to finance and distribute--hence, basically control--the films; Lucas financed his sequels on his own, giving himself the profit percentage that would have normally gone to the studio. He also stuck it to Fox--he was not bound to have Twentieth Century Fox distribute the films, and the potentially-free-agent Star Wars franchise was free to be shopped around to any studio that wanted it, which effectively was everyone, and they all would pay handsomely for it. Fox had right of first refusal, and Lucas was willing to let Fox distribute the next two films but only after he got his revenge for the way he felt the studio had mistreated the film before 1977. To say Fox got the short end of the stick is an understatement--Lucas got the deal of the century. With Fox paying for all distribution and advertising, and paying a $10 million upfront fee, Lucasfilm would get 77 percent of the theatrical gross, plus 90 percent of merchandising profits. (i) Though initially outraged, Fox was still happy campers, for the two sequels were nonetheless the most financially successful films the studio ever laid hands on (they bailed Empire Strikes Back out of debt in 1979 and improved their distribution deal, as well).

But while Lucas himself owned Empire Strikes Back and Return of the Jedi, Twentieth Century Fox still had the big caveat in owning the more popular original. While this probably was not a big deal in the mid and late 80's when the franchise basically disappeared and Lucas moved on to other things, in the early 1990's an unexpected rebirth occurred where the Star Wars trilogy returned to the limelight, stronger than ever, instigated by the unexpected success of Timothy Zahn's novel Heir to the Empire. Around 1992 or 1993, Lucasfilm and Fox agreed to release the original film in theaters to celebrate its twentieth anniversary in 1997. This act was not as simple as it seemed--the original negative was in such poor state that no prints could be struck from it, and so an in-depth restoration was enacted. Lucas also persuaded Fox to let him touch up a few effects that were compromised on the original release, namely in the Mos Eisley section of the film. However, as the years went by, Star Wars continued to grow in popularity--by 1995, toy manufacturer Galoob was making $120 million a year from Star Wars playsets, and the video release of the trilogy that year had moved nine million units in its first week. The Special Edition had grown to include dozens of new changes, and the two sequels were in the midst of being enhanced as well. Topping things off, Lucas also decided, finally, to make his three prequel films (using the FX of the SE as free research and development since Fox was paying the bill).

In this atmosphere, it must have become increasingly apparent that Fox still had one stick in Lucas' craw: they still owned the original film. By 1997, Twentieth Century Fox had spent around $20 million to restore and update their most prized possession--a pay-off that earned them over $120 million at the box office that year, a stunning success. The prequels began photography some months later, and by then everyone knew what was obvious: the prequels were going to be the biggest films of all time. But unlike the original trilogy, Lucas still did not have a distributor--only because he was putting off the decision, as all the studios were already lining up to offer Lucas the biggest paycheques ever written.

Of course, the most eager studio of all was the one that had been Star Wars' home for the past twenty years, Fox. Getting the prequels would be the biggest deal of the decade, and they already were in a favorable position since they had just paid to have Star Wars restored. Glenn Lovell writes in the Dallas Morning News in January 1997, "Skeptics believe Fox invested in the restoration and re-release because it wants to stay away from Lucas' dark side and get first shot at distributing the prequels," a sentiment that was expressed by many that year. (ii) They may be right--Fox was on a mission to get distribution rights to the upcoming three films and it was going to do anything to see it happen. Fox vice president Tom Sherak says in January 1997 "Do we want to have the prequel? Of course we do-- everybody does," and goes on to state "When George gets here, we'll lock the door and won't let him out until he makes the deal." (iii)

In 1998, the film now shot, negotiations did begin. Of course, Fox probably got a low percentage, just as in 1977 for the first two sequels, but that didn't matter because the films stood to be the most popular ever made, and an enormous paycheque to Lucasfilm is also a given. But any studio would have gotten that deal, whether it was Warner or Universal. But there was one thing Fox had that no other studio could offer, and that Lucas was after. They had the original film. In April of 1998, it was announced that Fox would be the distributor of the new films.

It has never been reported, but I believe that Lucasfilm offered Fox distribution rights only if they would hand over the rights to the original Star Wars. Fox obviously agreed to this at some point--when the SE was released in 1997, the prints, posters and video boxes said that Empire and Jedi were copyright Lucasfilm but that Star Wars was copyright Fox. The next time the films were released was in 2000 on VHS, where Empire and Jedi were copyright Lucasfilm--but now Star Wars was copyright Lucasfilm as well. Its no coincidence that between that time a deal was hammered out between the two mega-corporations to give Fox distribution of Lucasfilm's prequels.

It was never announced anywhere. But, quietly, Lucasfilm was given the rights to the original film by Fox. To the studio, it must have looked like a good deal, even if it was a hard bargain--they lost their number one property but they gained theatrical and video distribution to three more properties that potentially were all going to all be more popular.

(ii) see Skywalking by Dale Pollock, first edition, 1983, p. 199-200

(ii) (iii) " 'Star Wars' Juggernaut Began Slowly" by Glenn Lovell, Dallas Morning News , Janurary 30th, 1997, http://chronicle.augusta.com/stories/013097/starwars_juggernaut.html

07/06/08