Encore - Film Stories: George Lucas and Peter Jackson

25:04He paid him$5 million for the graphics group, which they changed their name to? Pixar. Another money-making colossus, of course, home of Toy Story, Cars. George Lucas ends up kind of hanging on by the skin of his teeth, thanks to someone we'll talk about in another episode, Steve Jobs. And eventually, you know, it's kind of fine. He kind of makes it out through this tough patch. which Indiana Jones and the Last Crusade ends up making$450 million worldwide in 1989. So he's still, he's getting money back into his pocket. But eventually it is Star Wars that brings in the billions because they package up the original ones?

25:40Yes. So PepsiCo, which owns Pepsi, if you can tell by the name, also owns fast food chains like Taco Bell, Pizza Hut, KFC. It's also the reason why annoyingly, if you go into KFC, you can't get a Coke. You can only get a Pepsi. And PepsiCo approaches George Lucas and says... We're going to get in trouble for that, come on. But it's true. So he works with PepsiCo on a$2 billion tie-in. So when the three old films are re-released with special effects that he's kind of redone post-Jurassic Park because now technology is so much more advanced. When the prequels, so Phantom Menace, etc., are released, Pepsi is also on board.

26:22I still remember the Phantom Menace toys from KFC. there's some extremely strange stuff that comes out of this deal as well. So if you go onto YouTube and you search for Pepsi Star Wars, you'll find some very weird commercials that ran on TV at the time, which feature Colonel Sanders, the Taco Bell Chihuahua, and a Pizza Hut delivery girl in the Star Wars universe, talking about selling burgers and pizzas and fried chicken, because obviously PepsiCo owns all of these fast food chains. Wow. Not every director would be that happy with that kind of mishmash and collage. People would say that is selling out as well as selling up.

27:01But it's really interesting because when you look at films like Barbie, for instance, that's kind of what's happening now. You know, it becomes this huge kind of brand deal. And at the time, it's considered the biggest global deal in entertainment history. So for context, in 1996, Coca-Cola spends millions on the Summer Olympics in Atlanta. This is absolutely dwarfed by what they do with Star Wars and PepsiCo. OK, so at that point, I think we can ring the bell and say he's a billionaire.

27:41So he's a billionaire now. He's ranked by Forbes at around 1.7 billion after that tie in with Pepsi. he's got as much money he will ever need he can make as many films as he'd like and he does go on to as you say make the prequels he starts directing these again and it doesn't go that well i mean it goes well commercially but not critically people hated them you know my experience of phantom menace very much lines up with that i remember queuing to watch the midnight screening of phantom menace and then falling asleep okay so commercially great success the cinema's packed out but artistically and critically i mean me and my friends were teenagers not 10 or 11 we walked up saying what was that all about jar jar binks not the greatest moment in cinema history he's definitely not in the top 500 characters ever committed to celluloid definitely not but what was interesting is that you had to see them right yeah you felt you had to see them that was the power of the franchise was so overwhelming that even if you read a view saying this film stinks I've got to see it anyway and I think that's sort of the power of the brand the power of the brand rests in the power of the world I mean if you think about Darth Vader Darth Vader transcends the film franchise in which he operates, you know, he's kind of like a cultural touchstone and even the little things about the Star Wars universe, the sound of the lightsabers going on Chewbacca's roar these are not special effects or things that we have dubbed in from the movies, this is just Simon by the way.

29:09Sorry, Disney, no trademark suit here. Really, when you think about it, he's created this cultural behemoth where you just have to be involved and have an opinion, even if it's good, even if it's bad. But interestingly, after the prequels are panned, he basically walks away. He never directs again. The three films that were directed and came out in this decade, nothing to do with George Lucas. Andor, The Mandalorian, all those Disney Plus series, nothing to do with George Lucas. And that spin-offs like Rogue One, all sorts of things. So basically, you've set up a kind of money-making machine, which is now owned by Disney, and he's gone off into the sunset.

29:46He marries his girlfriend. He has another child. He actually gets awarded the National Medal of Arts by Obama for contributions to American cinema. And at the same time, his universe, his baby, just keeps expanding. But without his involvement, he's like a god who created the Earth and just turned his back on it. and created something that will be probably with us for the rest of my life, at least.

30:12So that is how George Lucas became a billionaire, the first film director we ever covered on Good, Bad, Billionaire. Next up, we have the story of the second, the director of the hugely successful Lord of the Rings movies, Peter Jackson. And Simon, as I said when this episode first came out in 2024, if Star Wars was your film franchise when you were growing up, the Lord of the Rings was mine. But as we will discover, it wasn't those films that made him the majority of his vast wealth. Let's go back to the start and take Peter Jackson from Zero to a Million.

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33:44So Peter Jackson was born on Halloween, which is quite apt actually given his early career, in 1961 in Wellington, New Zealand. Yeah, that's the south bit of the North Island. He's the only child of English immigrants. Joan, a factory worker, turned housewife Bill, a payroll clerk. He's grown up in a coastal village, which is some 30 kilometres north of Wellington, and he's never actually moved from the region. So basically, even when he was making some of the biggest films in the world, he never left New Zealand. He brought the entire film industry to where he was rather than the other way around.

34:16Now, as a child, he was really into special effects in films and idolised this stop-motion wizard called Ray Harryhausen, which, if you remember things like Clash of the Titans, you used to see these kind of plasticky things move. It kind of looked impressive at the time, looks very dated now. Apparently, it was seeing the 1933 black-and-white film King Kong on TV as a nine-year-old that completely changed his life, though. Yeah, he said it was a defining moment of my life as a filmmaker. It was a time that I said, that's what I want to do. I want to make movies just like King Kong. and most importantly at the end of it he says I cried so it had an emotional attachment as well which a lot of escapism doesn't have.

34:55So Peter Jackson soon started making films with his family Super 8 camera which is a type of movie camera very popular in the 60s and 70s which shot an 8mm film and it was kind of cheap for home use too. Yeah and so he was very ingenious about how he did his sets he actually apparently dug up the garden to film World War I trenches or use his mother's fur coat to recreate King Kong. The effects have come a long way since then. Sometimes I think a fur coat would do a lot better than some of the CGI effects that you see. Some of them can be quite shoddy these days. But he also soon started creating his own homemade special effects.

35:28So on one occasion, he actually got his primary school teacher, filmed him walking around the corner and then cut to a firework explosion to create this impression of blowing him up. And he screened the film for his classmates. Yeah, he charged 20 cents for tickets. The film cost $12 to make. That cost for the four$3 film reels. That's New Zealand dollars, by the way, at that time worth just a bit less than US dollars. And he made that$12 back. So he broke even on his first movie. That school teacher, on the other hand, only found out he had been blown up at the screening. Peter Jackson actually said of his school days, because I was an only child, I tried to get good marks so my parents would be proud.

36:04But I certainly wasn't studying towards a career as such because I knew I wanted to make films. He actually left school because he wanted to make movies so badly and knew that in order to get a decent camera, he had to get a job. So he took a job as an apprentice photo engraver at Wellington's Daily Newspaper. And he says he only took the job because it had the word film in the job description. So clearly an obsessive from a very, very early age. He actually lived with his parents and used all his wages to make films. In 1981, 20 years old at this point, he started work on a short film called Roast, which morphed into his first feature film, Bad Taste.

36:40Filmed at weekends over four years around his friend's Saturday football matches, it was a gross-out horror comedy about aliens harvesting New Zealanders for an intergalactic restaurant. I mean, he is creative. You have to give him that. Yeah. The budget for this film was around$25 ,000 New Zealand dollars, a bit less than$25 ,000 US. So he was creating the props himself. He was baking latex masks in his mum's oven. And crucially, he was even building his own equipment, including a version of Steadicam, which is a piece of camera kit that holds the kind of camera steady, essentially. It would have cost more than the entire budget if he bought it himself, but he just copied it and built it for$20.

37:19So clearly, very tax savvy in his own way. Right. This is where New Zealand becomes a character in a way, because in 1978, New Zealand had offered to be a tax shelter for feature film investors. It was a loophole closed by 1982. The government worried it was being abused. But it had kick-started a new kind of cinematic era in that country. And he was right at the sort of vanguard of that. Now, at the beginning, the New Zealand Film Commission actually turned down Jackson's request for funding. But then in 84, the new executive director, Mancott Jim Booth, saw that Jackson had huge amounts of potential.

37:54And the debut film he was working on got given 207 ,000 New Zealand dollars towards finishing the film. The final budget for the film was 300 ,000 New Zealand dollars. The New Zealand dollars fluctuates a lot against the US dollars. At that time, that was about$150 ,000. So tiny, even back then in the early 80s. But Jim Booth had been absolutely convinced and sold on Jackson's vision. In fact, he was actually so excited that he quit his job at the New Zealand Film Commission to become the producer on Jackson's next few films. Yeah, so Bad Taste. Let's talk about that film. It was eventually released in 1987.

38:30bad taste by name bad taste i think is probably a pretty apt description because quite a lot of people were put off by the gore it became a bit of a cult classic though yeah it did and you know this is the boom time for kind of gory horror cult classics and it actually went into profit after international sales did well at the can film festival so this is an event in france very very lovey dovey a lot of deals get done in the film industry there um when we did george lucas's episode. That's where he went to find funding very early on in his career. Yeah. And even if you've made a film, you go there to find someone to buy it, to distribute it, whatever.

39:02It's a real international marketplace of films. So he managed to sell it. Jackson was finally able to quit his day job and make films full time. And it was during this very period that Jackson met a writer and a producer called Fran Walsh, and she would become his most significant collaborator. She's actually co-written all his films after Bad Taste, including Lord of the Rings. And she also became his wife and the mother of his two children. They married in 1987 and unusually for some of our billionaires they are still together. They're quite the dynamic duo. Yeah so the first two films as a partnership remained in a similar vein sort of black comedy horror as the debut film he had something called Meet the Feebles which was a puppet film full of violent sex and drugs you know.

39:47As you do with puppets. And then he followed that with Brain Dead a gory zombie horror so he's definitely a genre director at the moment. Yeah. But then along comes his fourth film, one called Heavenly Creatures, which stars a very young Kate Winslet. Massive change of gear here, because this is a very different film. So it's a true crime story. So it's based on something that happened in 1954, about two 15 year old girls who killed one of their mothers in New Zealand. Yeah. But before he was ready to create the film, something very significant happened, and probably the reason that he's on our list.

40:18Although he'd loved crafting effects by hand, He even described himself as a technophobe. Jackson now wanted to go digital. And there was a reason for that because something big had happened. Something big, something prehistoric. It was a film called Jurassic Park. So to set the context, it's 1993. Jurassic Park has come out. It's done gangbusters at the box office. And Peter Jackson said, I really thought I was seeing a living, breathing T-Rex. I thought, my God, whatever the future of visual effects is, it's now got to be computers. So he formed this special effects company, Weta Digital, with his film editor on Brain Dead and Meet the Feebles, a guy called Jamie Selkirk and Richard Taylor, who already ran Weta Workshop, the company that made the props and puppets for both of those films.

41:04Now, if you're actually wondering what Weta is... Spelt. W-E-T-A. So not wetter as in more wet. Yeah, wet, wet, wetter. Weta is actually named for a New Zealand insect, which is one of the world's largest and used to feature on their logo. So they bought a big expensive computer, something called Silicon Graphics, which was the last word in graphics computers in those days. That cost them about 8 ,000 US dollars and enlisted amateur George Port to master it and gave him two pages of instructions and said, figure out how it works. Port then spent seven months working on his own to create 14 effect scenes for Heavenly Creatures.

41:41If you haven't seen Heavenly Creatures, there are these incredible sequences where the New Zealand landscapes morphs into these ideas from the characters' overactive imaginations because they're teenage girls and they're slightly murderous. It's very fun. And unlike Bad Taste and Brain Dead, Heavenly Creatures actually made Hollywood start to notice him. Heavenly Creatures was released to critical acclaim. Jackson and Walsh were even nominated for the Best Original Screenplay Oscar. They actually lost out to Quentin Tarantino for Pulp Fiction. Well, I mean, it's not a bad script to lose out to.

42:13Even though Heavenly Creatures didn't make huge profits, it had an estimated budget of five million US dollars and earned approximately five point four million dollars at the box office. So, you know, they've made their money back and then some. But more importantly, the impressive special effects gave Jackson a lot of respect and established wetter. And that led to big US studio Universal funding his next film, The Frighteners, which was a ghost story starring Hollywood star Michael J. Fox, who you may know from Back to the Future or Teen Wolf or a bunch of films from that era. That film just about broke even at the box office, but there were also 540 special effects used.

42:52So Weta Digital ended up taking a quite significant portion of the roughly 30 million US dollar budget, and that allowed them to massively escalate their operation. That's very interesting. So despite the fact that the film just broke even, quite a lot of the budget was spent on the company that Jackson owned. So he would have been making money even if the film didn't make money. I think that's a really important point to make in the sort of financial story here. So they'd gone from being one man with a computer to 35 computers and a team of 50 people. They wrote new CGI software. They purchased an entire warehouse to use as their soundstage.

43:27on stage. They even started roping in Kiwi locals, which will become a bit of an ongoing theme. Yeah, I think just about everyone who was a citizen of New Zealand was somehow involved in The Lord of the Rings, which we'll get to in a bit. But this is really the moment when you can see that Peter Jackson is creating a business, something that on the one hand that aids the creation of films, on the other starts earning him a significant slice from the budgets. And, you know, presumably any profits the film makes is on top of that. This, I think, is where we see the seeds of his fortune. And Weta wasn't just, you know, providing the special effects, they were building them from scratch.

44:01Jackson said, we had a New Zealand guy who'd built a motion control camera, a homemade thing he put together in his garage with all sorts of motors and wheels and cogs attached to it. It worked incredibly well. So, you know, it's not just a production studio, it's a kind of home of innovation, really. Yeah, even the seasoned veterans from Hollywood were very impressed with the skills of Jackson's New Zealand crews. A senior crew member they hired from George Lucas's effects house, Industrial Light and Magic, noted that New Zealand's were better than those from LA because they had worked for smaller budgets.

44:31So they had to do a more complicated range of tasks, had a greater range of skills than the people they brought in from Industrial Light and Magic when they had to rush to a deadline. And also, very importantly, they were also being paid a lot less than the Americans. So all that meant that they were able to produce CGI shots for significantly less, for around 17 ,000 US dollars each, which was about a quarter of the prices that Jackson was being quoted by American houses. So Weta looked like it was value for money. It began attracting other films, looking to do CGI well on a budget. For example, I love this film, Contact, the Jodie Foster film, sci-fi film in 1997.

45:08Oh, I remember that film. The special effects still look amazing. Yeah. So by the late 1990s, Jackson established himself as a reliable filmmaker who's created his own studio system, effectively, outside Hollywood. Michael J. Fox, who remember starred in The Frightener, said, Peter has created everything you can get in Hollywood, in New Zealand, everything technical. Otherwise, it's a different world, a much nicer world. He himself is an unusual figure, five foot six inches tall. It's not that small. Well, it's not Hobbit. It's definitely not Hobbit sized. But bearded, known for going barefoot, he's sounding more Hobbit-like as we go on.

45:45He dressed more like a fan than a filmmaker, it said, in the 1990s. One US producer actually said he personified the New Zealand culture, humble, friendly and full of can-do ingenuity. In many ways, quite Hobbit-like characteristics. Yeah, and talking of the Lord of the Rings, Sir Ian McKellen, who famously played Gandalf, he said about Peter Jackson, some directors are authoritarian, ordering you what to do. That's not Peter. He knows what he wants, but he does it in a gentle way. If he says it's perfect, you utterly know you can move on. But still, we've yet to get to Lord of the Rings. So let's talk about the journey to Mordor.

46:19Weta, the successes with Heavenly Creatures and Frighteners, all of this helped Jackson get his dream job at the end of the 90s, which is directing a remake of King Kong. And he even started production in New Zealand. But the backers Universal heard there was another guerrilla film out there, The Mighty Joe Young. So they paused the production. There's not room in the releases for two big ape movies. No, only one allowed at a time. So Jackson and his partner, Fran Walsh, needed a new project and they needed it quickly. So they'd been already trying to write a fantasy film, but they kept referring back to Tolkien's Lord of the Rings books for inspiration.

46:55And finally, they felt, you know, we keep referring to this book, so we might as well just acquire the rights and adapt it. Yeah, not straightforward, though. I mean, it's been around for many, many years. And there were attempts to make a kind of animated version many years before. Jackson had been a fan of the book since reading him as a teenager. His grandfather had actually fought alongside J.R.R. Tolkien in World War I. So he decided if he couldn't make King Kong, Lord of the Rings would be a close second. So he asked producer Harvey Weinstein for help. Now, there's a name. So Weinstein is now obviously a disgraced producer.

47:27He's in prison, having been prosecuted as a sex offender following the revelations around Me Too. But in the late 90s, when Peter Jackson approached him, he was riding high. He was one of the kings of Hollywood. Yes, one of the most powerful people in Hollywood. He also had a deal with Jackson that he would get first look at any new projects after his company Miramax had distributed heavenly creatures. So Weinstein called in a favour from a legendary film producer called Solzantz who held the rights to Lord of the Rings and offered Jackson a deal to turn the three books into two films. Yeah, so Jackson and Walsh spent 18 months researching and preparing for filming.

48:02Jackson bought an old paint factory for an estimated$2 million to turn into a soundstage even before the film was greenlit. But this deal completely fell apart. Weinstein decided it should just be one film, effectively halving their screenplay. And Jackson simply turned around and said no. Yeah, have you seen the size of the books? and I know if you read them when you were a kid, I did. They're big, big wedges of books. The idea of getting three of them as a trilogy into one film, you're going to lose quite a lot of the nuance and the detail. So Weinstein had already spent$10 million on the project, but he agreed that Jackson and Walsh could have three weeks to find a new studio before he booted them off the project completely and found a new director.

48:42So very much the time was ticking. This is one of these incredible junctures we come across in some of our billionaires where there's a small window of time, a little opportunity, and you either make it or you don't. But remember, you know, the budget for this is going to be a effects-laden fantasy thing. It would be a huge budget, three or four times anything Jackson had made before. So it was a risky venture. It wasn't going to be a guaranteed success. So three weeks to raise the budget was going to be incredibly difficult. In the first week, they decided to use it to make a 36-minute documentary about how they would make the film.

49:16So quite meta. So they had CGI animatronics examples. And then in a second week, they flew to L.A. for all these meetings to show off this documentary and to try and convince people to give them the money. And they rated their chances of succeeding as about 50-50. In a way, it's like any other way of trying to raise money for a business. You come up with a kind of PowerPoint presentation or a pitch deck. They just made a short film about how they're going to go about it. And it paid off. Luckily, Jackson had an in with a company called New Line Cinema. So in 1990, they hired him to write a script for a possible sixth installment of Nightmare on Elm Street, which is a hugely famous horror franchise.

49:54Yeah, the New Line producer Mark Ordetsky had asked Jackson to do this because he was a big fan of bad taste, which is helpful. And while that script was never made, Ordetsky and Jackson had become friends after Jackson slept on his couch while writing it in L.A. Now, this was a very different proposition to Nightmare on Elm Street. So this would be a huge investment for New Line. But they saw that there was a very small window of opportunity to acquire the rights to these books. So they just went for it with Odeski on board as a producer. Yeah, in a way, it's a bit like, you know, you've got three weeks to try and, for example, to get the rights to the Marvel comic universe.

50:28It's one of those things which is basically such a valuable, well-known property. An IP. Oh, yeah, we've got the intellectual property. This could be our last ever chance to get it. So they took a gamble and went for it. Bob Shea, who was the boss of New Line, said at the time, we still see a good risk to reward scenario. Having seen Peter's script and demonstration reel, we believe he has the ideas and, very important, the technology to make this a quantum leap over the fantasy tales of 10 or 15 years ago. Yeah, much to Jackson's surprise and delight, no doubt. New Line suggested they make not two films, but three.

51:02Jackson then suggested making all three films at the same time to save money, really pushing his luck here. But this was a huge risk for the studio. Jackson was, you know, critical success, special effects pioneer, but he had yet to actually have a box office hit. So if the first film was a flop, the other two films would kind of be languishing. You can see the rationale economically of doing all three films at one time. You don't want to get everyone out and then bring them all back, back and forth to New Zealand. Plus, with something like a trilogy like this, who knows whether the person who played this dwarf or that elf or Gandalf or whatever might be busy the next time you want to do the thing.

51:41So whilst you've got them, but it meant that they had to raise, well, nearly$300 million. New Line put in$130 million. That was the studio's most expensive project ever. So finally, in 1998, New Line announces a deal with Peter Jackson to make the three films. With his stake in Weta Digital, plus fees for writing and directing previous films and a percentage of the small profits those films had made, Jackson may already at this point have been a millionaire. Weta remained a private company, so the ownership model and the shareholdings is a little bit opaque. And his exact deals for his earlier films are also uncertain.

52:16But the Lord of the Rings deal was definitely huge. He was reportedly given a$10 million upfront fee for each of the three films, along with 10 % of the profit. So I think we can say for sure that in 1998, the Lord of the Rings deal made Peter Jackson a millionaire. So Peter Jackson is officially a millionaire, but going from a million to a billion is a lot of zeros. And, you know, one does not simply walk into the billionaire ranks in the same way one does not simply walk into Mordor. So how does he actually get to a billion?

52:50So at this point, Jackson may have been a millionaire, but there's no guarantee that The Lord of the Rings would be a success. Even when the production started in 1999, all three films weren't certain to be completed because Jackson and the studio still had to raise the rest of the 280 million budget required to complete these really epic films. So the reason why that happens is because movies, especially the big budget type that Jackson makes, are really expensive. So it takes money from a lot of different sources to pay for them. You can't just expect someone like New Line to pony up the cash because we're talking millions and millions.

53:24It's a bit like having a portfolio of investments if you're a studio. There's a reason why when you see a big feature film, there seems to be the logos of countless different studios. And the credit scenes go on and on. New Line, for example, needed 25 distributors to give a total of$160 million in advance. And they had to commit to distributing all three films. And if the films weren't hits, this could have resulted in financial disaster for some of them. So New Line organised a trip for the distributors and US cinema reps to New Zealand's capital, Wellington, to meet the cast, watch 30 minutes of the footage and see Jackson at work in his mini Hollywood studio.

54:01I would love to be on that plane. Wouldn't that be great? Anyway, that trip worked and the money was promised. But production in New Zealand, it's still a nascent market, still offered some big challenges. Of course, one of the things about Lord of the Rings are the settings. And New Zealand became this place where you could get any location you wanted. You want craggy mountain range done. You want a beach done. But the unpredictable weather meant that there were floods washing away sets. Actors were stranded. Snow could shut down filming. Sir Jackson spent 274 shooting days. That is a lot initially.

54:36and then another pick-up shoot taking the total to 435 shooting days with the crew working six days a week. So a real marathon effort, this. And actually, for some of the 40 filming locations, they actually had to build the road themselves to take the sets and actors to somewhere and then they had to dig them back up again to preserve the landscape. That's amazing. Also, the size of this project, though, had given a bit of heft to Peter Jackson's elbow in securing some hefty tax breaks to take the entire production to New Zealand. Because although the country had felt it had been burnt by tax breaks and they'd been abused, Jackson and Fran Walsh were instrumental in convincing the government then to offer new tax breaks up to 20 % for film productions.

55:18So this was a gamble for New Zealand and it massively paid off because Lord of the Rings kickstarted the nation's film industry in a huge way. And by 2023, it was generating about US$2 billion in GDP annually. And Lord of the Rings itself contributed massively. The three films were worked on for five years. They had a production team of over 2 ,400. And get this, 26 ,000 extras. Everything Peter Jackson needed was actually made in New Zealand. And he actually called it the world's largest home movie in the sense that everyone in New Zealand worked on it. And it was a nice atmosphere. Everyone felt they had some sort of stake in it.

55:56People were very proud of the franchise when I was there in the early 2000s. So once the films were made, the final challenge was marketing them. New Line's research showed that only 20 % of audiences knew anything about the 50-year-old books. New Line focused their advertising push online. So the internet's still a relatively new endeavour. But New Line's sister company, Warner Brothers, had a big deal with AOL, who was a major player in those days. And they were able to create an online buzz with their 24 million users on the network. Yeah. And so the first film received rave reviews. it grossed$868 million at the box office in 2001.

56:35The trilogy as a whole went on to gross$3 billion and its final budget had been$281 million. So I figure that roughly it made the box office 10 times what it cost to make. That big gamble really did pay off. And also critically as well because the films actually got a total of 30 Oscar nominations and it won 17 of them, including Weta's visual effects for each film. Yeah. Can I be a heretic here and say, I don't think the first two films are all that good. So, I mean, it's hard for me to judge because in the same way, you probably can't objectively judge a Star Wars franchise, being a fan. I grew up with Lord of the Rings.

57:13Okay. And I mean, if you go up to a millennial woman of any age and you ask her, are you an Aragon girl or a Legolas girl? Okay. That's Orlando Bloom versus Viggo Mortensen. That's Orlando Bloom versus Viggo Mortensen. You know, it penetrated pop culture in a way that I think very few fantasy films do. OK, so I've got to ask you that question. Well, OK, my theory is that when you're a teenage girl, which is when I watch the films, you are 100 % a Legolas girl. And as you get older and you start seeing the value of a, you know, a grown man who can run a kingdom and save the world, it's Aragon. It's got to be Aragon.

57:49This is fascinating. OK. Well, anyway, the critics liked it. And in fact, Return of the King, which for my money was the best of the three films, won 11 Academy Awards, which is a record with Ben-Hur and Titanic, amazingly, including some big ones for Jackson himself. Best Picture, Best Director, Best Adapted Screenplay. So he's officially an Oscar winner several times over, which is a very big deal for a filmmaker. So the Lord of the Rings franchise made Jackson the hottest, most in-demand director on the planet. And that meant the return of a dream project for him, King Kong. Yeah, so he signed a deal with Universal to write, direct and produce King Kong with an upfront fee for him of$20 million.

58:34That remains, we think, a world record for the highest fee paid to a director in pre-production before the film's even been made. So the budget ended up at about an estimated$207 million. But unfortunately for Peter Jackson and Universal, it was a flop. Yeah, 50 million in its opening weekend, which is considered pretty poor when you've spent that kind of money. But ultimately, these things have a long tail, particularly these days in streaming and wherever. You know, you keep on earning money because people can go back to it. Ultimately, it made$562 million worldwide. So was long term a success, just not the kind of Lord of the Rings kind of knockout.

59:13But luckily for Peter Jackson, the Lord of the Rings continued success was making him a very rich man. But he's not as rich as he thought he should have been. Peter Jackson reportedly made$200 million from the trilogy by 2005. But remember, this is a trilogy that grossed over$3 billion. And at this point, we need to have a quick look at how the economics, the profit sharing in Hollywood works. So in Hollywood, something like 10 % of the profits, these are what are known as points. And sometimes, as with George Lucas on Star Wars, someone might get points on the gross or total made in ticket sales.

59:48But Jackson only had points on the profits. So, yeah, that's the difference between the gross money you're making at the box office and the net. So when you take out all the other costs, what's left over? Although we know, as we say, it made$3 billion at the box office and it had a budget under$300 million. you've got to take out an awful lot of stuff. For example, there's the marketing spend which is normally huge to promote the film. There's the distribution, what you pay the distributors. There's the money the cinemas make from the films which is normally 50 % of the box office. Loads of other costs.

1:00:20So some massive films which seem to make big money at the box office actually on paper make a loss after you've taken away all those expenses. Still there are other ways a film can make profits which Jackson also would have been entitled to such as, you know, because this is the early 2000s, we're talking about DVD sales, or, you know, nowadays what we call streaming rights. But, you know, however he sliced the pie, in 2005 Jackson thought he'd been underpaid to the sum of about$100 million by New Line. Yeah, so he filed a lawsuit. The case was eventually settled. New Line paid Jackson an undisclosed settlement, but reports say it was estimated to be over$100 million.

1:00:58So after that settlement, Jackson was probably worth about$350 million. Still not there yet. Only a third of the way. Still, Mr Kiwi Nice Guy clearly has a bit of a backbone in him. Well, isn't it funny? It's all lovey-dovey until it comes to spreading up the money. I will say, however, that Peter Jackson wasn't spending it on flashy cars or super yachts. He was actually spending it on, you know, what is now called Wellywood, which is Wellington, New Zealand's answer to Hollywood. Yeah, in 2007, he bought New Zealand's formerly state-owned National Film Unit. There was a production house making news, documentaries, processing films.

1:01:32And he relaunched it as a state-of-the-art post-production house. It's where you sort of, you know, do all the bits to films after you've done the initial filming. He actually said, it's been about 16 years since I put my first film into the film unit to be developed. So I've had a long association with it. It's like an old friend. Yeah, so he bought a new soundstage, special effects workshops at the editing suite. He spent more than$50 million on it. And whether people would use the facilities to make films or not, Jackson was quite chilled out about it. He said, I'd rather have the money parked in a facility that a lot of people can use than have it sit in the bank.

1:02:03I value being a New Zealander who is able to make films in his own country. So we've had to spend our own money to increase the infrastructure. So he really is kind of like a Swingali of the New Zealand film industry. Definitely. He's continued to have success after Lord of the Rings. He had some beef with New Line, as we just heard, and the New Line boss, Bob Shea, said he would never work with Peter Jackson again and wanted to make The Hobbit films with someone else, but was told by his bosses, fix your Peter Jackson problem. Fix your five foot six barefoot filmmaker problem. Yeah, it would have been quite weird for somebody else to try and take that on.

1:02:38Yeah, I mean, that would have been a poison chalice for sure. In any case, Bob Shea was eventually ousted and Jackson ended up directing The Hobbit films. Obviously, The Hobbit films, in my opinion, nowhere near as good as Lord of the Rings, but still made a lot of money. But there was controversy over Warner Brothers persuading the New Zealand government to pass a law curbing the unions and giving the production another£25 million in incentives on top of a 15 % tax break. They've got a feeling here that the movie industry is the tail wagging the government dog here. And I think a lot of people are saying, hang on a second, enough's enough.

1:03:10And actually, documents that were released later revealed emails from Jackson saying that he was not, quote, anti-union, but also describing a union organiser as a snake and referring to the unionisation effort as toxic nonsense. Yeah. Anyway, the Hobbit trilogy cost$754 million. Amazing that it costs more than Lord of the Rings. I know. Strange. Because some of the special effects don't seem to hold up as well as a Lord of the Rings ones. I agree. But anyway, it also grossed$3 billion. So what do I know? And what do we know? People still went to watch it. And it's thought that Jackson made$20 million per film, plus 20 % of the profits after the studios took their freeze, so 20 % of the net.

1:03:49So even though it made billions at the box office, the films were not the same critical hits as the earlier trilogy. But his 2018 World War One documentary, They Shall Not Grow, was much loved by critics, as was his Beatles documentary for Disney, Get Back. Loved that Get Back documentary, gripped by it. But listen, This is called Good Bad Billionaire, this programme. So we need to figure out how he got to a billion. So far, we've only got him to$350 million. And let's go back to what we were talking about before, the company he set up way back when, Weta Digital. It was that that made him a billionaire.

1:04:24Now, before Lord of the Rings, Weta had really struggled to get visual effects staff to join them in New Zealand. Understandably, it's quite a big move for someone, especially if you're used to working in LA. So the co-founder of the company, Richard Taylor, said, I flew to the States and handed out flyers asking if anyone was interested in joining us in New Zealand. We got one person. Then after the first Lord of the Rings movie had come out, we were getting up to 40 applications a week. So people were eager now to join Jackson's company. And after Lord of the Rings picked up so many Oscars, Weta also ended up working on one to two films that were massive every year in the 2000s, including iRobot, X-Men First Class, Chronicles of Narnia.

1:05:03and then they got another Oscar, this time for the visual effects on Avatar in 2010, another huge film. That was a massive thing that, in fact, Avatar, I mean, the special effects was the movie, right? It was all about that. People went to see how they did the aliens. Yeah, exactly. And what's interesting is that James Cameron, who is director of Titanic and Avatar, he's not on our list of billionaires, but the person who did the visual effects is. Yeah, I mean, it just goes to show that whatever way you slice it, tech will always end up edging entertainment as being the way to make your billion.

1:05:33Now, it's hard to say what fee he personally received for each film that Weta Digital works on. But when you look at it one way, Avatar's production costs were$230 million, a lot of which, as we said, were spent on effects. Yeah, and Weta is quite an outfit now. They've got 900 staff on Avatar alone. They required 40 ,000 computer servers. So this is a huge expense and shows how visual effects are becoming a big part of where filmmakers were spending their ever-increasing budgets and he was right in the right place for that. And actually by 2023, Weta had worked on over 100 films. It's got 7 ,000 people working on an average of six films a year.

1:06:13It is quite the factory. And this is what really made him a billionaire through a pretty peculiar deal. In November of 2021, Weta Digital sold a portion of its business to something called Unity Software, which was a US-based video game. They paid$1.6 billion for the VFX tools development division of Weta Digital. Obviously, because video games depend quite a lot on visual effects. So this means the company was now split. Unity had the tech assets like Weta Digital, with the visual effects company renamed as Weta FX, with Jackson having the majority ownership. But Forbes, who compile a list and rank billionaires every year, estimated that Jackson made$600 million in cash and$375 million in shares from the deal.

1:06:59So that's$975 million total, given the fact he's already worth$350. In 2021, Peter Jackson is a billionaire.

1:07:18So that is how Peter Jackson became a billionaire. I'll be back soon with brand new episodes. I'll be back too. There's a little hint of someone we might be hearing from in the future. Yeah, well, we'll both be back with yet more cinematic stories plus billionaires from industries like oil shipping, online retail, technology, airlines, fashion, steel, pharmaceuticals, maybe even electric cars. If you want to get in touch to suggest a billionaire for us to cover or tell us what you think of them, you can email us at goodbadbillionaire at bbc.com or drop us a WhatsApp to 001 917 686 1176. That's goodbadbillionaire, all one word, at bbc.com or 001 917 686 1176.

1:08:02We've loved getting your messages and some of the billionaires you've suggested will be popping up in our new season. Make sure you follow or subscribe wherever you're listening to this so you get those episodes as soon as they drop. Good Bad Billionaire is a BBC Studios production for the BBC World Service. It was produced by Hannah Hufford and Mark Ward, and the editors were James Cook and Paul Smith. For the BBC World Service, the commissioning editor was John Manel.

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