Peter Jackson: Lord of the Films

24:13Weta 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. But 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.

24:47So how does he actually get to a billion?

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27:45So 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.

28:19It'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.

28:57I 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. So Jackson spent 274 shooting days. That is a lot initially.

29:31And 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.

30:13So this was a gamble for New Zealand and it massively paid off because Lord of the Rings kick-started 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. It was a nice atmosphere. Everyone felt they had some sort of stake in it.

30:51People 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. Neoline focused their advertising push online. So the internet's still a relatively new endeavour, but Neoline'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.

31:31The 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.

32:08And I mean, if you go up to a millennial woman of any age and you ask her, are you an Aragon girl or 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. Okay. So I've got to ask you that question. Well, okay. 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 grown man who can run a kingdom and save the world, it's Aragon. It's got to be Aragon.

32:44This 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.

33:29That 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.

34:08But 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.

34:43But 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.

35:15So 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 dollars 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.

35:53So 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.

36:27And 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.

36:58I 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. 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.

37:33Yeah, 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.

38:06And 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. Anyway, the Hobbit trilogy cost$754 million. Amazing that it cost 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.

38:45So 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 I 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.

39:19there. Now, 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.

39:49Weta 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. And 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 the director of Titanic, Panic and Avatar. He's not on our list of billionaires, but the person who did the visual effects is.

40:21Yeah, 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 billions. Now, 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.

40:58And 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. It 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.

41:42But 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. So that's$975 million total, given the fact he's already worth$350. In 2021, Peter Jackson is a billionaire.

42:06We can't let his billionaire status go past without mentioning the controversy at the company. So Unity owns Weta Digital, but Unity said it was going to pull out of its agreements with Weta FX and that left 265 engineers redundant. So that was in 2023, so relatively recently. And Jackson's Weta FX have said they would try to re-employ as many of the workers as they could. But analysts have described the deal as terrible for Unity because it was just hard to take out the tech element from the company as a whole because they were so intertwined. So billionaire Jackson keeps the money and he has more films on the horizon.

42:44An animated film, The Lord of the Rings, The War of Rohirrim, is due to be released in 2024. Looking forward to that one. And he's also due to direct the sequel to Tintin. So there he is. He's still working. He's a billionaire. Now we just have to judge him. We'll judge him out of a series of categories, including wealth, villainy, rags to riches, and we'll rank him out of 10 as to how highly he scores in those. And then we'll decide, is Peter Jackson good, bad or just another billionaire? So let's talk about wealth. Is he richer than Smog the Dragon sitting on his mountains of gold? Good one.

43:20I like that. Well, one and a half billion, he's only just over a billion. So for the purposes of our list, there are two and a half thousand billionaires and the richest are over 200 billion. So he's entry level rich. So scores low on that. But he is one of only four filmmakers to make that list. The other ones are Steven Spielberg, George Lucas and newcomer Tyler Perry. He's a third of three New Zealand billionaires, certainly the most famous rich man in New Zealand. But in terms of wealth, I'm going to give him a one. Yeah, he's pretty entry level for me. I feel like I will give him slightly higher because, you know, being New Zealand's most famous rich man.

44:00I mean, it kind of sounds like a backhanded compliment, but it is a big deal. So maybe two out of ten for me. Okay, two out of ten on the wealth. Rags to riches. Now, this is how far have they come from their beginnings to where they are today. I think this is pretty amazing because his parents were quite working class people. He started making super low budget films, living with his parents. He's living in New Zealand, which is a long way from Hollywood. So to actually get to the top of the filmmaking from there, from that location and that background is pretty impressive. And also to stay relatively grounded, I would say.

44:38You know, he doesn't really spend his billions on flashy things. He just seems to spend it on filmmaking stuff. I would give him a 7 out of 10 for this. Yeah, I'm going to give him an 8 for this. Okay. Rags to riches. 7 from me, 8 from you. Now, what about villainy? Doesn't sound like much of a villain. No, he sounds like quite a cuddly guy, to be honest. He sounds quite hobbit-like, you know, kind of quite mild-mannered. but maybe, you know, when he slips the ring on, he gets all a bit weird. Yeah, he starts saying things like, unions? There shall be no unions in Mordor. Yes. But, you know, there were some cultural issues at Weta.

45:15Former staff alleged that Weta Digital's workplace culture included bullying, sexism, sharing of pornography and an inquiry was launched into all these claims. Yeah, a former employee described it as the world's most beautiful toxic waste dump, saying there were allegations of pornographic mailing lists hosted on the internet, staff openly viewing pornography in the studio. The review, which was completed in 2022, received 80 complaints of bullying, 120 of inappropriate behaviour, and 17 recommendations were made to improve the culture at Weta. One wonders, you know, when you've got quite a big organisation, how much a mild-mannered man who's off, you know, in his own thoughts, has control over an organisation like that?

45:56There's no implication he was a participant in any of those cultural issues either. Exactly. So I'm going to score him low on villainy. I'm going to give him, you know, one for villainy or maybe zero. Let's give him one just in case he did some bad stuff, which you find out about later. Yeah, I'm going to give him a one. He's still got time to slip the ring on. Yeah. Philanthropy. He's been known to give to UNICEF. He's been a donor to stem cell research, the latter after a young filmmaker called Cameron Duncan, whom he befriended and helped make some short films died of cancer in 2003. He also spent 10 million New Zealand dollars to save a historic chapel in Wellington from developers.

46:35Again, just just loves New Zealand, doesn't he? Yeah, you know, he clearly loves where he comes from. He's really doubled down. He's invested money back into it. He's created almost single handedly an incredible industry. And that in a way is philanthropy of sorts. I'm going to give him seven. I'm going to give him seven, I think, because I think, you know it's not technically philanthropy to reinvest in your industry but maybe it kind of is to build one from start in a way that contributes to your country's economic growth in the same way he has for New Zealand. So seven each on power this is a tricky one because obviously clearly important culturally is he powerful I'm sure he could make any film he wants to he's got enough money to finance it himself if you wanted to make a amazing you know if you wanted to make a another a Marvel MCU film, he'd be the first place you'd go to do the effects there or Industrial Light and Magic.

47:32So clearly a powerful person in New Zealand, for sure. A powerful person in Hollywood. But beyond that, I think pretty low. I'd give him a three. I mean, he was also able to influence the New Zealand government to change its tax policies to favour his projects. That's true. That's some power. I would score him slightly higher. Maybe I'll give him a four out of ten. Okay. All right. Three for me, four for me. Our last category is legacy. In New Zealand, I mean, an amazing legacy. He's created an industry, a sustainable one. There will clearly be statues of him if there aren't ready. And I think he's got a big legacy in Hollywood.

48:07I mean, I think back to the kind of films, fantasy films coming out around that time, Lord of the Rings really upped its game because there wouldn't be a Game of Thrones or House of Dragons without Lord of the Rings. That's a good point. There wouldn't be, you know, this huge boom or interest in fantasy or historical epics. It basically resurrected the Lord of the Rings franchise from just, you know, a book that nerds love. Apologies to anybody who loves the books. Into something that was an economic powerhouse. So I think in that sense, his legacy is really huge. You don't have to wonder, is there any appetite for fantasy anymore?

48:42You know it's there and he proved it and he unearthed it and monetized it. Exactly. You had people like David Lynch trying to do fantasy with his adaptation of Dune flopped. You know, the Lord of the Rings cartoon flopped. But Peter Jackson turned it all around. And it was a huge gamble because if you read the books and you're a movie exec, you're looking at it going, sorry, which elf goes where with what dwarf? Like, how is this going to be made on screen? How many characters do I have? What language are they speaking? Who's the bad guy? There seems to be tons. What's this giant floating eye?

49:12So Peter Jackson made that all a reality. So I think, you know, Legacy for me scores quite highly. So I think eight out of 10. OK, you've convinced me. You make such powerful arguments. I always get not bullied. Easily persuaded. I'm easily led on these things. So there we go. I'll give him eight for Legacy as well. So is he good, bad or just another billionaire? I think this is an easy one, isn't it? This is easy for me. He's a good billionaire. I just love the films. OK, Lord of the Rings was to your era what Star Wars was to mine. And George Lucas definitely was a good billionaire. So congratulations, Peter Jackson.

49:43You are a good billionaire. And please, I would love to visit Bilbo's house. So if you're listening to this, let me pull the lever and enter the secret dungeon that contains Bilbo's home. So who do we have on the show next episode? The richest comedian on the planet who got rich making a show about nothing. It's Jerry Seinfeld. Good Bad Billionaire is a podcast from the BBC World Service. And if you've enjoyed this episode, we've also got tons of other entertainment billionaires on the show. We've had Taylor Swift. We've had George Lucas. We've had Oprah Winfrey. Rihanna. Rihanna. Jay-Z. Jay-Z.

50:24I mean, it's showbiz central over here. Yeah, and tons of others. So you can get that from wherever you get your podcast. That's Good, Bad, Billionaire. This podcast was produced by Mark Ward with additional production support from Tamsin Curry. James Cook is the editor. For the BBC World Service, the senior podcast producer is Kat Collins and the podcast commissioning editor is John Manel. And it's a BBC Studios production for BBC World Service.

50:59America is changing and so is the world. But what's happening in America isn't just a cause of global upheaval. It's also a symptom of disruption that's happening everywhere. I'm Asma Khalid in Washington, D.C. I'm Tristan Redman in London, and this is The Global Story. Every weekday, we'll bring you a story from this intersection, where the world and America meet. Listen on BBC.com or wherever you get your podcasts.