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Danny McBride stars as Dundee’s Son In Dundee: The Son of a Legend Returns Home

#PacificRim2 May Not Happen Now

According to THR Legendary wanted to produce a sequel to del Toro's Pacific Rim, which was made under the Warners deal and turned into one of those films that grosses a lot ($411 million worldwide) while being so costly that a follow-up isn't a sure thing. Sources say Legendary liked that the original performed exceptionally well in China, where the company is heavily invested, but for now the project — which had been ramping up to make a release date in August 2017 — has been halted indefinitely and will be pushed back (if it gets made at all).

Universal Pictures' decision last week to let Thomas Tull's Legendary Pictures take its Kong: Skull Island project to Warner Bros. in the midst of a five-year production and financing deal is being read as a symptom of relationship trouble between the companies.

Several sources say there has been strain, in part because Tull kicked off the deal in 2014 with a couple of clunkers that he put through Universal's distribution system and then upset some at the studio who feel he has indulged a bad habit of wrapping himself in credit for hits that he merely helped finance. In this case, the film at issue was the biggest movie of the year to date, Jurassic World.

Known as a brash fanboy with a knack for raising big money, Tull, 43, brought potentially hundreds of millions of dollars in film financing to Universal after his relationship with Warners soured amid similar reports of tension over that studio's perception that he grabbed credit for Christopher Nolan's Batman movies and other hits on which he was a financing partner. (In a 2009 Wall Street Journal profile, for example, Tull said Legendary had made The Dark Knight.) "That will always be his biggest problem," says a source close to Warners. "Not just saying, 'Thank you.' " Legendary, Warners and Universal declined comment, but a source with ties to Tull notes that both studios "certainly decided to cash his checks."

In a twist, following Universal's decision to pass on Kong — with a budget north of $125 million — Warners is stepping in with a three-picture deal that kicks off with Kong; followed by a sequel to 2014's Godzilla, the biggest Warners hit originated by Legendary ($529 million worldwide); followed by a mashup that pits the ape against Godzilla. Warners is said to be kicking in 25 percent of budgets as well as marketing costs on the Kong films.

One industry veteran notes that the deal brings Tull "back to Warners, which was thrilled to see him leave." But a studio insider says a broader deal between Warners and Legendary won't happen in the foreseeable future because WB is happy with its financing partnership with James Packer and Brett Ratner's RatPac Entertainment.

It's still early days in the relationship between Legendary and Universal. But things got off to an inauspicious start as the deal required the studio to distribute two existing Legendary-backed films: Michael Mann's $70 million Blackhat, which was released in January and grossed a paltry $17.8 million worldwide, and Seventh Son, a $95 million-plus fantasy that reached only $111 million worldwide. (Universal lost no money on those films but spent manpower on releasing them didn't relish the association with them.)

Universal has invested in three Legendary projects: the $15 million horror movie Krampus (Dec. 4); the ambitious Warcraft, based on the video game (June 10); and The Great Wall, a Matt Damon sci-fi action film directed by Zhang Yimou for November 2016. (Tull shares "original story" credit on Great Wall.) Several sources say the latter two are seen as "problem movies" that have heightened concerns on the part of Universal studio chief Donna Langley.

Meanwhile, Legendary opted into two big Universal hits: It took 25 percent of Jurassic World, which was a smart bet because it has grossed $1.7 billion worldwide, and 50 percent of the moderately budgeted Straight Outta Compton, which has earned $181 million. Legendary also invested in Danny Boyle's awards hopeful Steve Jobs (Oct. 9).

Kong is not the first Legendary film in which Universal has declined to participate. This spring, the studio bowed out of paying for half of Guillermo del Toro's Crimson Peak (Oct. 16). The studio had said it would share the cost only if the film got a PG-13 rating; a source says Langley believed the movie cost too much for an R rating. With del Toro now having delivered an R, Legendary is footing the whole bill.

Some industry insiders assumed King Kong was a Universal property, probably because of Peter Jackson's 2005 film and the theme park attraction, but the material is in the public domain. Tull wanted Universal to kick in 25 percent of the new film's budget, and sources say some at the studio were excited about the idea of a new Kong movie. But "when you're taking a big swing like that," says an insider, "you'd better have your shit together." And Universal was not convinced that such was the state of Legendary's project. But Legendary attorney Skip Brittenham says Tull has talked for years of making a movie that would matchup Kong and Godzilla and asked Universal to let the project go to Warners.

Now that Legendary has moved Kong, that settles a brewing argument over the script's references to Monarch, the secret government entity in Godzilla that employed the characters played by Ken Watanabe and Sally Hawkins. Obviously, the inclusion of Monarch in Kong is a move to tie the ape into a hoped-for Godzilla "universe." Warners, which held onto the right to participate in any Godzilla sequel, did not relish the idea of a Godzilla element in a Universal-backed Kong movie.

A threshold problem is that Kong supposedly is much smaller than Godzilla. That fact was not lost on Universal. "There were funny comments about him having to be the size of the Empire State Building instead of hanging off of it," says a studio insider. But a source close to Tull says Legendary is confident it can come up with a rationale to explain how Kong and Godzilla can do battle — and possibly become allies.

Sources with ties to both Legendary and Universal point out that the deal between the two was engineered by NBCUniversal CEO Steve Burke just before the ouster of Adam Fogelson as Universal's film chairman. Burke was said at the time to have been enamored with Tull's company and to have promised him nearly unfettered access to Universal projects (minus Fast & Furious, Minions movies and Ted). Universal had no major financing partner at the time, and though it was showing signs of life with Fast & Furious 6 and Identity Thief, it also had costly disappointments like R.I.P.D. and 47 Ronin.

But after Universal's record-setting year at the box office, says a person with knowledge of the situation from the studio's perspective, things have changed: "Donna Langley is ascendant and carrying far more weight with [Universal Filmed Entertainment Group chairman] Jeff Shell, Burke and [Comcast chairman and CEO] Brian Roberts than Thomas Tull. That was not Thomas Tull's plan." And given Universal's dazzling run, says another person close to the studio, "They have the right to be really selective. They're riding on top of the world right now."

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