The company behind ‘Terrifier 3,’ ‘Toxic Avenger’ finds success outside a broken system

Chris McGurk saw the writing on the wall for the independent film business more than a decade ago.

His distribution company Cinedigm released “Short Term 12,” starring Brie Larson, to rave reviews in 2013. Hardly anyone showed up to see it in theaters.

“We probably lost $4 million on it,” McGurk told the Times. “At that point, I said, we gotta stop doing this. Let’s see if we can build a new machine.”

So the firm pivoted its focus, spending years assembling and growing its collection of “new media” assets — streaming channels, a podcast network and its own ad technology.

It used those online channels, social media and its horror fan site Bloody Disgusting to wage a microbudget campaign for Damien Leone‘s gory underground killer-clown horror sequel “Terrifier 2” in 2022, grossing nearly $11 million at the domestic box office.

Last year’s follow-up, “Terrifier 3,” did even better for the Los Angeles-based company, now called Cineverse: $54 million in North American ticket sales and $90 million worldwide.

Now the company is trying to fill its release slate with similar intellectual-property-driven movies that can leverage that same system, including a Legendary-produced revival of the Troma cult classic “The Toxic Avenger,” starring Peter Dinklage (set for Aug. 29).

Cineverse’s success comes at a time when many people believe the traditional way of releasing movies — with broad-based, expensive national ad campaigns — is broken for some types of movies. Certain films still do good business, including big action spectacles, low-cost horror pictures and animated movies. But indie releases and mid-budget films are increasingly risky.

Those themes will surely be much discussed this week at CinemaCon, the movie theater industry’s annual trade show in Las Vegas.

With that in mind, I spoke to McGurk, who joined the company in 2011 after stints at Overture Films and MGM, about why his model is well suited to the digital age and what Hollywood might be able to learn from it.

How does your business model allow you to lean further into theatrical releases at this perilous time?

The all-in investment for “Terrifier 3” was less than $5 million in acquisition costs and marketing spend. If you take the theatrical marketing costs out of the mix, it fundamentally changes the economics, not just for us but for producers and filmmakers.

This is something that non-Hollywood people don’t understand. Often, for smaller movies, the marketing spend is a much bigger cost than making the film.

If you read a recent interview with Tom Quinn, CEO of Neon, that’s exactly what he said. They spent $18 million on “Anora,” and it was a $6 million movie. In our case, the producers were sitting behind a less-than-$5-million investment on our part, and they’re pretty happy right now.

We’ve already added three movies to our release schedule. One is “The Toxic Avenger,” which Legendary produced and we picked up. Our all-in investment in that will be less than $5 million.

And $5 million is low for a Legendary Pictures movie.

It was originally rated R, but we put some stuff back in it, and now we’re going to take it out unrated, just like we did with “Terrifier,” because we think there’s a fan base out there that basically is saying “screw it” to all the rules and regulations and the MPA [Motion Picture Assn.]. They want to see a raw, uncut movie.

The movie was in the can in 2023 and it went to Fantastic Fest and got great reviews, but the studios couldn’t figure out how to release it. So part of our campaign is, “We’re giving you the movie that the big studios didn’t want released or couldn’t release.” And we’ll go right after the “Terrifier” audience, even though this isn’t exactly a straight horror movie.

It’s a Troma movie.

That’s really the only way to describe it.

We also have “Silent Night, Deadly Night,” which is a remake of the movie in the ’80s that they banned from theaters. And then we also announced “Wolf Creek: Legacy,” the third in that series.

The goal is to maybe get up to as many as eight wide releases a year. I know it’s kind of counter to what everybody else is doing, but we’re going to keep applying our formula until it doesn’t work.

And that formula is what?

It’s really saying, we’ve got this collection of new-media assets that we own and control, so how can we leverage that in order to drive media value and awareness?

We think on “Terrifier 3” we probably created $5 million to $7 million in media value without spending a dime beyond the cost of producing the ads, which isn’t that much.

You’re able to do this because you are small by design, compared to the studio players.

And I think we’re willing to throw out all the rules and leverage these assets. We’re not going through a middleman.

If you’re the head of marketing at a studio, your new spending plan is to do everything you did before, but do a little less of it.

Studios often won’t do mid-budget movies because they’re so challenging financially. Are there ways to be smarter about marketing those films?

I think we’re onto something.

I hate to make the comparison, but it’s analogous to how Trump won. He went with the podcasts and very targeted spending, TikTok and digital spending and things like that. Whereas Kamala Harris followed more of a national media buying approach but lost.

The problem is, every executive in that business is trying not to screw up. So it really does stifle innovation and risk-taking.

How do you target the marketing for “The Toxic Avenger?”

We’re going to use our own ad technology to identify where the fan base is for this type of movie — the Troma fans. And we’re going to place ads to target that audience and market it on our podcast network as well.

The other thing that we’ve had real success in doing is creating stunts and promos that have attracted a lot of attention.

For “Terrifier 3,” we had a guy dressed up as Art the Clown walking through Times Square the week before our movie opening, and looking up at a billboard of the Joker. For “Toxic Avenger,” we did a stunt where they dyed the Chicago River green for St. Patrick’s Day and we had Toxie on a boat with his mop going around to clean it up.

You’ve got the Troma geeks, but you’ve also got Macon Blair directing, who has a following.

With “Terrifier 3,” our whole thing was, how do we expand the audience beyond the people who went to see “Terrifier 2”? So we spent a lot of time really focusing on the Hispanic audience and the African American audience, and almost half the viewers on opening weekend were Hispanic.

Then it was trying to figure out how we could have group attendance and increase our female attendance. And we did that in two ways.

One was, we tried to make Art the Clown this must-see character and not focus on the gore. Sort of what we did with “Hannibal” back at MGM, where we sold Hannibal Lecter as the James Bond of serial killers. And then toward the end, we really did the whole “You’ve got to see this movie, because everybody’s going to be talking about it.”

So we need to do that here. We need to make sure that Troma fans go to see the movie. But we need to expand out of that and focus on the comedy and the actors to try to get more of a female audience and more group attendance.

That’s key to the decision to go unrated, right? You’re going for a “You really shouldn’t be seeing this” kind of appeal.

The studios can’t really release an unrated movie, because they’re signatories to MPA. It gives us a real advantage, because we really don’t care.

There’s a space for filmmakers to do things outside the traditional system.

The thing is, we didn’t have final cut on the “Terrifier” films, and we were fine with that. Let him make his movie. That’s our approach.

When I was at MGM, I was trying to get Christopher Nolan to do [James] Bond, and the Bond producers would not give him final cut. Now he’s Christopher Nolan times five.

Well, now they’ll have another chance with producers Amy Pascal and David Heyman in charge of 007 for Amazon.

He’ll get final cut now, but it’s 20 years too late, in my view.

Anything to add?

Just one important point. I hated how everybody on Wall Street and in the entertainment press set up this big thing of “streaming versus theatrical,” with streaming being the villain, because it was helping to destroy this great institution in America.

What we tried to do with the “Terrifier” movies is show that there could be a symbiotic relationship between the two. We use streaming and the podcasts to basically help make a theatrical success in a unique and different way, and hopefully everybody can do more of that.

Stuff we wrote

FCC chair opens investigation into Disney and ABC for DEI practices. Federal Communications Commission Chairman Brendan Carr has opened an inquiry into Disney and ABC’s DEI programs, marking the second investigation of a major media company.

Jen Salke is out at Amazon MGM Studios. Salke said she would start her own production company after leaving her perch at the company. She had some major hits like “Reacher” but was criticized for her spending on shows including “Citadel” and for mishandling the Bond franchise.

How California legislators aim to sweeten film tax credits for Hollywood. The proposed legislation would increase to 35% the amount of qualified production the credit would cover. Los Angeles has been losing productions to other states and countries with generous programs.

Republicans grill PBS, NPR chiefs as Democrats mock proceedings. The two public media entities have become frequent targets in the GOP’s efforts to reduce government spending. There was grandstanding about drag queens and jokes about Elmo.

Inside Paramount’s bumpy sale: the president, a scion and a possible sheikh. “They have to get [the deal] approved,” said Mario Gabelli, a longtime Paramount shareholder. Gabelli and others are eager for a new chapter, but the Skydance deal has turned into a fitful slog.

ICYMI:

Number of the week

In a surprise, Jason Statham’s mid-budget action movie “A Working Man” was No. 1 at the U.S. box office last weekend with $15.2 million, topping Disney’s troubled “Snow White.” That live-action remake grossed $14.2 million, a 66% drop from a disappointing debut that generated poor word-of-mouth.

“A Working Man” comes at an interesting time for Amazon MGM Studios, which last week announced the departure of leader Jennifer Salke after seven years. Film head Courtenay Valenti, the former Warner Bros. film executive who joined Amazon in 2023, now will report directly to Salke’s old boss, Mike Hopkins.

Film shoots

Local shoot days were up 5% last week compared with a year ago, according to FilmLA data.

Finally …

Listen: Alison Krauss and Union Station released their first album in 14 years. No surprise, it’s excellent.