Titanic was for a long time the biggest film of all time at the box office – and at least one movie studio got an absolute bargain.

In the 1990s, James Cameron made the most expensive film in the world on three different occasions. Firstly, there was Terminator 2: Judgment Day, a movie that reportedly became the first to cost $100m to simply make (before marketing and distribution). Then he followed that with True Lies, which edged towards a price of $120m. Both times, he left studio executives nervous as to the amount they were gambling, but confident when they saw how it was being put on the screen.

And then Titanic came along, which cost about the same as those two films put together.

20th Century Fox, then, had signed Cameron and his production company – Lightstorm Entertainment – to a development deal at the studio in the 1990s, post-Terminator 2. Not uncommon: Warner Bros for one was regularly making talent deals, tying big name filmmakers to it and getting a regularly flow of notable films. Sony did the same a decade later.

Fox hardly got a regular flow in this case, but it did twice get the biggest movie of all time (Avatar was to follow). But at the point in particular that Titanic was in production, it was testing to the nerves of any studio executive.

It’s well known now just how it all turned out, but in the run up to the movie’s 1997 release, Hollywood had seen nothing in the modern era like it. Waterworld, from 1995, was deemed to have been expensive (around $175m) and taught the lesson of never shoot on water. Titanic was something else entirely. Long a passion project of Cameron, it was the kind of project that every studio wanted, but nobody wanted to pay for. Not least when they saw the size of the bill.

It came at a slightly tricky time for Fox, too. Sizeable bets such as Speed 2, Volcano (‘The Coast Is Toast’ remaining a prime example in how to do a tagline) and Chain Reaction hadn’t cut the cloth at the box office. Home Alone 3 – sans Macaulay Culkin – was thus ordered up, and Alien 4 prepped for 1997. And whilst Independence Day had mitigated the underperformers, it was hard to see how a film such as Titanic could actually make money when it was going to cost so much to realise.

Even by conservative estimates, it was going to match the bill for Waterworld. But more likely, it was shaping up to be the first film to ever cost $200m to simply make. A further fortune to market, given that it didn’t have proven movie stars (at that point) in the lead, with Leonardo DiCaprio and Kate Winslet in the infancy of their careers. Furthermore, Fox studio chief Bill Mechanic was coming under pressure from his ultimate boss – Rupert Murdoch – to get results. But Mechanic believed in Titanic, believed in Cameron.

The Titanic project was too the talk of the town, even though – despite its size – it was under a veil of secrecy. That just inflamed the tittle tattle of course. Leaked copies of the script made their way around, piquing the interest of other studios. They were eyeing too the fact that the film was likely too big a gamble for one studio. Even on True Lies, Fox had opted to bring in a partner to share the risk, with Universal picking up non-American rights to distribute that movie.

It was in 1996, with the production running over schedule and the budget going north, that Fox accepted it couldn’t pay for this one by itself, even though Mechanic wanted to fund the lot. His bosses were less keen. Talks therefore began with Universal about a similar deal to the one they’d struck on True Lies. But this time, Universal had troubles of its own, not least the aforementioned Waterworld, from which the ink hadn’t really dried yet. Thus, when Mechanic approached then-Universal movies chief Casey Silver about a deal for another water-based movie, he “couldn’t run away fast enough”.

As Mechanic would say of Titanic, “everybody thought the movie was nuts”.

But on the flip side of that, there was an opportunity. James Cameron’s last two films, after all, had done strong box office. And to buy up a slice of his next venture, whilst a different studio took the bulk of the risk? Understandably, others began sniffing around.

Paramount Pictures, under the stewardship of Sherry Lansing, had been pioneering in seeking partners to share the risk of big movies, most of the time selling slices of its own films. This time, it wanted in on someone else’s. It got word that Universal wasn’t keen on Titanic, and thus wanted to pounce before another studio had a chance to put in an offer. The pair had a relationship from Mel Gibson’s 1995 success Braveheart, where each had bought a stake from him. Lansing and her team started hitting Fox with calls,

But it turned out there was a little bad blood left over from Braveheart. The film had taken home the Best Picture Academy Award, but as its North American distributors, Paramount had taken its share of the credit, yet failed to deliver the necessary paperwork to ensure Fox could share the Oscar. Mechanic was a bit pissed.

Yet when Fox and Universal’s proposed partnership on Titanic didn’t work out, and with Paramount working the phones, Mechanic was asked by his bosses to see if there was a deal there.

There was. Cameron was happy, incidentally, to leave Fox to sort this out, given that he was knee deep in making the film itself. Fox thus gave Paramount five days to come up with a deal. One was finally concluded two hours after that deadline had passed.

And it’d be a smart one for Paramount too. In exchange for $109m, Paramount got the American distribution rights, Fox got everywhere else. At least that was the original agreement, but the the deal was about to get even sweeter for Paramount.

Upon finally getting hold of the budget, it called bullshit. It saw just how far over estimates the film was running, and Fox – to calm things and find a way forward – came up with a different deal. It agreed – and this prove costly – to Paramount’s insistence of a guarantee the budget had been properly vetted, and Fox allowed it to cap its input to half that vetted budget.

Said budget came to $130m. Paramount thus snapped its arm off, agreeing to pay $65m for the US rights, knowing that Fox had to stump up for anything over that budget figure.

And heck, did Fox have to. In all, the bill for the picture’s negative was $210m. Yet nobody could have seen the sizes of the incoming grosses. Notwithstanding the many further delays, that saw the picture pushed back to the end of 1997, Titanic smashed every record in front of it.

In the end, the US box office take for the film was $659m, one of the highest grossing films in Paramount history. Fox didn’t do too badly: its slice of box office revenue was $1.5bn, and both studios also brought in a mint on the home video release.

Hindsight, of course, is a wonderful thing. Yet Paramount, without question, got a hell of a deal.

And this time, both studios got the Oscar glory…

Quote for this article sourced from the excellent book Leading Lady: Sherry Lansing and the Making of a Hollywood Groundbreaker, which is available here.

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