Hollywood's Rogue Mogul: How Terminator Director McG Is Blowing Up the Movie Business

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The Germinator: McG is using his ever-expanding financial leverage to explore new ways to make -- and own -- his work. | Photo by Jill Greenberg

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The Antihero: The new Terminator's gritty aesthetic seems to set it on a new artistic plane. "In this world," says McG, "Everything's ability-based." | Photo by Jill Greenberg

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Early in January, McG invites me to see Spring Awakening on Broadway. Loaded up with Milk Duds and Twizzlers, he mentions he has locked up the rights and will direct the film version of the musical. The story is based on a 19th-century German play that deals with teen sex, masturbation, rape, and abortion -- a winning combination to be sure. But the revival brings the story back as a rock opera, complete with a Duncan Sheik alt-rock soundtrack and postmodern staging with characters occasionally speaking to the audience. It swept the Tonys, winning eight awards, and is currently a global phenomenon playing in Budapest, Helsinki, London, Tokyo, and Vienna. No surprise that a rock aficionado, music-video master, and pop savant is drawn to the material.

During intermission, McG resorts to Hollywoodese to explain his vision for the film. "I see it as a modern Splendor in the Grass meets Romeo and Juliet with the feel of American Beauty." He plans to shoot it in six weeks for $25 million.

As McG accumulates money, power, and, now, artistic credibility in Hollywood, he has become a genial triple threat to business as usual. "Because I'm protected by Terminator and 20,000 Leagues in the most conventional way, I have the freedom to ultimately control Spring Awakening," he says. "I can decide what to do with the production and how much it's going to cost. I can stop doing the dance with Warner and the other studios -- whom I adore, but the process always ends up with 17 development executives who constantly want to 'fix' it, or say they already have a hot-teen-sex coming-of-age musical in the fourth quarter."

McG is hardly the first to threaten this coup. The notion of unlocking the studios' monopoly is one that seems to be in perpetual turnaround. Three years ago, Steven Soderbergh made noise about subverting the system by digitally distributing his low-budget film Bubble, and doing so simultaneously on big screens, DVD, and pay per view. But McG isn't playing around with a shelved film-school piece: He's going to test the system with a super-hot property.

"The simplest expression of the idea is to raise my own money for Spring Awakening and do it all independently and just cut a straightforward distribution deal with an existing media conglomerate," he says. "This way, I retain an 85% ownership and can do it my way." As of press time, McG hadn't finalized the exact details on how he is going to finance Spring Awakening, but his options are many. He's mulling partnering with Apple or Nokia for an exclusive distribution deal through the Apple Store or Ovi, respectively. Or he might take a page out of the studio model and finance it through the presale of foreign rights. Or tap his network of fabulously rich contacts. "It's a terrific story and I believe in him," Vivi Nevo, the reclusive Israeli billionaire and media tycoon, told me. "If he brings it to me, I would definitely consider it because I like him a lot. It's powerful." Considering that Nevo is Time Warner's largest individual shareholder, the idea that he would back McG in the director's mission to do an end run around the company is powerful indeed.

McG isn't predicting the imminent demise of the studios. He believes they will still have a place funding their big-budget properties like the Harry Potters and Pirates of the Caribbeans. (And McG says he'll gladly continue to direct for the studios if the material excites him.) But when it comes to movies with manageable budgets and the potential for huge payoffs -- Slumdog Millionaire, perhaps Spring Awakening -- McG's friendly insurrection could ripple across the industry. During an earlier meeting, he had been remarkably open about how much he gets paid for his various projects. As he ran through the grosses, however, I realized he wasn't bragging about how much money he makes but revealing how much he was missing out on. As a hypothetical, assume Spring Awakening performs as well as Slumdog, that the $25 million movie grosses at least $300 million worldwide. In the old payout scheme (using the 20,000 League deal as a yardstick), McG earns his $8 million fee, against 7% of the gross, or $14 million, for a total of $22 million; after production costs, the studio takes $253 million. Under the McG plan, the studio gets $45 million for its distribution services; after costs, his cut comes in at $230 million, minus the expense of paying back any investors. He can then take that money to make 10 more movies of the same scale -- or start hiring other directors to make them for him. Either way, the making of a single film has expanded his power in the market exponentially.