Economix Blog: A Rating With a High Return: NC-17

Updated, 10:32 p.m. | with comment from Michael Cieply.

After looking at box office returns on investment by genre, I got interested in whether children’s films generate high returns.

There is no category specifically for such movies in the OpusData numbers I have; they usually seem to fall under the adventure genre, which includes family-oriented films like “Finding Nemo” and “Toy Story 3″ as well as films for older audiences like “Star Trek” and “The Day After Tomorrow.” But I do have the Motion Picture Association of America’s ratings for films in this data set, which includes movies made from 2003 to 2012 with at least $2 million in domestic box office returns. That allows a look at how G-rated pictures, a decent proxy for children’s films, perform at the box office:

Data shown refer to films with at least $2 million in domestic box office grosses. Most data come from OpusData, with some select entries from Box Office Mojo.

As it turns out, G-rated films, on average, book domestic box office returns that are about 2.4 times production budget and global box office returns that are about 5.3 times budget. The domestic box office R.O.I. is almost exactly the same as the average for all films, and the global box office R.O.I. is somewhat better than the average for all films (about 4.5 times budget).

I bet this measure substantially understates how well G-rated films perform relative to other films though, since children’s films like “Finding Nemo” offer a lot of opportunities for lucrative merchandising. Or as Yogurt might say, moi-chendizing.

In any case, you may notice from the chart above that the film rating associated with the highest box office R.O.I. is, by a long shot, NC-17. The worldwide box office revenues for NC-17 films average 6.3 times production budget. (Films that were NC-17 and “Not Rated” were disproportionately foreign films, which is probably why such a high share of their ticket sales were abroad.)

Of course, bear in mind that the average production budget for the NC-17 films in my data set is $8.5 million, compared with about $37.5 million for all the films from 2003 to 2012 for which I could find production budgets. And there are only five films in my data set rated NC-17 â€" out of nearly 2,000 films total â€" although I did find publicly reported production budget information for all five of them.

For comparison, there are a lot of G-rated films of the last decade for which production budgets are not public. Only 40 of the 68 G-rated movies in my data set had publicly reported budgets.

Addendum: My colleague Michael Cieply, who covers the entertainment industry, writes with this smart point:

A missing variable that would considerably distort the results is marketing expense. Most NC-17 movies are small films, and small films tend to have marketing budgets that are vastly out of proportion to their production budgets. It’s not unheard of, for instance, for an Oscar-style film to cost, say, $5 million or $10 million to produce, but $50 million or more to market. Big films, by contrast, tend to have marketing budgets that are closer to their production budgets. A movie that cost $200 million to produce might cost another $200 million to market around the world. If you’re spending 10 times the production budget to market a film, the equation, I think, goes tilt.

ArtsBeat: Motion Picture Chief Says China Will Pay Studios for Film Distribution

LOS ANGELES â€" Hollywood studios will soon begin receiving overdue payments for the distribution of their films in China, the Motion Picture Association of America chief executive Christopher Dodd said in a statement on Tuesday. About $200 million in payments had been withheld by the China Film Group, which oversees the importation of foreign films into China, while the group disputed its responsibility for the payment of a new value-added tax on theater tickets.

Mr. Dodd’s statement did not say whether the China Film Group would be required to pay the 2 percent tax, which it had sought to avoid. But the statement said the studios would be “paid in full” under a process that has already begun. People briefed on the matter, who spoke on condition of anonymity, earlier said the film group had been withholding payments due for films released in China over the last year. Those included “Life of Pi,” “Man of Steel,” and other high-profile movies from virtually all of the major studios in the United States.

ArtsBeat: Motion Picture Chief Says China Will Pay Studios for Film Distribution

LOS ANGELES â€" Hollywood studios will soon begin receiving overdue payments for the distribution of their films in China, the Motion Picture Association of America chief executive Christopher Dodd said in a statement on Tuesday. About $200 million in payments had been withheld by the China Film Group, which oversees the importation of foreign films into China, while the group disputed its responsibility for the payment of a new value-added tax on theater tickets.

Mr. Dodd’s statement did not say whether the China Film Group would be required to pay the 2 percent tax, which it had sought to avoid. But the statement said the studios would be “paid in full” under a process that has already begun. People briefed on the matter, who spoke on condition of anonymity, earlier said the film group had been withholding payments due for films released in China over the last year. Those included “Life of Pi,” “Man of Steel,” and other high-profile movies from virtually all of the major studios in the United States.

Blacked Out in 3 Cities, CBS Still Wins Ratings Race

The 11-day old blackout of CBS on Time Warner Cable systems seems to be having a minimal effect on the network’s ratings.

Last week, the first full week of blocked service for more than three million Time Warner customers, the network topped its competitors in total viewers and in all the ratings categories important to advertisers.

One reason perhaps: RadioShack reported Monday a “double-digit” increase in sales of high-definition antennas in the three big cities being blacked out â€" New York, Los Angeles and Dallas. (The company provided no specific numbers.)

Time Warner Cable has been suggesting that customers try watching CBS the old-fashioned way - on a broadcast signal to an antenna â€" since it removed the network from its cable systems on Aug. 2 in a dispute over what are known as retransmission fees.

CBS has maintained that it is seeking fair value for its content, but at the same time said the loss of Time Warner viewers would have minimal impact on its ratings - an assertion that was surely meant to reassure its advertisers.

Last week’s ratings would seem to bolster that argument. For the week, CBS averaged 5.51 million viewers, which was up 34 percent over the same week a year ago. Two weeks ago, before the blackout, CBS averaged a similar number, 5.78 million viewers; but August weeks traditionally are lower than July weeks.

CBS also ranked first last week among the broadcast networks with a 1.2 rating in viewers between the ages of 18 and 49 (up 20 percent over 2012) and a 1.6 rating among viewers between the ages of 25 and 54 (up 23 percent.) Those age categories are the two most attractive to television advertisers.

Much of the network’s improvement this summer has been tied to the drama “Under the Dome,” which continues to win its hour every Monday, though this week it declined to its lowest performances so far.

Media Decoder: One-Upmanship Continues After Publicis-Omnicom Deal

One-Upmanship Continues After Publicis-Omnicom Deal

TOKYO â€" For years, the two highest-profile chief executives in the advertising business â€" Sir Martin Sorrell of WPP in London and Maurice Lévy of Publicis Groupe in Paris â€" had engaged in one-upmanship across the English Channel as they jousted for industry dominance.

A big acquisition by WPP was always swiftly matched by Publicis. And vice versa. Usually with a “take that” kind of rejoinder.

So it was only a matter of time before Mr. Sorrell responded to the recent megadeal between Publicis, the third-biggest advertising company in the world, and Omnicom Group, the second-largest, to create a new No.1 that leapfrogged past WPP in revenue.

Mr. Lévy and Omnicom’s chief executive, John Wren, explained their merger as a play on “big data,” the trove of information that Internet companies hold about their users.

The riposte from Mr. Sorrell has been a flurry of smaller deals for agencies involved in digital marketing and, yes, big data. Since the Publicis-Omnicom deal last month, WPP has announced at least five acquisitions or investments â€" in Africa, Asia, Europe and Latin America.

And Mr. Sorrell had another trick up his sleeve: He joined LinkedIn, the social network for professionals. No, he does not appear to be job-hunting. Instead, he is using the platform to sound off, as one of LinkedIn’s “Influencers” â€"the network of business leaders and experts who write for the site.

Sure enough, Mr. Sorrell used his first post on Tuesday to take a swipe at Publicis and Omnicom.

“Others in our industry may take strategic leaps backwards for various odd or inconsistent or contradictory reasons,” he wrote. “We’ll remain focused, actually even more focused, on our long-established and consistent strategy, on future developments and on accelerating implementation.

“That’s how we’ll really add value to our clients’ businesses â€" while others find themselves distracted by internal stresses and strains.”

Mr. Sorrell said he was raising WPP’s five-year targets for revenue from fast-growing emerging markets and digital businesses to 40 to 45 percent each, from current ranges of 35 to 40 percent. New media and emerging markets each produce about one-third of WPP revenue now, he wrote.

He also had a nice line on the news of the acquisition of The Washington Post by Jeff Bezos, the chief executive of Amazon, referring to the paper as “The Washington Kindle” â€" a reference to Amazon’s e-reader.

Oh, and one other thing: Mr. Sorrell said WPP was hiring.

How Laura Poitras Helped Snowden Spill His Secrets

This past January, Laura Poitras received a curious e-mail from an anonymous stranger requesting her public encryption key. For almost two years, Poitras had been working on a documentary about surveillance, and she occasionally received queries from strangers. She replied to this one and sent her public key â€" allowing him or her to send an encrypted e-mail that only Poitras could open, with her private key â€" but she didn’t think much would come of it.

The stranger responded with instructions for creating an even more secure system to protect their exchanges. Promising sensitive information, the stranger told Poitras to select long pass phrases that could withstand a brute-force attack by networked computers. “Assume that your adversary is capable of a trillion guesses per second,” the stranger wrote.

Before long, Poitras received an encrypted message that outlined a number of secret surveillance programs run by the government. She had heard of one of them but not the others. After describing each program, the stranger wrote some version of the phrase, “This I can prove.”

Seconds after she decrypted and read the e-mail, Poitras disconnected from the Internet and removed the message from her computer. “I thought, O.K., if this is true, my life just changed,” she told me last month. “It was staggering, what he claimed to know and be able to provide. I just knew that I had to change everything.”

Poitras remained wary of whoever it was she was communicating with. She worried especially that a government agent might be trying to trick her into disclosing information about the people she interviewed for her documentary, including Julian Assange, the editor of WikiLeaks. “I called him out,” Poitras recalled. “I said either you have this information and you are taking huge risks or you are trying to entrap me and the people I know, or you’re crazy.”

The answers were reassuring but not definitive. Poitras did not know the stranger’s name, sex, age or employer (C.I.A.? N.S.A.? Pentagon?). In early June, she finally got the answers. Along with her reporting partner, Glenn Greenwald, a former lawyer and a columnist for The Guardian, Poitras flew to Hong Kong and met the N.S.A. contractor Edward J. Snowden, who gave them thousands of classified documents, setting off a major controversy over the extent and legality of government surveillance. Poitras was right that, among other things, her life would never be the same.

Greenwald lives and works in a house surrounded by tropical foliage in a remote area of Rio de Janeiro. He shares the home with his Brazilian partner and their 10 dogs and one cat, and the place has the feel of a low-key fraternity that has been dropped down in the jungle. The kitchen clock is off by hours, but no one notices; dishes tend to pile up in the sink; the living room contains a table and a couch and a large TV, an Xbox console and a box of poker chips and not much else. The refrigerator is not always filled with fresh vegetables. A family of monkeys occasionally raids the banana trees in the backyard and engages in shrieking battles with the dogs.

Mauricio Lima for The New York Times

Glenn Greenwald, writer for The Guardian, at home in Rio de Janeiro.

Greenwald does most of his work on a shaded porch, usually dressed in a T-shirt, surfer shorts and flip-flops. Over the four days I spent there, he was in perpetual motion, speaking on the phone in Portuguese and English, rushing out the door to be interviewed in the city below, answering calls and e-mails from people seeking information about Snowden, tweeting to his 225,000 followers (and conducting intense arguments with a number of them), then sitting down to write more N.S.A. articles for The Guardian, all while pleading with his dogs to stay quiet. During one especially fever-pitched moment, he hollered, “Shut up, everyone,” but they didn’t seem to care.

Amid the chaos, Poitras, an intense-looking woman of 49, sat in a spare bedroom or at the table in the living room, working in concentrated silence in front of her multiple computers. Once in a while she would walk over to the porch to talk with Greenwald about the article he was working on, or he would sometimes stop what he was doing to look at the latest version of a new video she was editing about Snowden. They would talk intensely â€" Greenwald far louder and more rapid-fire than Poitras â€" and occasionally break out laughing at some shared joke or absurd memory. The Snowden story, they both said, was a battle they were waging together, a fight against powers of surveillance that they both believe are a threat to fundamental American liberties.

Peter Maass is an investigative reporter working on a book about surveillance and privacy.

Editor: Joel Lovell

A version of this article appeared in print on August 18, 2013, on page MM22 of the Sunday Magazine with the headline: Snowden’s People.