Studio pacts whacked
As they cut back, indies pick up slack
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If you were among the 50-odd shingles that lost the support of a studio overhead or production deal in the last year, take heart: You're in good company.Among the production outfits that currently count themselves among the untethered are Cameron Crowe's Vinyl, Paul Thomas Anderson's Ghoulardi, Roland Emmerich's Centropolis, John Hughes' Great Oaks, Kevin Costner's Tig, Michael Douglas' Furthur and Oprah Winfrey's Harpo.
All told, studios dropped 52 deals over the last year.
Even more startling is the fact that the list of the orphaned would be twice as long if it weren't for the rise of well-financed indies.
In the last year, Intermedia alone has signed first-look deals with nine producers and now supports as many as New Line Cinema.
These include Barry Levinson and Paula Weinstein's Baltimore/Spring Creek, Andy Vajna and Mario Kassar's C-2, Sydney Pollack's Mirage Enterprises and Mark Johnson Prods.
Also picking up the studio slack are the likes of Canada's Alliance Atlantis, Britain's Winchester Films and Germany's Kinowelt USA.
Their hope is that the combination of independent financing and prestigious development slates will allow them the opportunity to enter Hollywood's big-budget playing fields.
Variety's fifth annual roundup suggests that as studios cast an increasingly critical eye on who deserves their financial support, indies view the studios' loss as their gain.
The production deal has become less of a cushy pitstop -- although it still provides a soft landing for jettisoned studio execs -- and more of a nuts-and-bolts job in which recipients must prove their worth.
Virtually every studio in town has lightened its pact load in the last year, with New Line Cinema and Fine Line Features leading the pack by slashing their combined stable of producers by 50%.
Disney ran a close second: Where there were 31 term deals in 2000, there are now 18.
Over the last year, the studios have seen an 18% drop in the number of production deals. While this isn't the first year for cutbacks, studios have moved well past the point of merely curbing producer excesses and dumping vanity pacts.
In fact, compared to the free-spending ways of yesteryear, the attitudes of studio chiefs toward production deals seem to be based on a revisionist view of the Communist Manifesto: "From each according to his ability, to each according to my need."
"We're not paying these people to walk in the door every day," said one studio chief.
"On some deals we pay no overhead, others a lot less than standard. In exchange, we give them 15%-25% more if they get a movie going. We turn a fixed cost into a variable cost."
If that kind of talk sounds less like a description of a production deal and more like the strategy for a stock portfolio, so be it. Studio chiefs now arrange their producer pacts with an eye toward balance and diversification -- and they don't hesitate to get rid of any investment that fails to perform.
"In the eyes of studios, producers fall into two desirable categories," said one veteran studio producer. "There's the cash machines, sort of like 'ATM producers,' who have money, and whose job it is to inject cash into projects. Then there are the producers who are perceived to have value because they add both quality and financial control."
Forget those glitzy deals
Gone are the glitzy deals once accorded superstars or star directors whose presence on the studio lot was considered a major asset. The rationale was that if a star's company was based on the lot, he would be more likely to commit to studio projects. Despite the considerable outlay of overhead, however, the stars in question usually ended up making their films elsewhere.
Surviving deals of this sort involve very productive talent such as Tom Cruise who, with prolific partner Paula Wagner, retains his deal at Par.
Among those who fall between the cracks are top-flight producers who once provided a studio with bragging rights. However, when many of these arrangements were subjected to bottom-line scrutiny, the consensus was often that they cost more than they were worth.
Studios like Warner Bros., now under the harder-line regime of AOL-Time Warner, found themselves jettisoning star producers like Jon Peters, the Donners and Baltimore/Spring Creek over the last year -- companies that received big overhead deals in exchange for infrequently producing expensive movies.
While the return on these investments could be fantastic, sometimes they were just expensive.
Warners now focuses much of its attention on more modest shingles like Alcon Entertainment and Gaylord Films. Workhorses rather than show ponies, these deals bring production funding to the table, create high output with relatively low budgets and allow Warners to broaden its slate with quirky yet marketable movies while laying off risk.
Even some of the high-profile shingles that remain on studio turf have only been able to do so with the support of foreign equity.
Germany's Senator Entertainment pays the bulk of the bills -- including development and production -- for the Warners-based Canton Co., while Intertainment pays for 100% of Kopelson Entertainment's overhead at Paramount.
However, the financial support of outside investors doesn't inspire companies to outfit their offices with tropical fish tanks. These producers know that their backers can easily evaporate if they don't see their cash produce results.
Ashok Amritraj and David Hoberman's Hyde Park Entertainment has a first-look deal with MGM, a second-look with Disney and output deals around the globe, but the decor of its anonymous suite in the MGM building is limited to a bookcase overflowing with scripts and simply framed one-sheets of the producers' previous releases.
Only a few lavish deals
There are still a few big-name, top-dollar producers like Joel Silver and Scott Rudin whose lavish offices are still wholly supported by their studios, but they also have the firmly established track records to back them up.
Those producers who are coming up the ranks must still find a way to make their dollars stretch as far as they can.
That includes ordering one set of creative directories for the office, steering lunch meetings to the Rose Cafe rather than Ivy by the Shore and recruiting as many clever interns -- that is, free labor -- as their relatively modest offices will hold.
""You have to be willing to give your blood, sweat and tears to each project you have in development," said Seth Jaret, exec producer of "10 Things I Hate About You." The production arm of his lit management company, Jaret Entertainment, is 18 months into a two-year first-look deal with MGM.
"The purpose of the deal is to make profitable movies for the studio. It's not a personal payday, so everything must have energy, vision and passion behind it."
While today's producers may be fortunate to snag a studio deal of any size, the brightest among them aren't relying on mere luck and hard work for their future. Instead, they increasingly view studios as distribution entities that provide the leverage to woo outside investors.
Among the young producers in this camp are FilmEngine -- a partnership between Chris Bender and J.C. Spink's management company Benderspink, Josh Hartnett and Elden Henson's Roulette Entertainment and Florida entrepreneur Bill Shively; and Escape Artists, in which Todd Black and Jason Blumenthal are partnered with Steve Tisch, Patrick Wachsberger and Bob Hayward.
