More than Spidey in Sony's web
Tentpole swings into action amid studio's strategic shifts
For the first time in years, the studio has released five profitable films in a row including Columbia Pictures' "50 First Dates" and "Secret Window," and on June 30 it's betting its bank on "Spider-Man 2," the follow-up to the 2002 blockbuster that earned more than $800 million worldwide.
After a hit-and-miss -- albeit profitable -- year, Sony closed out 2003 with two risky and pricey pictures, "Big Fish," an epic fantasy in the hands of Tim Burton, and "Something's Gotta Give," about middle-aged love, which didn't prove so risky after all.
As of June 13, Sony was second in studio market share, behind Warner Bros., having earned $451 million for the first six months of 2004 (compared to $461 million for the same period last year). "Spider-Man" could shoot the studio to the top.
But before there's too much back-slapping, challenges remain:
- Revolution Studios, Sony's biggest movie supplier, is nearing the end of its distribution contract, and its future at Sony is unclear.
- Sony spent $603 million on marketing in 2003, considerably more than any other studio.
- Besides blockbuster fare like "Spider-Man 2," the studio is releasing quirkier films this year, such as "Closer," directed by Mike Nichols, and James L. Brooks' "Spanglish."
- Sony is investing heavily in its animation division, though it won't see any returns until the first film is released in 2006.
- This year's slate is leaner than in years past: 17 films are being released, compared with 21 in 2003 and 26 in 2002.
Management-wise, following last year's retirement of Sony Pictures chairman John Calley and the brief stint of leadership by troika by vice chairmen Amy Pascal, Jeff Blake and Yair Landau, the new ruling team of Pascal (whose title is now chairman of SPE's Motion Picture Group) and SPE chairman Michael Lynton, who was appointed in January in part to bring financial discipline to the studio, seems to be gelling more successfully than Hollywood had presumed -- even if Lynton's role as a high-level strategic thinker leaves some scratching their heads.
Part of the reason is that Pascal's role has been left largely unchanged: She still decides what movies get made.
Although Pascal and Lynton consult on every film, Lynton's word is advisory; Pascal's is the last.
As Pascal explains: "If I wanted to make a movie and Michael said, 'Gee, I really wish we weren't making that movie,' I'd say, 'Well, I really believe in that film, so we're going to make it, and you've got to trust me on it.' "
Lynton, who in an interview splits his time between assessing the complexities of today's media landscape and bolstering Pascal, adds: "Nobody would presume anything other than that Amy picks the pictures."
Even so, the duo goes to great lengths to maintain that they are partners, lest it appear otherwise.
But it is hard not to see their relationship as the Business Guy/Thinker backing up the Artist.
Lynton, the former head of AOL Europe and chief executive of book publisher Penguin Group, who also did time at Disney, is more conversant with Sony Corp. USA chairman Howard Stringer, who appointed him. Pascal is the filmmakers' It Gal.
In addition to Lynton, last month Bob Osher, former co-president of production at Miramax, was brought on board.
Ostensibly, Osher, who is overseeing business affairs, replaces former Columbia Pictures president Peter Schlessel, but the execs' backgrounds are radically different. Schlessel came to Columbia from its sister company, Screen Gems; Osher has been training with the Weinstein brothers. (Previously, he worked at Turner Pictures with Pascal, and prior to that, with Lynton at Disney.)
A studio exec who has worked with Osher describes him as someone who "pushes and pushes to get things done."
"He's a bit of a bulldozer," the exec says.
(Osher is praised in the industry for being responsible for wrangling "Shakespeare in Love" back from Universal and making it a Miramax production instead of a co-production.)
Indeed, one producer on the lot already fears that Osher is "applying the Miramax way" to Sony. Osher maintains he is still taking things in and "getting up to speed."
Many measures that have led to turning the studio around were in place before the new team was arranged.
Both 2002 and 2003 were profitable years, despite some film misses and a swollen marketing budget last year.
Jeff Blake, who throughout the management shifts remains an integral part of the studio's machinery as head of worldwide marketing and distribution, says he's looking hard at promotional partnerships and alternatives to costly TV advertising for the future.
The studio's operating profit dropped 40% for the fiscal year ended March 31 to $320.5 million, although that is compared against the "Spider-Man" year.
But there's no "Spider-Man" on next year's slate (the third installment is due in 2007). As the only studio without the distribution synergy of a network, Sony can't afford to be complacent.
In recent months the studio, which in the past has been criticized for wild overspending, has been holding accountability meetings ("assigning blame sessions," a source close to the studio calls them) and is continuing to cut costs.
On a macro level, Lynton has been charged with making the relationship between Sony's digital and content divisions more meaningful, and exploiting the growing importance of home entertainment.
While Wall Street analysts charge that Sony's lack of complete vertical integration is a hindrance, Lynton disagrees.
"Having worked in these enormous companies, I can tell you that it's either a distraction to have all that -- whether it be a network or what have you -- or it doesn't allow you to be genuine in your motives, because you're always slightly ulterior and doing things for another reason," he says. "Our position is unique in the sense that we live and die on how well our movies do and how well our TV shows do. And that really focuses the mind."
Pascal spiritedly adds: "We're a studio. We're not a media company!"
Not that Sony is navel-gazing. The company was recently in exclusive talks to acquire MGM, including the Lion's impressive film library, for an estimated $5 billion, though the deal-making has come to a standstill, and MGM has opened up the table to other companies, such as NBC and Time Warner.
The studio has always lived by its movies, but its approach to making them has become more strategic, and even, arguably, restrained -- at least by Sony standards.
Although "Spider-Man 2" got the no-holds-barred treatment -- Pascal admits the film's budget is "in the range" of $200 million (some say it's more), and the movie has tied up much of the studio's resources for the last several months -- the rest of Sony's summer slate is notably less extravagant.
The studio is only releasing three other films (Revolution Studios' "White Chicks" and "Little Black Book" plus Screen Gems' "Anacondas: The Hunt for the Blood Orchid"), none of which comes close to Spidey's scope.
Compare that with last summer, when Sony served up lavish fare such as "S.W.A.T." and the "Charlie's Angels" and "Bad Boys" sequels; or in 2002, when "Mr. Deeds," "XXX" and "Men in Black 2" went back-to-back.
Part of the rationale, Pascal says, is to make room for "Spider-Man 2," but the strategy is also the result of a growing confidence she says she has found from learning from past mistakes, when the pressure to fill up a slate and rush films didn't pay off.
Furthermore, co-presidents of production Matt Tolmach and Doug Belgrad have been in their jobs over a year now, having served several years in the production ranks at Sony (Belgrad started in 1989; Tolmach came over in 1997 after working with Pascal at Turner), providing Pascal with a mature team. Agents add that Columbia production execs are more empowered than at most studios.
While the 2005 slate is hardly lacking in big names, there are only two splashy action movies ("Stealth," which Rob Cohen is directing, and Revolution's "XXX2"). The rest of the lineup is a roster of comedies and dramas, including Jim Carrey in "Fun With Dick and Jane"; Nicole Kidman and Will Ferrell in "Bewitched"; and Rob Marshall directing "Memoirs of a Geisha."
Despite such star power, Pascal maintains the studio is sticking to its rule of paying no more than 25% of a film's gross to stars, directors or producers.
Asked if it was tough to hold multimillion-dollar-players to the line, Pascal says, "I don't know if it's a matter of being tough or just clear. What's really hard is being clear, even if clear means big, just not enormous."
The recent revival of TriStar as an acquisitions and distribution label will further allow Columbia to focus more exclusively on mid- to big-sized films. One of TriStar's first releases will be "Lords of Dogtown," based on a documentary about skateboarders, which Columbia is producing.
As for Revolution, although this year is proving more successful than last, whether the company will retain as large a presence on the lot when its contract expires in 2006 is up in the air.
Sony execs dismiss this notion. "We're in business with them for a long while to come," Lynton says.
But for the moment Sony is focussed on only one thing: "Spider-Man 2." Just one week away.
