Toon titles leave Par sitting pretty in int'l split

D'Works deal gives studio access to tentpoles, CGI pix

By DAVE MCNARY

"Mystery solved."

That was a common reaction in the international distribution community to Dec. 11's stunning news that Paramount was buying DreamWorks.

Up until then, the town had been perplexed as months went by with Paramount's relatively thin slates for 2006 and 2007 -- particularly with September's announcement that Par was dismantling the UIP foreign distribution partnership and starting its own operation.

"You have to feed that pipeline with films that foreign exhibitors can actually use," muses one rival exec. "So what they've done is gotten themselves an instant slate."

Specifically, Paramount now has significantly more access to the types of films that work in foreign markets -- namely, CGI toons like "Madagascar" and Steven Spielberg-type blockbusters like "War of the Worlds." Those two films took in nearly $700 million overseas for UIP and were the third and fourth highest overseas grossers of 2005.

Under the deal, Paramount co-owns any movie that Spielberg directs or produces and has exclusive rights to distribute DreamWorks animated films.

Revamping foreign distribution has been the top priority for Rob Moore, Par's president of marketing and distribution, since he arrived on the job in August. He's acknowledged that the growth potential on the international side is a key driver in Paramount's strategy.

"The DreamWorks acquisition is a huge part of building our international business," Moore tells Variety. "Now we have the product to sustain our operation."

Moore expects to name an exec to head the new Par foreign distribution operation by the end of January.

Opening new offices will cost Paramount a significant amount.

"There's no other way to do it without people on site," one exec notes. "You can't rely on Hollywood or London to make those decisions, not when you're going with up to 1,000 prints in Germany or France. If you don't have a significant local presence, you may have a real problem with getting your share of the money from exhibitors."

Par has lagged on the animation front, opting to limit itself to occasional TV-based fare from Nickelodeon with limited foreign potential such as "SpongeBob SquarePants," which grossed a respectable $85 million domestically and a moderate $54 million offshore.

Now it will get to handle DreamWorks' "Over the Hedge" next summer after it's released "Mission: Impossible 3" in May.

"Everyone has come to realize that you have to have an animated title in your portfolio, just like you used to need a Western," one exec notes. "Foreign exhibitors are counting on you, particularly for those dry periods, to be a reliable supplier of three or four tentpoles a year. If you are, you have an advantage on getting good dating and enough screens."

Paramount now is light-years removed from the Sherry Lansing-Jonathan Dolgen regime, even though Dolgen departed in mid-2004 and Lansing left last March. Dolgen pioneered the strategy of selling off foreign rights in order to limit financial risk; Par chairman Brad Grey is far more interested in maximizing the upside in offshore territories.

Over the years, filmmakers and studio execs have expressed frustration with the UIP structure, which required UIP to simultaneously work on multiple projects from competing studios.

"I'm sure Paramount feels it can do better," one vet notes. "Going away from UIP is as much a matter of control as the actual economics. So if a picture doesn't perform, Paramount can say, 'OK, it's our fault.'"