The Tao of Tinseltown

Hollywood finds yin & yang of opportunities

By PETER BART, MICHAEL FLEMING

This is a moment of both angst and opportunity for Hollywood filmmakers.

Major cracks have opened up in the studio infrastructure. There have been regime shifts at three studios, bankruptcy looms over another, costs are being cut mercilessly and both production and development money is hard to come by.

Another cloud hanging over the biz is the uncertainty about the long-term viability of the traditional business model that sends pics through a pipeline that starts with the box office and wends through various video-on-demand, pay TV, DVD and other TV licensing windows.

At the same time, the overall pace of production is finally picking up among studios and indies, after setbacks from the WGA strike and the economic crisis. While there's agreement that the old system doesn't work, the filmmaking fraternity is doggedly finding ways around the system -- indeed, creating a new system.

The show must go on, after all.

Talent agents report that some of the encouraging signs are coming from outside the studios. While producers complain that the studios are choking off development funding, several outside sources are moving into the breach:

• Jerry Bruckheimer has closed a deal for a $20 million fund with Barclays Bank, which will augment the $10 million or so in development funds that Disney accords him.

• Producers Walter Parkes and Laurie MacDonald disclosed a deal last week providing a $10 million revolving fund from Imagenation Abu Dhabi. The money will fuel projects the husband-and-wife team produces under its first-look deal with DreamWorks.

• DreamWorks, of course, is being principally funded by Reliance Big Entertainment, the India-based company that's hatched development deals with Brad Pitt, Tom Hanks, Jim Carrey and other stars. Reliance is providing up to $2 million in development funding per star and has helped acquire some 10 projects thus far with the aim of co-financing their films.

While the majors are cutting development spending and, in two or three cases, putting many projects into turnaround, most are diligently filling their production quotas for 2010 and 2011. Publicly, studio chiefs consistently put out the word that there were too many releases in 2009 and predict fewer production starts next year, but nonetheless there is robust activity around town.

At Warner Bros., for example, six films are either in production or are about to start shooting. The pics represent a mixed menu, ranging from Clint Eastwood's "Hereafter" and Christopher Nolan's "Inception" to Todd Phillips' "Due Date" and Ben Affleck-helmed "The Town."

The slate includes such tentpoles as New Line's "The Hobbit" (in partnership with MGM) and "Green Lantern," as well as films from helmers as diverse as George Miller ("Fury Road"), Ken Kwapis ("Everybody Loves Whales") and Zack Snyder ("Sucker Punch").

Fox, Paramount and Sony all have at least six films skedded to start through summer, as does MGM, which plans to rouse itself after a sleepy 2009. The newly reinvented DreamWorks has nearly that many. Even Disney and Universal, which are in a period of transition due to the exec changes (see story, page 6) have healthy-looking slates.

All are promising varied fare, with more cost-conscious pricetags.

The production starts are helping allay the paranoia felt by many in the creative community stemming from the studio upheavals of recent weeks.

A few months after management changed at Paramount, new regimes were installed at Disney and Universal. Disney Channels chief Rich Ross took over the movie division from the abruptly ousted Dick Cook at Disney, and cutbacks were disclosed at its prestige-picture maker, Miramax. The studio's future will rely on the branded projects that come from Marvel Entertainment, Pixar and Jerry Bruckheimer.

At Universal, the rumor that started last summer finally came true, when chairmen Marc Shmuger and David Linde were deposed. Adam Fogelson and Donna Langley took the reins, at a time when NBC U might well be spun off by General Electric to another owner like Comcast. And MGM is trying to stave off bankruptcy, as studios contemplate making a play for its film library and franchises like James Bond and "The Hobbit."

Not surprisingly, the upheaval is taking its toll.

Talent agents feel lucky to book an actor client into a picture, even at a discounted salary, while a cash break backend as first-dollar gross becomes more elusive than ever.

Agents repping scribes say the WGA strike obliterated established quotes for all but the top-tier screenwriters. They are agreeing to take-it-or-leave deals from studios that call for lower pay, one-step deals and tighter deadlines for writers to deliver under.

Financiers and distributors of independent films are feeling their own pain. A palpable lack of acquisitions action at the Toronto Intl. Film Festival left financiers shaking their heads. Dealmakers felt less like brokers and more like matchmakers as they struggled to place a film with a distributor, even without much of a minimum guarantee or P&A commitment.

"There is a perfect storm going on here," says one veteran talent agent. "Studios have devalued the star system, as the DVD business goes by the wayside. Right now, it feels like there is just no oxygen, and we are all like fish, gasping to stay alive."

Moreover, dealmaking in the movie and TV biz has never been more complex than it is in an of ever-expanding exhibition platforms, industry vets say.

"All of the challenging aspects are also the opportunities," says attorney Ken Ziffren. "I think we're in a transitional phase, and what's happening is that the windowing of the product is changing with the effects of new technology."

Some feel that once the excess is washed out of the system a new Hollywood order will emerge, bringing fewer films, tighter costs.

Observers say some of the most encouraging signs are coming from outside the studios.

Todd Wagner, who with Mark Cuban co-owns 2929 Prods., just made a first-look deal with Bedford Falls partners Ed Zwick and Marshall Herskovitz, who were without one since Warner Bros. cut them loose two years ago.

"At face value, the studios are closing down first-look deals and making fewer movies, and they are not buying material," Wagner says. "That's exactly the time for someone like us to come in and position ourselves to acquire quality projects and be patient during a very difficult transition time."

Also, more artists are gambling on themselves.

In the wake of Todd Phillips' decision to wager his salary and gross that he would turn "The Hangover" into a hit with no stars in the cast and a $34 million budget -- sources said he will make $45 million when all the revenue is counted -- more filmmakers are gambling on themselves, particularly on projects that are important to them.

Last week, for instance, Michael Mann used his own coin to acquire the Susana Fortes novel "Waiting for Robert Capa," seeing it as the angle he needed to realize his long-held dream to make a film about the famous war photographer. Mann just set up the project at Columbia. A director who makes exquisitely visual adult-themed pictures at high budgets, Mann this time is determined to make the Capa film as a gritty, lower-budget effort.

When Steven Soderbergh set his latest film, the espionage thriller "Knockout," with Relativity Media, he waived his traditional upfront and gross salary so that the picture could be made at a $20 million budget. Soderbergh, who needed to make that deal because he cast the mixed martial arts fighter Gina Carano in the title role, will own half of the movie, sources say, and use that stake to surround the newcomer with established talent.