HBO exiting movie joint-venture

NEW YORK (Hollywood Reporter) - HBO is getting out of the movie distribution business after a string of box office disappointments such as "Starter for 10" and "Rocket Science."

The films were released by Picturehouse, a 50/50 joint venture with Time Warner corporate sibling New Line Cinema, which has suffered its own box office woes in recent years. Picturehouse was launched in 2005, and enjoyed critical success with "Pan's Labyrinth." It recently released another Spanish-language thriller, "The Orphanage."

Although details are still being discussed, the specialty film venture is likely to move under New Line's sole oversight. Terms are expected to be finalized in the next three months.

According to all parties, the desire for change came from the new HBO regime that took over last spring after HBO chairman/CEO Chris Albrecht was fired in connection with an arrest for allegedly assaulting his girlfriend in Las Vegas.

"Trying to involve us at HBO in the day-to-day-management of distribution company is not the best use of our talents," said an HBO source.

The cable network will continue to have some involvement in Picturehouse, but its financial commitment would depend on the number of films it releases through Picturehouse.

Under its current structure, the cable network's HBO Films division and New Line both funnel projects to Picturehouse, which also acquires its own projects. HBO and New Line have the option in most cases to be financial partners on any particular Picturehouse film, as they were on "Pan's Labyrinth."

No layoffs are expected within Picturehouse, New Line or HBO, and the distributor is likely to increase internal production to make up for the reduced pipeline.

HBO Films plans to continue making feature-length films for its cable channels, and if films with theatrical ambitions are made, Picturehouse would be one of many potential buyers. Several sources said the company found movie marketing costs and the inherent gamble in theatrical releases an unwelcome burden in contrast to its profitable TV side.

Two HBO Films projects originally announced as Picturehouse releases, Kenneth Branagh's "As You Like It" and the Chernobyl drama "PU-239," bypassed theaters and were aired on the network. Another film, Jeff Bridges's "A Dog Year," is in postproduction and no longer slated as a Picturehouse release.

Picturehouse plans to go ahead with the release of at least one HBO project this summer, "Kit Kittredge: An American Girl" (based on the American Girl doll line), which Picturehouse president Bob Berney brought to HBO.

Reuters/Hollywood Reporter