Specialty film business reeling after cutbacks

By Steven Zeitchik

NEW YORK (Hollywood Reporter) - This week's downsizing at Paramount Vantage, coming on the heels of major cuts at Warner Bros.' art-house divisions, has inspired industry executives to do some serious soul searching over studio involvement in the specialty-film business.

Paramount Vantage's marketing, distribution and physical production departments are being taken over by its Paramount Pictures parent, but the 2-year-old unit will continue as a production label.

Last month, Warner Bros. shut down its Picturehouse and Warner Independent Pictures units, after repurposing former standalone studio New Line as a specialist banner. Hundreds of jobs were lost.

"There are two ways of viewing all these changes: either that the market is falling apart or that this is a healthy shakeout," said one producer who has made movies for several specialty divisions.

He added that the third possible explanation -- and one he's tempted to embrace -- is a collective over-reaction by those calling the shots in the restructurings.

"I think you're seeing a knee-jerk reaction because too many of these companies were overbuilt," the producer said. "Everyone thought they can win an Oscar and gross $100 million, and that's not true. But there's still a market for specialty movies. It just may happen in the $25 million-$30 million range."

Meanwhile, four studio specialty divisions have remained relatively unaffected through the havoc -- NBC Universal's Focus, Disney's Miramax, Sony's Sony Pictures Classics and 20th Century Fox's Fox Searchlight. All would seem to have unique models or reasons for being.

Focus has a strong international sales arm, and Miramax's prestige movies differ substantially from the releases of its family-friendly parent studio. Sony Classics has a long track record of breaking out low- to mid-budget fare.