June 6, 2008 / 8:46 AM / 11 years ago

Specialty film business reeling after cutbacks

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.

And Fox Searchlight has been effective with its trademark approach to platform releases — though Searchlight’s more commercial releases, such as “Juno” and “Street Kings,” suggest it doesn’t bear all the classic hallmarks of a specialty division.

In times past, the modestly budgeted adult-oriented movies now dubbed specialty films were handled by the same marketing and distribution teams that handled all of a studio’s other pictures. Executives of the time believed the audience for such films was sizable enough as to warrant the films’ care and nurturing.

But production costs for this indie fare have risen dramatically in recent years as have marketing expenditures. Marketing outlays on the Oscar-winning Vantage/Miramax drama “There Will Be Blood,” for instance, approached $70 million. That kind of outlay suggests it’s “a logical decision to have the studio take over more than they used to,” one top industryite said.

Still, it’s too soon to say there will be fewer specialty titles unspooling collectively this year.

“This doesn’t necessarily mean that there will be fewer specialty movies generally,” indie-world veteran Jonathan Dana said. “It just means there may not be as many released by studios.”

Such newer companies as Overture and Summit could compensate for slate downsizing among studio specialty divisions. Still, anxiety is palpable.

“I know a lot of people are feeling terror,” a specialty film insider said. “It’s tempting to want to see a trend here, but the Time Warner and Paramount news (may be limited) just to those companies.”

Reuters/Hollywood Reporter

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