The call for A-quality product at last year’s Cannes Film Festival didn’t fall on deaf ears in the independent film community. This year, New Line and Miramax stepped up the quality of their pix, and the Samuel Goldwyn Co. has boosted its ambitions to become a bigger, if not more diversified, player.
Observers say the true independent competitors are few, but the one they peg as the indie to watch is Savoy Pictures Entertainment. Formed last February by former Columbia toppers Victor Kaufman and Lewis J. Korman, analysts and industryites hope Savoy will fill the void left by Orion and Carolco.
Kaufman and Korman are still creating the domestic theatrical distribbery with $ 165 million in capital from Japanese giant Mitsui, the billionaire Pritzker family and investment banker Allen & Co. and others. Their purpose, they say, is to give indie filmmakers an alternative to the studio distribution systems.
Biz veterans Kaufman and Korman know the pitfalls of not having enough capital. They plan to dodge the mistake made by many indies in the ’80s, particularly Carolco, of having bloated overhead.
They say they’re betting on filmmakers like Frank Price and giving them the freedom needed to make the right kinds of films. Those close to them say they would like a type of operation that resembles Castle Rock — a classy group of filmmakers who create a positive work environment.
But unlike Castle Rock and other indies that depend on a major to distribute their product, Savoy plans to eventually be the key independent supplier of A-quality product, sources say.
“Savoy will have its test toward the end of the year,” says entertainment attorney Peter Dekom. “That’s when we’ll see whether they can open pictures. But they are clearly the one to watch this year.”
But Nigel Sinclair, managing partner of Sinclair Tenenbaum & Co., cautions that startup indie distribs like Savoy need a “huge amount of capital to serve the mainstream pictures on a broad basis. It’s too soon to say how well they will do. If, however, Savoy and other independents can retain a tightly controlled business plan, they can weather the liquidity crisis that still hovers over the industry this year.”
That crisis is even more serious for independents than some realize, industry consultants say.
John Hyde, an entertainment consultant and turnaround specialist, spent much of ’92 helping to restructure several companies, particularly independents, that fell into bankruptcy because they were poorly managed or undercapitalized.
“I’d still say there are two major problems facing independents at the moment. One is the inability of most independent films to get major theatrical releases in the U.S., and that’s especially any film that is not an A-quality film,” he says. “The other is raising independent financing.
“Because of the drastic cutback in the number of banks that are willing to do project financing, it is becoming almost impossible to produce an A-film on a totally independent basis,” he continues.
“Plus you have a very tight foreign market. The video and TV rights picked up in overseas territories tend not to bring in enough to pay for a proportionate share of the film costs, particularly in B-quality films.”
Trimark on the mark
Still, Sinclair says some indies like Trimark can pull it off. He sees Trimark as one undervalued indie “that has an unpretentious approach to marketing films. They are a very conservatively managed company in a niche business. They have no debt, are strongly placed in the market and have no illusions about being something they aren’t. If you want to find trouble ahead, find companies that operate the reverse of that.”
Dekom is quick to note that New Line is never one to be overlooked. “They should be interesting, even more than before since they are trying some new things this year,” he says. “They’re trying to expand their budgets and get into some more serious movies, basically A-titles.”
Sinclair considers New Line a swing vote and says it is too early to call their success in a new area.
While naysayers consider it a major mistake for 25-year-old New Line to deviate from the core B-product business it has clicked with, New Line chairman Michael Lynne says his critics shouldn’t judge too quickly.
“I don’t think we’re changing our core business philosophy and that’s the key issue. We’re not abandoning our traditional niches,” he says. “What we plan to do is enhance what we do.
“Now, because of our comprehensive distribution capabilities, we are in a position to acquire better product. With films like ‘The Player’ for example, our distribution channels have been validated by mainstream talent. We will maintain our financial approach, but because of the relationships we now have with filmmakers like Robert Altman and Louis Malle, it puts us in a very different position of recognition by our peers.”
As for the industry for independents overall, Lynne says, “It was in the doldrums all of ’92 until Thanksgiving, an incredible weekend. And that says something about particular product that is out there at a particular moment. It says there is a theater-going audience if the product is good enough to attract.”
That is what Miramax is banking on. Miramax co-chairman Harvey Weinstein says: “This year it’s A-titles for us all the way. We put out a lot of B-titles in the past, and we built a library on it (260 titles). But with the strength of the releases we had last year like ‘The Crying Game’ and others, that is where we are headed.
“Basically we plan to cut back and handle bigger product,” Weinstein says. “That is what the market demands.”
Meyer Gottlieb, president of the Samuel Goldwyn Co. agrees.
“I still believe as I have for the last three years that the only opportunity that really exists is for product that has worldwide appeal,” Gottlieb says. “We see ourselves as making A-product in the global definition. We believe all the pictures we’re involved with have international interest.”
He says Goldwyn’s strategy hasn’t deviated much, although last year he says the company rounded out its business plan with the acquisition of the bankrupt Heritage theater chain.
“I do believe the market will continue to be difficult for independents in ‘ 93 and in ’94,” Gottlieb says. “But to the extent Savoy is successful in executing their plan, I can see them being a meaningful force at end of ’94.”