In an age of mega-mergers, is there still room for the little guy?
Judging by the decision of Savoy Pictures Entertainment, the answer is a resounding no.
Savoy announced Sept. 15 that it was retreating from the feature film business in favor of a greater focus on television programming and station acquisitions.
Prompted by the sweeping changes in the entertainment landscape in the past few weeks, Savoy said it planned to reduce the amount of capital it’s committed to the motion picture business. It also will seek to minimize the risks involved in its existing projects by seeking to co-finance and possibly giving up distribution on some pictures.
Instead, it will concentrate on buying TV stations, alone and through its SF Broadcasting joint venture with News Corp.’s Fox Broadcasting, and on producing for the networks.
Savoy Pictures president-CEO Rob Fried said the company will continue production, marketing and distribution of feature films, but on a smaller scale.
For its big-budget projects, the company will seek co-ventures and split-rights deals. Fried and Savoy chairman Victor Kaufman said five such projects at the mini-major are currently close to signing pricey top talent, which is too expensive for Savoy to handle on its own. Each pic was expected to carry a budget in the $40 million to $60 million range, so Savoy will be looking for a partner.
One film headed for co-financing will likely be the much-ballyhooed, still untitled Sylvester Stallone project, for which Savoy is paying the actor $20 million. Another is the film of Tom Clancy’s novel “Without Remorse.”
Fried and Kaufman provided no details on potential partners. But they outlined another, more surprising alternative – to simply produce the pictures for another studio’s distribution web.
To fill its distribution pipeline, the execs said Savoy will fully finance six pics per year in the $10 million to $20 million range, along with some low-budget acquisitions and flat distribution deals with independents.
Savoy said no layoffs are expected and all executives will remain in place.
The decision to shift focus for the studio came after three years of weak releases, including “A Bronx Tale,” “Serial Mom” and the disastrous “Exit to Eden.”
Kaufman insisted that Savoy is not withdrawing from Hollywood.
“We are definitely staying in the movie business. We are just reallocating our resources and putting more of them into the area of broadcasting and TV production,” he said.
The move stunned Wall Street. “This is bizarre,” said one investment banker. “They raised all this money out of the public markets saying they had an artful touch in making movies.”
“This is basically total surrender,” said another investment banker.
In general, Wall Streeters were scathingly critical of the new strategy of focusing on TV stations. “This is ridiculous. This is absolutely the top of the market (for TV stations). The prices being paid are unbelievable.”