Though gambles paid off, distribs wary of big pix

CANNES — One ring to rule them all.

It’s the theme of J.R.R. Tolkien’s “The Lord of the Rings,” and it made a great tagline for New Line Cinema’s Peter Jackson film, which has earned $850 million worldwide to date.

However, no one ever expected the phrase to apply to the foreign distributors who took a chance on handling the epic — and who are now blessed with a franchise that will help them withstand the down cycle that is battering many of their competitors.

When New Line Intl. prez Rolf Mittweg presented “Rings” to 25 foreign buyers in late 1999, he had to do some extraordinary wooing: in order to have a blockbuster, he said, they jointly would have to pony up $160 million in advance for the three installments.

Their support for all three films was mandatory since “Rings” was structured not like an orthodox studio picture — the Harry Potter series, for example — but like the “pass the hat” projects of old. However, unlike famous losers like “Cutthroat Island,” “Rings” would bring back serious money for its backers — at least so they were told.

The fellowship of distribs is a unique group, in that it’s unprecedented to be virtually guaranteed a huge hit for the next two years.

“It gives us a certain security and prestige to have two such major titles on our upcoming slate,” says Federico di Chio, CEO of Italy’s Medusa. “And to a certain extent, it takes the pressure off us to find other big blockbusters, even though we’ll absolutely be going for them if the right one comes along.”

Distributors are using their “Rings” bonanza for a variety of investments. They’re being cautious with acquisitions and prebuys — but bullish in other areas.

San Fu Maltha of FuWorks/A Film in the Netherlands says he’s using the money to build his library.

“I’m a 2-year-old company, so that’s what I need,” he says. He recently acquired a package of classics such as Fellini’s “8½.” He’s also beefing up his local production activities.

What he’s not doing is shelling out big money for big movies. Instead, he has the luxury of watching and waiting until prices for smaller, quality films come down to bargain levels. Recent pickups include “Bend It Like Beckham,” “Intacto” and “The Eye.”

“I would rather pay $50,000 or $60,000 for several smaller films than $300,000 for something bigger that I would also have to spend a lot of P&A on,” he says.

Mittweg says he expects many of the companies to use their “Rings” money to ensure survival in the difficult times ahead.

Last week in Cannes, “We had a reception for the ‘Lord of the Rings’ distributors,” he says. “They were obviously thrilled, and they’re obviously being careful with that money. It’s a sigh-of-relief situation — there were a lot of sleepless nights. It was a huge risk and they’re not going out to buy just anything.

“Most international distributors can wait until the TV markets become better,” Mittweg adds. “Sellers have to become more realistic.”

But while the film is a huge hit, these 25 distribs are not exactly rolling in dough.

For some, the “Rings” windfall simply cushions them against the disappointment of other 2001 big-budget gambles. For example, the U.K.’s Entertainment was one of the many global distribs that had a disappointment in “Ali.”

And many have output deals with New Line, meaning “Rings” was offset by disappointing pics like “I Am Sam” and “Life as a House.”

The “Rings” deal included high minimum guarantees for all three films in the trilogy, with overages as soon as the first pic went into profit. New Line Intl. is also trying to renegotiate the video royalty on “Rings,” upping the deal by 5%.

Distribs are particularly distressed about the video rethink, especially considering the New Line pics that did badly in recent years.

“Why would anyone agree to this?” says one. “When we lose money on their films, they don’t come back and suggest we pay them less.”

However, distribs looking to negotiate new deals with NL may feel they must go along with it.

Still, they’re not complaining. In a down market, these 25 distribs may be reluctant to gloat, but they’re pleased and relieved with their “Rings” lucre, and at Cannes they were putting it to good use.

During the May 15-26 festival, France’s Metropolitan was perhaps the most aggressive buyer among the “Lord” distribs — but even that company was concentrating on cherry-picking smaller films.

Metropolitan execs prefer pics with clear-cut theatrical and ancillary value rather than taking big risks on theoretical blockbusters.

In Spain, cash from the book-inspired film may, go, somewhat appropriately, into publishing: Spanish distrib Aurum is a subsid of publisher Zeta, and it’s likely that the “Rings” windfall will bypass the film biz altogether and go to the parent company.

The shingle has pulled out of pic production and lost New Line pics (outside the “Rings” trilogy) to TriPictures. In the short term, Aurum will have to buy selectively, since indie distribution sales to Spanish pay TV operators are currently halted.

Thanks to other factors, some “Rings” distribs are facing such bleak situations that even the Tolkien bonanza may not prove to be an antidote.

Thailand’s Mongkol Cinema, for example, raked in strong revenues from “Rings” but lately has wound down its buying after it was rocked by legal and financial difficulties, including being banned two years in a row from AFM. The company has faced charges of piracy from Hollywood, resulting in loss of face in the region.

(Adam Dawtrey, Don Groves, John Hopewell, Ed Meza, David Rooney and Andrea R. Vaucher contributed to this report.)

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