H'wood triest to re-invent role of niche divisions

The film community is trying to get Focus into focus. So far, it’s having little luck.

Last April, Universal execs announced the birth of an entity comprising USA Films, indie Good Machine and the fledgling Universal Focus. It would be a specialty arm of U Pictures to be run by James Schamus and his former Good Machine partner, David Linde.

In an era of mega-mergers, this one was a minor blip on the radar (the Good Machine acquisition was valued at less than $10 million). But the transaction attracted keen interest because it revealed the changed thinking of the majors toward the potential of the niche market, and how it may fit into the scenarios of their corporate parents.

Viv U Entertainment topper Barry Diller is said to be a leading supporter of the deal, but what exactly is he buying?

It’s a bicoastal outfit with an estimated $10 million in annual overhead and, with roughly 80 people on staff, one that dwarfs most studio specialty labels: Paramount Classics, Sony Pictures Classics and United Artists have staffs of 15 or so employees.

It’s much smaller than Miramax, which has more than 400 staffers. But as a bellwether for the film biz, Focus is like the Incredible Hulk: a mild-mannered company that could grow into a substantial force. But that potential depends entirely upon its relationship with the parent company.

No one associated with U or Focus would speak on the record about the company’s plans. But the larger picture is becoming less blurry.

Major studios continue to invest in the specialty arena, and not just for the prestige factor: At a time when production and marketing costs are spiraling upwards, they’re nixing midrange pics in favor of event films that cost more than $80 million and niche films that cost less than $10 million, many of which come with foreign financing and minimal risk.

That may indicate a stepped-up role for Focus.

After Viv U’s share price plunged to its 10-year low last week, chairman Jean-Marie Messier told shareholders that the company is committed to reducing pic production costs.

Focus is also meant to serve, in part, as a magnet for talent, keeping filmmakers like Ang Lee, Steven Soderbergh, Pedro Almodovar, Spike Jonze, Neil LaBute, Mira Nair and Todd Haynes — all have made pics for Good Machine or USA Films — in the Universal fold, and creating an incubator for emerging filmmakers and stars.

Auteur filmmakers don’t like to be pigeon-holed. Soderbergh, for instance, recently segued from “Ocean’s 11″ to the low-budget “Full Frontal.” Focus gives U the leverage to accommodate both kinds of projects.

The studio has also taken an unorthodox approach to matching filmmakers and projects, attaching Lee to “The Hulk,” Doug Liman to “The Bourne Identity,” and Curtis Hanson to Eminem vehicle, “8 Mile.”

That strategy might pay big dividends.

Schamus, for example, is the longtime partner of helmer Ang Lee; anyone who wants Lee is automatically in business with Schamus (who is himself an Oscar-nominated screenwriter and lyricist). That makes him a key player for Universal, since Lee is directing its “Hulk” feature, which is aimed to be the first of a franchise.

If the first film works, U can bank on an international franchise, a flood of merchandise and licensing deals, and upwards of $500 million at the global B.O.

USA also had plans for a directors’ company run by Soderbergh and including Spike Jonze, Alexander Payne and maybe Sam Mendes. (The directors’ company blueprint is still alive. Jeffrey Korchek, former head of U Pics business affairs, was recently hired away from Broder Kurland to hammer out a deal.)

So U hopes to lure talent to Focus, but will talent embrace the new entity?

Top filmmakers and their reps will be watching Focus with a keen, in some cases a skeptical, eye. After all, you don’t need to be part of a transnational media conglom to achieve sustained success in the specialty market. Witness Bob Berney’s IFC Films, distributor of “Y Tu Mama Tambien” and “My Big Fat Greek Wedding.”

Before the merger with U, USA Films was mobilizing strong deals with key filmmakers. Some of the directors listed above had their greatest success with USA under Scott Greenstein. But he has ankled USA and is being courted by other studios. Rumors indicate Focus will soon be hit by a wave of layoffs, eliminating duplications in acquisitions and other divisions.

One of USA Films’ top projects, the Polish brothers’ “Truth, Justice and the American Way,” just went to Miramax in turnaround from Focus.

Universal, which owns a share of the Sundance Channel, has long been invested in the specialty business. Focus was founded two years ago to handle niche titles from key studio suppliers like Working Title and Jersey Films. More recent deals with producers Kevin Misher and the Weitz brothers could also yield smaller pics that benefit from attentive, grass-roots distribution.

The first acquisition by the new Focus is Roman Polanski’s “The Pianist,” which cost sibling company Canal Plus some $40 million to produce. It has also bought North American rights to an untitled Sylvia Plath biopic toplining Gwyneth Paltrow as the tormented poet.

Focus is also forging ahead with a slate of pics from USA Films. This fall, it will release Haynes’ “Far From Heaven,” Francois Ozon’s “8 Women,” and “The Pianist.”

Under U Studios prexy Ron Meyer, U Pictures chair Stacey Snider and vice chair Marc Shmuger, the studio has prided itself on its ability to successfully market and distribute films of all shapes and sizes.

“Billy Elliot,” the inaugural title from Focus, earned more than $100 million worldwide. But only one Focus pic — “Brotherhood of the Wolf” — has since cracked the $10 million mark Stateside. The new Focus brings more firepower via Linde, who built Good Machine Intl. into a dominant sales outfit, and Jack Foley, former head of distribution and marketing at USA Films, among others.

But the logistics and personal politics of studio life are sure to be daunting for Focus.

Linde and Schamus report directly to Snider. How much independence they have is a key question in the indie business, where acquisition execs need to see a film before their rivals and make rapid, autonomous decisions.

“If anybody can figure it out and manage the egos and day-to-day operational problems, it will be those guys,” United Artists topper Bingham Ray says of Linde and Schamus.

But U brass are looking hard at the bottom line in every division, and the nascent Focus is no exception. Snider is said to be eyeing an annual $75 million budget for Focus. Though Focus will supplement its revenues through foreign sales, U’s budget is less than originally anticipated.

The merger also comes as the niche-pic business is grappling with a series of hurdles: the usual financial sources are drying up; it’s hard to book the requisite screens; and the ancillary market — traditionally indifferent to arthouse pics — holds more sway over greenlight decisions.

As a specialty exec at another studio says, “Once the indie execs leave the conference room, the video guys are like, ‘Who’s Catherine Keener?’ (co-star of recent Good Machine production “Lovely and Amazing”).

“The sheen is off really fast.”

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