As 'Wars' end, Lucas empire is at a crossroads

It’s an entertainment empire, spanning 1,700 employees and seven divisions that notches up some $1.2 billion in annual sales. It encompasses movies, visual effects and lots and lots of real estate. In the next few months, it will release a film representing a $300 million investment, and will open a grand edifice that promises to change the face of San Francisco.

Yet it all comes down to one 60-year-old idiosyncratic billionaire whose tastes and moods defy predictability.

George Lucas answers to no man. Indeed, his autonomy is unique in the history of the entertainment industry: Even Walt Disney had to cope with his skinflint brother Roy.

Lucas turns 61 in May, the same month “Revenge of the Sith,” the sixth and probably last “Star Wars” picture, makes its bow. But the visionary filmmaker has no clear plans to make any more films — at least none of the obviously commercial variety.

And while he has started up several self-sufficient companies — effects shop ILM, sound firm THX, etc. — it’s not clear that he will turn his focus to any of them. Instead, his peripatetic mind seems eager to blaze new frontiers.

The question is what that means for his corporate and creative empire.

Lucas says he wants to go back to the things he was exploring as a film director in his late 20s and making movies “that nobody wants to see.”

He’s referring to the moody sci-fier “THX 1138,” his first feature. After that 1971 film, recut by Warner Bros., failed at the box office, he followed with 1973’s “American Graffiti,” a $777,000 ensemble piece that took in $140 million worldwide for Universal.

Since then, he’s carefully tailored Lucasfilm to his own needs and desires, especially his desire for independence. It’s no accident that Lucas and Lucas alone holds the fate of his company in his hands. That’s exactly how he’s always wanted it.

He doesn’t report to shareholders, stock analysts or nosy financial reporters, and he funds his own movies, so he’s not accountable to investors.

That is part of why Lucas left L.A. in the first place. Away from the Hollywood filmmaking community, which he shuns, he’s been able to build his empire without constant scrutiny — and gossip — from the rest of the industry.

Even on the set, Lucas is noted for never taking “no” for an answer; he’ll ignore counsel from his effects supervisors and tell them to fix the shot in post. If that means millions in extra costs, well, it’s his money.

His personal fortune is estimated at $3 billion, with several hundred million more sure to flow his way from “Sith.”

Money doesn’t seem to be his focus, though. If it were, he could have earned a few hundred million more by taking his company public while retaining enough stock to rake in future profits.

He says he wants to make niche movies, but has artfully kept his options open. Not only has he avoided announcing any specific plans for himself or his company, he’s taken no steps (like announcing an IPO) that would commit him to any course of action.

The company reorganized some months ago with an eye toward succession, but a spokesman says Lucas has no plans to retire.

Cool hand Lucas

“The mystery man remains as mysterious, unpredictable and exciting as he’s always been — once you get used to him,” says former Lucasfilm exec Sid Ganis, who admits with a laugh that Lucas does take some getting used to.

Ganis was a senior VP at Lucasfilm before going on to senior posts at Paramount and Sony.

“Lucas is so intensely aware of what he’s doing and everything he’s doing. Every once in a while I’d scratch my head, even say out loud, ‘Are you sure you want to do that?’ But right or wrong, he’s sure what he wants to do. It’s in his nature to plan it all, even if he doesn’t know how he’s going to get there,” Ganis says.

So where is he going?

Lucas says this is the end of the “Star Wars” movies, a franchise that has spanned six feature films with combined worldwide theatrical gross, including rereleases, of $3.4 billion, with Fox as the distrib.

That’s not counting revenues from homevideo, foreign and domestic TV deals, a TV special, an animated series, videogames and some $9 billion in licensed merchandise.

Fan sites are buzzing about a possible “Star Wars” TV series, but the feature films are ending. Similarly, nothing is imminent for Lucasfilm’s other pic franchise, “Indiana Jones.” Paramount would love to distribute a fourth edition, but, despite the talk since No. 3 in 1989, there are no immediate plans.

A Lucasfilm spokesman says the company is developing projects in live-action, television and animation, but no outside projects. So don’t look for Lucas to move into Hollywood-style acquisition and development.

“Never was he ever interested in doing that,” says Ganis. “He develops, but he develops his own, specific, few, thought-out ideas.”

There was a time, in the 1980s, when Lucas did lend his company’s resources and his name as exec producer to several of his friends’ movies.

The results: Jim Henson’s “Labyrinth,” Ron Howard’s “Willow,” Francis Ford Coppola’s “Tucker: The Man and His Dream” and Willard Huyck and Gloria Katz’s “Howard the Duck.”

He also put the “Young Indiana Jones” TV skein mainly in the hands of others, including Frank Darabont.

The series failed, though, and the films were box office disappointments at best, flops at worst. “Howard the Duck” was widely lambasted.

Since then, Lucas has personally provided the story, screenplay and/or direction for every film made under the Lucasfilm banner.

That’s been frustrating for some of the company’s top creative people in the years since. There’s been a glass ceiling at Lucasfilm, and eventually some decide that if they want to make movies — other than Lucas’ own movies — they need to move on.

ILM’s former prexy Jim Morris, for example, cited his desire to get back into producing as a reason for leaving his job last November.

It didn’t take him long to get another gig; Pixar has hired him to produce an as-yet-untitled project.

Pixar also snagged Oscar-winning sound designer Gary Rydstrom, who left Skywalker Sound to direct a movie for the toon giant.

Lucasfilm simply isn’t making movies for them to work on.

However, there is still plenty of talent at ILM and Lucasfilm’s other units, so Lucas could go off to make his movies and leave his company’s other divisions, including ILM and Skywalker Sound, to run on their own momentum.

But their record is mixed and their problems mounting.

Skywalker Sound, which will remain on the Skywalker Ranch, rules its niche in sound and needs only to keep its talent to continue.

Industrial Light & Magic, though still the top f/x shop, faces more competition and is being stressed by changes in the industry, labor problems and turmoil created by the move to San Francisco.

It also hasn’t won a visual effects Oscar since “Forrest Gump” in 1994 (despite numerous noms).

Gaming division Lucas Arts, according to industry tracker NPD, grossed just over $100 million last year, primarily from its successful “Star Wars” titles. That’s just a fraction of what the year’s top games like “Halo” took in on their own.

In August, the company laid off 31 of its nearly 300 workers as it decided to focus on fewer titles, making clear it isn’t becoming a major industry player as many once predicted.

LucasArts went several months without a leader before last April bringing on CEO Jim Ward, who still serves as head of marketing and distribution for Lucasfilm.

Ward says he sees a healthy future for “Star Wars” in vidgames. Trends are pointing downward in other licensing areas, though.

Lucas Licensing is still profitable, and toy industry experts predict at least one “must-have” toy will come out of “Sith.”

But the last two pics have not generated big toy sales among kids under 10. Some toymakers were so hurt by disappointing sales after “The Phantom Menace” that they walked away from “Attack of the Clones.”

There are higher hopes for “Revenge of the Sith” because of the appearance of Darth Vader, who has been by far the most popular figure in the “Star Wars” toy market.

The iconic character has so beguiled fans that his presence is already ubiquitous in “Sith’s” early marketing and media coverage.

(By coincidence, his visage even dominates this week’s Variety cover, in an ad for European cell phone company Orange.)

Lucas, who sold Pixar in 1986 to raise cash when his other units were struggling, got into the toon business in 2003 with the creation of Lucas Animation, and in August 2004, announced the creation of Lucas Animation Singapore. Neither shop has yet put out any product.

So will Lucasfilm make a comeback, as it did after its disappointments in the ’80s, or will it fade away and become a bit of brand nostalgia, like Oldsmobile or Pan Am or RKO?

The answer lies in how closely Lucas remains tied to the company.

If he keeps ownership, the company’s future as a movie production company is probably limited, as Lucas doesn’t seem much interested in being a feature film player. He hates dealing with the Hollywood community, especially talent agents, and it’s hard to see him turning over dealmaking authority to anyone else.

Even if he steps away from managing the company, he could return at any time, and it would be difficult for prexy Micheline Chau or any other management team to launch major initiatives.

If Lucas sells the company, or relinquishes control in some way that assures its toppers they can’t be summarily removed if he changes his mind, then the company would be free to become more active in the movie biz.

As for the company’s service businesses, they’re poised for a long run, regardless of Lucas’ personal plans.

“There’s always an encouraged sea of creativity happening all around the company,” says Ganis. “Lucasfilm will be moving into technology that you and I have only barely heard of, with George’s commitment and money.”

Ganis expects Lucas to continue his tubthumping for digital cinema.

“What he single-mindedly believes he should do, he does. That’s a sign to me that he’s going to continue in the movie business. He’s not going to be a force in making it happen and then abandon the medium.”

However, Dale Pollock, the Lucas biographer who is now dean of the North Carolina School of the Arts school of filmmaking, wonders if the public will ever see the films Lucas makes from now on.

“He might make movies and only show them to himself and his friends. That’s as personal as filmmaking can get. That wouldn’t surprise me.”

So is it possible that Lucas will make movies that never get released and that Lucasfilm, though still active through ILM and Skywalker Sound, won’t make any movies at all?

It would be a peculiar end for a man who has made some of the most popular films ever and for a company that has been, at times, one of the most lucrative and visible enterprises in showbiz history.

But like Howard Hughes, another billionaire filmmaker who’s been much in the news of late, Lucas can afford to be as idiosyncratic as he wants to be. And at least he keeps his fingernails trimmed.

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