H’wood searches for new niches

Amid a breakout year, Sony seeks fresh ways to lure crossover auds

Sony hopes that its upcoming pic “Stranger Than Fiction,” directed by Marc Forster and starring Will Ferrell, is its version of “Little Miss Sunshine”: a breakout, artsy pic with name talent made for a modest price. (“Stranger” was made for $30 million. “Little Miss Sunshine” cost $8 million.)

The difference is that Fox opened “Sunshine” through its Searchlight division, with specialized marketing and distribution operations. “Stranger,” a comedy whose quirky plot could have been scripted by Charlie Kaufman, comes from Sony’s main Columbia Pictures label Nov. 10.

And that’s a dilemma Sony faces, even as it basks in the glow of being No. 1 at the domestic box office this year, thanks largely to “The Da Vinci Code”: It is the only major studio that lacks a specialty division in the vein of Searchlight or Universal’s Focus Features.

Beyond providing cachet during Oscar season, studios increasingly rely on such divisions to make financially prudent films at a time when the industry is facing rising costs and a flattening DVD market — hence the launch of Paramount Vantage and Warner Independent Pictures.

From a disgruntled agent’s point of view, specialty labels are mainly a way to get talent for a lower price, all in the name of “art” and “risk.”

To agents’ chagrin, Sony says it is contemplating starting up yet another one, though nothing is officially under way.

Sony Pictures co-chair “Amy (Pascal) and I have talked about (a specialty division) a lot, and I think we would very much like to have that,” says Sony Pictures chairman Michael Lynton. “Clearly, it’s a really good piece of the market.”

Were it not for the fact that “Stranger” was financed and produced by Mandate Pictures, Pascal admits, the pic never could have been made if Columbia was the sole backer. The studio paid Ferrell $20 million to star in “Talladega Nights,” but Mandate offered Ferrell a considerably reduced fee to get its movie made.

“We really do want to make those kinds of movies,” she says of “Stranger”-type films. “But the one thing I’ve learned is that those movies have to be financed carefully. And you can’t get A-list actors to work for the kind of money that we would want them to work for in order to make that kind of film, if they’re making it for Columbia Pictures. It doesn’t happen. And I’ve tried — a lot.”

Another Col film with a specialty pedigree is Sofia Coppola’s “Marie Antoinette,” due out Oct. 20.

Like “Stranger,” “Marie Antoinette” will test Sony’s ability to distrib and market a niche picture through a major distribution and marketing apparatus. So far, the results look good: “Marie Antoinette” has grossed nearly $8 million in France, where it was released in May.

As other studios fragment and build more focused units — Fox recently launched Fox Atomic, a teen-oriented label; FoxFaith, for Christian films; and an unnamed venture with Walden Media — Sony’s strategy is integration.

Valerie Van Galder, head of domestic marketing for Sony, previously worked at Searchlight and Screen Gems, and says this background makes her suited to handling blockbusters and arty pics alike.

“Because I came from Searchlight, I’m an unnatural hybrid,” she says. “The reason I’ve been asked to work on films such as ‘Closer’ and ‘Adaptation’ is because my sensibility as a person tends to be toward those kinds of films as well. I straddle that (big and small movies) more comfortably than other marketers do. Having started off in the independent world, I understand how to integrate all the cogs in the marketing machine at Columbia.”

Not that Sony is without labels. The studio relies on Sony Pictures Classics for arthouse fare. But the 15-year-old SPC, which is run out of New York by co-heads Tom Bernard and Michael Barker, operates less as an arm of Sony and more as an independent production and acquisitions company specializing in high-end, sometimes foreign-language films. In other words, it’s not where Ferrell’s likely to be making his next movie. SPC prides itself in keeping costs low, capping production budgets at $20 million.

Bernard says another specialty label at Sony “wouldn’t affect us in any way,” pointing out that labels have come and gone before at the studio.

Sony also has Screen Gems, for genre fare, and recently revived its TriStar Pictures, albeit mainly as a releasing label rather than a full-fledged division. And since Van Galder, who was running TriStar, was promoted last year, it has been less active. In 2005 TriStar released “Lords of Dogtown,” and later this month it unspools “Running With Scissors.”

Lynton says until now, conversations about a new unit have been on the back burner because the studio has been focusing on more immediate issues, such as its shifting relationship with MGM. Sony no longer distributes the Lion’s homevideo product and, after the next two James Bond pics, will not release its films.

There’s also the dissolution of Revolution Studios, Sony’s equity partner, which is closing shop at the end of 2007; and the establishment of Sony Pictures Animation, which released its first pic, “Open Season,” on Sept. 29.

But at the moment, Sony is enjoying its success rather than fretting about the future.

The studio has pulled a dramatic turnaround from a dismal 2005 and is on track to beat its best year on record — 2002, when “Spider-Man” was released. Sony is currently at $1.2 billion in domestic B.O. receipts.

Despite recent slips, such as “All the King’s Men” and Revolution’s “Zoom,” Sony is No. 1 at the domestic B.O. for the year, led by the juggernaut “The Da Vinci Code,” which has grossed $700 million-plus worldwide, and other high-performers such as “Talladega Nights,” “Click” and Screen Gems’ “When a Stranger Calls.” There are high hopes for new Bond pic “Casino Royale” in November.

Pascal, whose contract was recently extended until 2011, describes her mood as “grateful.” As she prances into an interview, looking like a teenager in jeans and a white shirt, “giddy” seems more apt.

“I’ve been here since 1988, so last year was no different than other years six or seven years ago,” Pascal says. “I know how cyclical this business is, and I no longer see a couple of movies in a row that don’t work and panic.”

There are still challenges ahead.

While Sony may have identified its mega-tentpole companion to “Spider-Man” in “The Da Vinci Code” — Pascal hopes to have Dan Brown’s prequel “Angels and Demons,” out in the next few years — the costs of those films are skyrocketing. “Spider-Man 3,” due out in May, has a reported budget of $250 million; it’s rumored to be even higher. As for “Angels,” it will be a challenge for Sony to keep a lid on 25% of gross receipts, as it did on “Code,” and deals with Tom Hanks and Ron Howard have yet to be secured.

Going forward, Sony is trimming its slate rather than making up for the four to six pics that Revolution has annually contributed. While this year Sony is releasing 27 films — the most of any studio — the plan is to reduce that to around 20 per year.

Lynton, now in his third year at Sony, has worked to ramp up film production ventures in emerging markets such as Russia and India, where Will Smith is producing a pic that Sony will release worldwide. Lynton also was behind Sony’s purchase of online video company Grouper.

In January Sony signed a $400 million deal with hedge fund Relativity Media, which has put up financing for pics such as “RV,” “Talladega Nights,” “All the King’s Men” and the upcoming Nancy Meyers pic “Holiday.”

As for lessons learned in ’05, Pascal says: “Not everything is a sequel and not everything should be big.”

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