The pressure cooker

After D'Works exit, new U team hammers out a slate

Both Marc Shmuger and David Linde, who were named chair and co-chair of Universal Pictures in March, keep a binder in their offices called the “2006 Growth Playbook.”

It’s a roadmap of a sprawling studio they are still getting their arms around. Inside, the binder spells out the expectations for the pictures on tap for next year and the long-term strategy for the studio.

“It’s something we put together and present to our bosses at NBC, and ultimately to GE,” Shmuger says.

A “Growth Playbook” is as good a symbol as any of the highly corporate environment that movie studio chairs operate in today, and especially at Universal since its merger into GE’s NBC.

The two execs have established a good rapport with their corporate managers. This may be because of their background in the business side of the movie business: Shmuger’s roots are in marketing, Linde’s in foreign film sales.

They came into the biggest jobs of their careers with a lengthy to-do list. The biggest question, when Universal Studios prexy Ron Meyer tapped the duo to replace Stacey Snider, was whether they could develop as creative execs — especially since neither has well-established relationships with star talent.

Meyer’s long history brings those sort of connections to the table, but he’s made it no secret that he’s not happy with the quality of the films on this year’s slate, which Shmuger and Linde inherited from Snider.

While they continue to put together a slate for next year and beyond, U conspicuously lacks many continuing franchises at the moment, aside from the “Bourne” spy series, currently shooting its third edition.

There is great hope that the Steve Carell laffer “Evan Almighty” can keep that franchise alive without Jim Carrey, and developing “The Mummy 3” and a “Meet the Fockers” sequel are high priorities. As for fresh properties, both vidgame adaptation “Halo” (a co-production with 20th Century Fox) and comicbook pic “Wanted” are being developed as 2008 events pics.

But Meyer has signaled that he doesn’t much care for the ever-riskier tentpole business and is reluctant to spend more than $100 million on a film — a lesson perhaps from the disappointing results of “Miami Vice” (which cost close to $140 million) and nervousness over the budget of “Evan.”

To that end, U has been extremely cost-conscious as it readies “Halo” and “Wanted,” eschewing pricey talent for newer names.

There are other critical relationships that need plenty of attention. Pacts with two of U’s biggest suppliers, Imagine Entertainment and Working Title, are skedded to expire soon. (Imagine is up in 2008; Working Title in 2007.)

They also are working to internationalize the studio’s business, building up U’s foreign distribution operation as the long-standing UIP joint venture begins to wind down.

Though Meyer is still the calming force at U, the lot is undergoing — as quietly as possible — its biggest internal reorganization in seven years.

Back in 1999, the last time there was so much shuffling of the U’s top ranks, Meyer promoted Snider to replace Casey Silver in the chair’s office, after a string of box office flops. But after that, the studio exec regime stayed largely intact even as the studio passed through four different corporate owners.

Though U has had recent big-budget disappointments such as “Miami Vice” and “Curious George,” as well as more modest efforts that failed to click with auds, like “Slither” and “American Dreamz,” the current reorganization is being driven by a chain of external events.

First DreamWorks, co-founded by longtime U fixture Steven Spielberg and expected to merge with U, slipped out of the GE dealmakers’ hands and landed at Par, which was hungrier to put its titles through DreamWorks’ distrib pipelines. Simultaneously, U and Par were figuring out how to unwind their long-standing international distrib venture UIP and set up foreign shops of their own. And, in the final blow, Snider decided to run the reconfigured DreamWorks rather than reup at U.

When Meyer tapped two execs from within the U fold to replace Snider in March (Shmuger was U’s vice chair, Linde a co-prexy of Focus Features), the message he was trying to convey was clear: Production units and execs, like corporate owners, may come and go, but U stays the same.

As Meyer wrote in the companywide memo announcing the promotions, “To have them both come from our deep bench of talent gives us a unique competitive advantage and provides continuity for the business and the entire team.”

That is still largely the message today. Under Shmuger and Linde, execs have risen through the ranks.

Their first major decision, they say, was to promote a coterie of execs, including naming Rick Finkelstein vice chair; tapping longtime business affairs chief Jimmy Horowitz to be co-prexy of production with Donna Langley, who has emerged as the studio’s top creative exec; and upping Michael Joe to exec VP for strategic planning.

Shmuger and Linde’s learning curve at U has largely been one of figuring out how to delegate. “Every single day you realize, ‘This is something that, say, Jimmy can handle, I don’t need to integrate myself in this,’ ” Linde says.

“I was driving today in between meetings and someone said, ‘Oh, there’s this meeting with a filmmaker over here,’ and if I had been at Focus or even been here the first three months, I would say, ‘Well, I have to go to that meeting.’ But I didn’t have to go to that meeting and I was able to make the decision,” he says.

Though their partnership is an arranged marriage, Shmuger and Linde have been working well together, choosing to handle things jointly rather than draw up separate fiefdoms.

“We tell all the filmmakers we work with, as well as our executives, that if they cover one of us off that they should recognize that we’ll take the responsibility to cover the other one off,” says Shmuger.

Or, as Linde puts it, “If you tell dad, you don’t have to tell mom. And you can’t use dad against mom.”

The sort of movies the Shmuger-Linde regime will make is still coming into focus. There may be changes in approach, but not goals. Since taking over six months ago, they have been busily handing out greenlights to fill a 2007 slate that currently has 12 titles.

“Nothing ground to a halt during this transition, and that was very important to us,” Shmuger says.

While many of the pics they’ve put into production were in the works when Snider left, the new regime has given the go-ahead to pics like Ridley Scott’s “American Gangster,” starring Russell Crowe and Denzel Washington; “Charlie Wilson’s War,” with Tom Hanks and Julia Roberts; “The Kingdom,” starring Jamie Foxx; the Matt Damon spy sequel “The Bourne Ultimatum”; comedy sequel “Evan Almighty”; Adam Sandler’s “I Now Pronounce You Chuck and Larry”; and Judd Apatow’s laffer “Knocked Up.”

They also have been striving to show they can make high-level creative deals. In late September, they won the auction for the highly sought-after rights to Peter Morgan’s play “Frost/Nixon,” winning the prize for Imagine Entertainment and Working Title to produce, with Ron Howard attached to direct. And just before that, they set George Clooney to star in and helm “Leatherheads,” a football pic the studio has been trying to make for more than a decade.

As for longer-term strategies, the duo aren’t quite ready to publicly spell out the details of their plans. But in the back of their “Playbook” is a chart that guides their thinking.

Sharply sloping upward, it shows how the growth of Hollywood studio revenues over the course of the film industry’s history has been fueled by an expanding array of ancillary revenue streams.

The revenue graph looks like one of those geological charts of how mountains rise up over the eons as different layers of rock push up against each other. On the bottom of the chart, there is the thin layer of bedrock — domestic box office — which has been piled on over the years by new sources of revenue, whether it be homevideo, consumer product licensing, foreign television sales or online downloads, to create a sharp upward slope.

“The amount of revenue that movies bring in through all the channels has grown and grown and grown throughout those decades,” says Shmuger. “And there’s every reason to believe that as we move to ubiquitous distribution, it’s going to continue to grow, if not explode. You know, looking way out over the horizon line, we think it’s a great business. But in the immediate next 18 months, I don’t know. It’s anyone’s guess.”

High up on their list for the most promising places to search for new sources of revenue is the international market. Not only are they laying the groundwork for the new Universal Pictures Intl. distribution arm, they’re also seeking to use more international talent in the development of their films.

The helming assignment for “Halo” went to a young South African native, Neil Blomkamp, who will produce the film at Peter Jackson’s Weta facilities in New Zealand. The other major tentpole targeted for 2008, “Wanted,” is in the hands of Russian helmer Timur Bekmambetov. Likewise, they secured rights from Sony for Spanish director Guillermo del Toro to make a sequel to his “Hellboy.”

Part of their philosophy guiding such choices is the belief that films do not have to be U.S. theatrical hits in order for U to make money. Other release windows — whether it be in foreign territories or on homevid — can make pics profitable. “In most cases, films will be released first in the United States, and that will be a defining factor, but it’s not a limiting one,” Linde says.

For instance, on Sept. 22, U released “Children of Men” in the U.K., where the pic is set, before its skedded Stateside Christmas release. “We’re looking at each title through a global perspective, not through the perspective of how it looks from just the Hollywood Hills.”

They’re also looking to produce more movies solely for the international market. They inked with Brazilian filmmaker Fernando Meirelles, whose O2 shingle will produce Portuguese- and English-language films for distribution in his home country and throughout the world.

Much of this foreign emphasis is rooted in the preparation for U’s new independent international arm without the cushion of a steady supply of DreamWorks product.

“In some ways, it’s one of those events that serves as a radical wakeup call of how urgently we have to get our act together and make sure we’re putting enough exciting new product through those pipelines,” Shmuger says. “Now we’re out there on our own and we’re responsible to have the volume and profitability to make those structures work.”

Linde points out that U distribbed DreamWorks for a fee, and only handled theatrical and homevid. The plan is to own more of the product they distribute. “Ultimately, it’s very straightforward: If you own ’em, you make more money, a lot more money. It’s a repetitive thing to say, but content in this age is king. If you don’t have it or enough of it to be competitive …”

Shmuger finishes the sentence for him: “…and if you rely on others for that content, then you just don’t have your eye on finding the real opportunities to grow the business. And that’s the difference. It’s really moving toward self-reliance now, which makes us a healthier, more profitable and better company.”

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