Production arrangements continue to grow

First the good news for Hollywood producers: Cost-cutting by the majors seems to have stopped.

In the six months since Variety’s last compilation of studio term deals, the number of those pacts at the major studios has increased 5% to a total of 152.

Big names such as Mary Parent, Steve Zaillian, Darren Aronofsky, John Hamburg and Roy Lee have all struck pacts in the last six months.

The tough news for producers is that the terms are tougher, and the number of studio deals is still 48% fewer than a decade ago, when 292 deals were listed in Variety’s 2000 report. That number fell to 241 in 2001, stayed fairly consistent for the next half-dozen years and then plunged to 184 three years ago and 133 last year.

The 2000 edition of Facts on Pacts tallied an astounding 79 deals at three studios — DreamWorks, Miramax and New Line — that have since morphed into far smaller versions of themselves. The numbers at those companies are now four (up from two) at DreamWorks, zero at Miramax and three (unchanged) at New Line.

So the slight overall rebound is welcome news, particularly since none of the big six studios cut their number of deals.

Fox — widely perceived to be among the most cost-conscious of the big six — has increased its number of deals from 19 to 22, including pacts with Aronofksy, Simon Kinburg, Jennifer Lopez and Bryan Singer.

Warner Bros. continues to maintain the largest roster of producing deals, up to 33 as it added Roy Lee and Greg Berlanti, while letting Johnny Depp’s pact lapse. Even without Depp, Warners has the biggest stable of actors in production pacts, including Ben Affleck, Matt Damon, Steve Carell, Clint Eastwood, Zac Efron, Leonardo DiCaprio, Robert Downey Jr. and Morgan Freeman.

And notably, Disney has maintained the number of its deals at 23. That’s significant since many in the industry had anticipated that studio chief Rich Ross, installed in October 2009, would kick loose a significant number of pacts.

Mark Gordon, one of the town’s most active producers, remains optimistic that the number of term deals won’t decline any time soon, even as studios ratchet back on the number of movies they make and focus more and more tentpoles and franchises.

“I really feel like things are moving again,” notes Gordon, who’s also co-president of the Producers Guild of America. “It’s a very good time for producers.”

Others differ, and emphasize how tight-fisted studios have become. One independent producer notes with distress that the standard $25,000 development fee for setting up a project — $12,500 paid when the deal closes and the rest when production starts — is no longer a certainty.

“Producing has really become thankless,” notes Daniel Alter, who’s spent a decade as an independent producer with credits on pics including “Hitman” and “Apparition.” “I grew up in L.A. worshipping producers like Robert Evans, but there’s really a squeeze on us now, particularly if you don’t have a studio deal. I can’t imagine starting out today as producer.”

Alter would still love to have a deal.

“When I’m out approaching videogame companies about rights, I’m the one who’s making the calls, not a development executive,” he notes. “But I don’t have that asterisk (of a studio deal) by my name, which would make my job so much easier. Plus, if I do get something set up with a studio, it’s always a concern that I’ll just be pushed aside in favor of a producer with a studio deal.”

A decade ago, the typical deals usually featured overhead costs for an office and staff, often well in excess of $1 million annually; an annual discretionary fund of about $750,000 for purchasing material, usually with a $250,000 per-project cap; and a guaranteed fee of around $1 million as an advance on producer’s fees.

In recent years, studios have cut back, with veteran producers estimating that spending on term deals is less than half what it was as little as eight years ago — except for the largest producers, such as Jerry Bruckheimer at Disney and Ron Howard and Brian Grazer’s Imagine Entertainment at Universal. Only a few discretionary funds exist; overhead and guarantees have been sliced.

“With fewer films and less money on development, you don’t need as many deals,” notes one producer and former studio exec. “It’s always going to be a fluid situation but the discretionary funds used to be something used to build (legions) of writers. They are still interested in talent deals like Robert Downey Jr. and Steve Carell at Warner Bros. or Simon Kinberg at Fox — which give a studio ready access to people that can get you over the hump and turn a development project into an actual movie.”

Another producer says the value of such deals comes into play when producers — particularly former studio execs — can be placed onto projects to get them to the finish line. “If you have a good producer like that, they’re almost like an ersatz studio executive,” he notes.

Former studio execs with deals include Lorenzo di Bonaventura, Parent, Peter Chernin, Bill Gerber, Kevin McCormick, Plan B’s Dede Gardner, John Goldwyn, Dan Lin, Karen Rosenfelt, David Hoberman, Donald De Line, Alex Young, Scott Stuber, Peter Guber, Lionel Wigram, Brad Weston and John Calley.

Many producers contacted for this story declined to be quoted for attribution. “The studios often don’t like to announce producer deals because they’ll get inundated with calls from agents and managers demanding to know why their clients haven’t gotten a deal,” one notes.

Marshall Herskovitz, who concluded his four years as PGA topper last spring, says it’s a constant struggle to adjust to the needs of the studios.

“To do this job well, you have to think like a studio executive,” he adds. “People in TV have been doing that for a long time. There’s a real value in understanding the dialectic between art and commerce.”

To that end, Herskovitz and producing partner Ed Zwick have adjusted the business model at their Bedford Falls banner, which produced 2003′s “The Last Samurai” (which topped $450 million worldwide) and 2006′s “Blood Diamond,” which grossed more than $170 million worldwide. Each carried a pricetag of about $100 million.

Since their Warners deal lapsed, Bedford Falls has been aiming at far more moderately priced projects — World War II freedom fighter tale “Defiance” and romantic comedy “Love and Other Drugs” for Fox and New Regency.

Those producers with deals swear by them, even if they’re less generous than they were a decade ago.

“The main reason to have a deal is consistency,” says Todd Black of Sony-based Escape Artists. “As far as the studio’s concerned, the producers know what will work and what won’t. The lines of what’s expected are very clear.”

Escape Artists produced “The Taking of Pelham 123,” based on a Sony library title, and joined with Sony-based Overbrook to produce Will Smith vehicles “Seven Pounds” and “The Pursuit of Happyness.”

“We’ve had a lot of clarity on all these projects,” Black says. “For us, it’s a great place to be, since they’re very filmmaker-driven and very eclectic.”

Chris Bender, whose shingle with JC Spink, Benderspink, has been based at New Line for a decade, notes that a studio deal also carries intangible benefits in terms of potential collaborations.

“As the business has contracted, it’s become more important to be a good partner to not only the studios and financiers, but with other producers as well in order to get movies made, and there are great benefits to creating those relationships,” notes Bender, whose credits include “A History of Violence,” “The Hangover” and the upcoming “Arthur.”

In addition to the squeeze on cost containment, producers are feeling the continued pressure to shoot films on a shorter schedule, too. Studios are now insisting most midrange films be shot in well under 60 days. “Unknown” lensed in 46 days; “Hall Pass” in 48 days and “Red Riding Hood” in 42 days.

Hawk Koch, who became co-prexy of the Producers Guild of America in June alongside Mark Gordon, says the downsizing of shooting days has occurred because technology’s speeding up the production process.

“It’s not just because of increased studio pressure to reduce costs wherever possible,” notes Koch, whose producing credits go back to “Heaven Can Wait” and “Gorky Park.” “Technology really is catching up at a time of belt-tightening, so you can make films faster than most films are made. You don’t need two months to make a good film. ‘Black Swan’ got made in 23 days.”

Gordon notes that smaller cameras and digital editing are accelerating the pace of production.

“You can get the dailies sent to your iPad, which takes lot of the uncertainty out of the process, and you can go through nine versions of a scene in four minutes,” Gordon says. “So you have to adjust, because there’s a major change in technology every six months that pushes the process forward.”

And saves money that may be plowed back into producer deals next year.

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