Think big, spending big

Warners is teeming with tentpoles, but can the studio nurture its niches?

The apocalypse is coming to theaters this summer courtesy of two Warner Bros. tentpoles — “The Matrix: Reloaded” and “Terminator 3: Rise of the Machines.” The two pics, which open a month apart, portentously relate the tales of cosmic battles to save humankind from evil machines.

Warner Bros. execs have lately been waging their own battle — against a corporate machine. With lawsuits flying at AOL and revenues of the online division still plunging, it’s the studio that’s relied upon to produce the big numbers in the interest of corporate survival.

That’s why Warners, more than any other studio, is reiterating its strategy of tooling up tentpoles for 2003 and beyond.

And that’s why the management team of Warner Bros prexy and COO Alan Horn, and film production chief Jeff Robinov — who assumed his post just prior to the departure of Lorenzo di Bonaventura last September — realize that their strong results of last year must be pumped up even further this time round.

All of which raises the following questions:

Can the studio manage and market five “event pictures” a year, including a new “Harry Potter,” two “Matrixes” and “Terminator 3,” and give adequate attention to the rest of its slate?

Can it also elicit significant numbers from its non-tentpoles?

AOL’s most recent earnings report, which credited the entertainment division for boosting the media company’s last quarter profit, should take some heat off the studio.

Both Horn and Warner Bros chairman and CEO Barry Meyer insist that there is no corporate friction.

In his opening remarks April 29 at “The Big Picture,” a two-day confab for exhibitors held on the lot, Meyer said the studio had delivered 20 straight years of record earnings growth.

“There goes that myth of instability and volatility,” Meyer said.

Horn later told Variety the studio faces “zero cost pressure” from its corporate parents.

Thanks to the success of modestly budgeted hits like “What a Girl Wants” and “Two Weeks’ Notice,” the studio already has a jump on last year’s box-office results, with two “Matrixes” and “T:3” yet to come. This could portend a reversal of the studio’s probelm in recent years in marketing its “niche” pics.

“We want to be the most major of majors, making 25 pictures a year, with an emphasis on event pictures,” Horn told exhibs at the Big Picture. The rest of the slate, he said, reflects “the diversity of the marketplace.”

Last year, however, the marketplace wasn’t that friendly to the Warner’s diversity. And some people doing business with the studio wonder aloud whether it may be biting off more than it can chew. “If you have a slate of 25 pictures or more, some get less attention than others,” says one rival studio topper. “If you’ve got three kids they all get a fair amount of attention. If you’ve got six kids you are spreading it kind of thin. If you’ve got 12 kids you hope the others help out.”Warners is forging ahead with a strategy Horn and Meyer articulated three years ago of building the slate around the sort of event pics that have long been a studio hallmark.

Despite the very public, recent breakdown in negotiations to put the next “Superman” franchise into production, Warner Bros. has assembled a rich lineup of franchise pics over the next three years to drive its bottomline.

Forthcoming this year are the CGI and live action comedy, “Loony Tunes: Back In Action,” and the Tom Cruise historical epic, “The Last Samurai.” In 2004, there’s “Harry Potter 3,” “Troy,” Scooby-Doo 2,” “Polar Express,” and “Ocean’s 12”; In 2005, there’s “Batman,” “Harry Potter 4,” “Charlie and the Chocolate Factory” and two other, as yet unnamed titles — possibly “Superman,” which the studio is still committed to making.

With the most prolific release schedule of the majors, the studio is under immense pressure to deliver a well-balanced slate, generating profits throughout the calendar year — not just on the key dates — Memorial Day, July 4, Thanksgiving and Christmas — on which Warners pegs its biggest movies.

Hence the studio’s desire, despite several false starts, to establish a classics division with a mandate to produce specialty movies, whose budgets are capped at $15 million.

Why, when most studios are racheting down the size of their output, is Warners still committed to 25 pics a year?

“It’s all about balance,” Horn says. It’s a balancing act that involves both targeted movies that appeal to a certain audience and broader mass commercial fare.

“Profitability is a function of our business decisions as much as our creative decisions,” Horn says.

Those business decisions involve cutting risk by sharing the slate with partners. One third of WB’s slate is co-financed, and one-third consists of distribution deals with partners like Franchise and Alcon.

Yet even with financial partners, some rival studio heads accuse the studio of profligacy, citing “Polar Express” as a significant financial risk that is by no means a slamdunk like the “Harry Potter” and “Matrix” franchises.

Warners also has a sizable worldwide distribution infrastructure and a DVD arm that depends on a high volume of product moving through its motion picture division.

That means Warner needs a consistant regimen of successful niche pics — more “Divine Secrets of the Ya-Ya Sisterhoods” and “Insomnias” — steadily profitable movies with modest budgets.

At a time when mass-market franchises drive profits at the media congloms, consuming the lion’s share of studio resources and marketing money, focusing on the smaller movies is more of a challenge than ever. It’s a problem facing all of the majors — though none bears as much of a burden as Warner, which has to deliver 20 such movies a year.

“The middle class has fallen out of the entertainment business,” says one agency topper. “You now have the haves and have nots. Warner Bros. was never in the middle-class business. They were always in the haves business.”

That challenge lies most squarely on the shoulders of Warner Bros domestic marketing team headed by Dawn Taubin and the production team headed by prexy Jeff Robinov.

Taubin now has a staff structure in which separate teams are dedicated to either a “Matrix” “T:3” or a smaller release.

And so far this year, the system seems to be working, not least due to the success of such targeted fare as “Malibu’s Most Wanted,” “What a Girl Wants,” “Kangaroo Jack” and “Two Weeks Notice.” The studio may be headed for its most profitable year in history.

Robinov, now ten months into the job, has also been described by Horn as the “primary architect” in putting together the studio’s annual slate.

But the sheer volume of Warners’ slate puts more pressure on Robinov and his team than ever before.

Every production exec at Warners is now responsible for four or five projects — a heavy load under any circumstances. And the studio is talking of hiring another exec VP of production to share the load.

Though it is clear Robinov has a very different style to Di Bonaventura – his own track record and collaborative approach has empowered the team underneath him resulting in a more decentralized, relaxed and less micromanaged environment for the studio’s production execs.

“I can’t succeed unless my production team succeeds,” says Robinov of the new spirit pervading the lot these days.

“Alan relies on us and we work for him. The slate represents the choices we give him. He sets the agenda and mandate and our job is to fulfill it.”

Robinov, a former ICM lit agent who repped such talent as the Wachowski brothers and shephered the studio’s lucrative Joel Silver-produced “Matrix” franchise is a soft-spoken exec who has built his reputation on a smart, passionate take on material and a tireless work ethic.

He cites filmmakers such as the Wachowskis, Curtis Hanson, Chris Nolan and their younger counterparts such as “Catwoman” French vidhelmer Pitof and “Constantine” helmer Francis Lawrence as the types of prestige talent the studio wants to be remembered for.

“I would like the studio overall to be more of a director’s studio. The notion is we want filmmakers to feel they have a home here for their bigger and smaller movies. We hope filmmakers find it a good environment to make movies in,” he says.

Horn doesn’t shrink from the fact that, given the studio’s immense output, some pix will fail and miss the mark.

“I have eaten crow from time to time in my career,” he told exhibs on April 29. “Though it never tastes very good, it is nutritious,” he said.

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