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Focus Features Shake-Up Blurs Forecast for Specialty Biz

Aiming for films with a wider appeal, Universal says specialty distrib will release more films per year

It’s a brave new indie world.

Last week’s startling news that Focus Features was losing its leader, moving out of its New York headquarters and absorbing another indie distributor with a mandate to release movies that have a more global appeal, underscores just how important the bottom line of speciality film companies has become to their corporate parents.

Indie film pioneer Ted Hope, a longtime associate of Focus’ just-ousted chief James Schamus, recently referred to the state of independent cinema as a “Bizarro World” in a keynote speech he delivered to European filmmakers. The reference is to a cube-shaped comicbook planet in which everything is inverted, so that, for instance, a superhero’s greatest strength becomes his greatest weakness.

So too with Schamus, an old-school film aficionado, who found that carrying the cross for daring prestige cinema was now his biggest liability.

More than a decade after co-founding one of the industry’s most respected specialty distribs, Schamus got word from his boss at Comcast Corp.-owned Universal Pictures that he was being replaced by more commercially successful exec Peter Schlessel, chief of FilmDistrict.

As a result, FilmDistrict, the three-year-old Los Angeles-based distributor of such films as “Olympus Has Fallen,” which grossed nearly $100 million domestically (more than any Focus movie), and the hit “Insidious” franchise, is being shut down — leaving the indie world with one fewer outlet for its releases.

The development rocked the cliquish arthouse community, already suffering from the financial collapse of the 1990s and 2000s that destroyed many of its indie financing channels.

“I think everyone in the film business entered it with precisely the dream of making great, ambitious cinema,” says Hope, who, with Schamus, co-founded Focus’ predecessor company Good Machine. “The change in business strategy at Universal shows (that kind of cinema is) just too much trouble today.”

Universal Pictures chairman Donna Langley, who gave Schamus the boot, declined to comment.

The shakeup at Focus caught many by surprise, especially the 44 New York employees at the distrib’s Bleecker Street headquarters, many of whom are likely to lose their jobs by year end. (Some will have the option to relocate to L.A., where Focus currently employs 43, and will now be based. FilmDistrict staff also will be considered for positions at the company.)

Under Schamus, who co-founded Focus with David Linde in 2002, the distrib released many prestigious titles that garnered plenty of Academy awards and nominations, including “Brokeback Mountain,” “Atonement,” “Milk,” “Coraline” and “The Kids Are All Right.” With a bold campaign championed by Schamus, “Brokeback Mountain,” an emotional love story between two cowboys, became an unexpected breakthrough hit with $83 million in North American ticket sales.

But of the distributor’s 88 films released since 2002, less than one quarter grossed more than $20 million at the domestic box office, despite frequent critical acclaim. In recent years, Focus suffered its share of duds, including Gus Van Sant’s “Promised Land” and Ang Lee’s “Taking Woodstock.”

In the specialty distrib’s reconstituted form, Universal says Focus will release more films per year — between eight and 10, up from four to six — but do so with a smaller staff. The parent studio is still grappling with whether or not to shutter Focus’ foreign sales operation in London, which employs 17 people. The unit has been a key component of the company’s overall strategy of pre-selling overseas rights to help mitigate production costs.

Focus’ relocation to the West Coast also represents a critical blow to Gotham’s specialty film scene, where the company has been a longtime keystone. It’s no surprise that many in New York were unsettled by the news. “It’s hard to characterize what the change is going to be,” says John Sloss, founder of Cinetic Media, “but it’s not good for the New York film community.”

While New York continues to be the headquarters for companies like Sony Pictures Classics and the Weinstein Co., the city no longer is the exclusive hub it once was for arthouse cinema; specialty film distribs such as Fox Searchlight and Roadside Attractions are based in L.A.

It is believed that, unlike 21st Century Fox-owned Fox Searchlight, which is based on the Fox lot in Century City, Focus will find a separate home off Universal’s studio site once Schlessel settles in. Universal wants Focus to retain its autonomy, but to do so with more accountability.

Bob Berney, who formerly headed distribution at FilmDistrict and now runs the newly revived Picturehouse in New York, insists that specialty films are profitable for a studio, even if they don’t necessarily move the needle.

“I think that audiences are bigger than ever for specialty cinema,” Berney says, pointing to ancillaries such as VOD and digital outlets that offer filmmakers more platforms than ever before on which to leverage their films.

“There’s just been a reset in the way independent films are being financed and distributed,” Berney adds.

The changing tide for specialty film has created a need for leaner, more nimble operations with smaller overhead. Sony Classics, which releases between 15 to 20 films a year (most of which rarely break $10 million at the box office), employs just 25 staffers in New York. By comparison, Focus employed 104 people among its three locations, but released only a fraction of that number.

Roadside co-president Howard Cohen agrees that regardless of the quality of film, a model needs to be cost effective, though he’s not sure a strategy that moves away from arthouse projects translates to an improved bottom line.

“Grafting the studio mentality onto these specialty releases more often than not loses more money than it makes,” Cohen says. “There is a business in highend films, but you have to control costs.”

With a greater commercial mandate for Focus, the specialty arena could suddenly open up for companies like Roadside or David Fenkel’s Manhattan-based newbie distrib A24, which released the buzzy “Spring Breakers” earlier this year.

Hope, who decided to take a break from indie film producing to serve as executive director of the San Francisco Film Society, laments what he perceives to be a lack of confidence for a business he helped foster and holds dear.

“The final proof is in the pudding that the industry is saying there is no business in art right now,” he says.

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