End credits roll for Warners specialty units

By Borys Kit and Gregg Goldstein Reuters - Friday, May 9 07:58 am

LOS ANGELES/NEW YORK (Hollywood Reporter) - After Warner Bros. absorbed New Line as an in-house production label in February, industryites wondered which Warners specialty unit would remain, Warner Independent Pictures or Picturehouse. The answer came Thursday: Neither.

In a move that sent ripples of shock around town, Warners said it is was shuttering both divisions, citing cost savings and an elimination of redundant operations.

Most of the units' 70 employees are expected to lose their jobs, including all 43 Picturehouse staffers. WIP president Polly Cohen said that some of her 27 staffers will remain on board to shepherd projects to the studio. The 11-year Warners vet's contract runs for about two more years, and she will stay within Warners for now, though she's unclear in what capacity.

Some Picturehouse staffers also might remain.

The future of Picturehouse president Bob Berney was unclear Thursday, but a close associate said the executive is likely to form his own independent distribution venture, adding, "Bob is a very resourceful guy." No immediate announcement on his plans is expected.

OVERHEAD ISSUES

Warner Bros. president and COO Alan Horn said that in the competitive movie marketplace, which sees upward of 600 movies released each year, profit margins are tough to eke out, and that is exacerbated by overhead. Because New Line is part of Warners, the company is able to handle films across the spectrum of genres and budgets without overlapping production, marketing and distribution infrastructures.

"We can't justify a third overhead," Horn said. "It just doesn't make sense."

Warners did look at various ways it might keep the two companies -- WIP, the art-house film division of Warner Bros., and Picturehouse, the indie movie arm of New Line Cinema. Scenarios that were considered included having Berney and Cohen co-head one specialty division, something the execs agreed to do shortly after the New Line absorption was announced, Cohen said. The idea to merge the divisions arose as early as a year and a half ago, Cohen said, but was nixed at the time by executives at Picturehouse and its partners New Line and HBO.

The decision to cease operations was made only about a week ago, and many inside the company were caught off-guard -- including Cohen, who said she was having meetings about a merged division with Berney as recently as Friday. She said she was informed about the decision Wednesday, and she dismissed word that the decision was made earlier than then. "I doubt they'd pull a whole 'Truman Show' on me," she said with a laugh. "I've been at Warners so long they say derogatory things about me in front of my face."

When Cohen replaced Mark Gill in May 2006, the plan was to develop low-budget genre films at WIP. "You can't live on art-house movies alone," she said.

JUMPING THROUGH HOOPS

"It was similar to what happened at New Line. Warners made both of them (Cohen and Berney) jump through hoops for weeks," says a Berney associate.

"They said, 'Will you streamline your staff?' -- 'OK.' 'Will you use the Warner Bros. distribution network?' -- 'OK.' With every obstacle they threw at them, they came back with a PowerPoint presentation on how to deal with it. It's almost like they wanted Bob to quit."

"Bob wasn't getting a lot of calls from other studios since the New Line announcement was made, but he was getting a lot from people with venture capital," the colleague added. "Now the call volume is getting really crazy."

Warners will release WIP and Picturehouse movies through the fall. Titles on the Picturehouse side include historical drama "Mongol" (June 6), the Abigail Breslin-starring "Kit Kittredge: An American Girl" (in limited release June 20 and wide release July 2) and the remake of "The Women" (September 12).

Warner Independent's upcoming releases include Alan Ball's drama "Towelhead" (Aug, 8) and the Danny Boyle-directed romance "Slumdog Millionaire" (in limited release starting November 7).

Picturehouse will remain open until October 1, but just when its employees will be laid off remains unclear. At least some WIP staffers will remain through the "Slumdog" release.

Cohen said her division has about 30 projects in development, some preceding her tenure. Her immediate efforts will be to find them homes within the studio or elsewhere, she said.

Picturehouse has only around 10 projects in development that will be seeking homes.

TENTPOLE BIAS?

What raises concerns around Hollywood is that the industry is losing two buyers and distributors. And with Warners now the only major studio without a specialty division, many industry observers said that the company is leaving the indie and festival film business.

"It's all about the tentpole movies; everything else is an afterthought," said one manager, expressing an observation that reverberated around town.

Horn, however, made a point of saying that the company is not leaving that part of the business.

"We will still go to festivals. We are not abandoning that marketplace," Horn said, adding that specialty fare "will not be relegated to New Line." New Line, he said, will not be a "genre factory" but will help supplement Warners' slate, making any kind of film it wants, subject to a green-light by Horn.

He said criticism that Warners does not know how to handle smaller releases no longer applies to a company that released awards-favoured material such as "Million Dollar Baby" and "Michael Clayton."

"In the last four or five years, we have gained greater expertise in the handling of these movies," Horn said. "We have the people in place to sell any movie."

Still, selling a movie that has Clint Eastwood or George Clooney's name attached to it is one thing; it's another to sell one like "Juno."

"This was inevitable. (WIP) was always an awkward fit within Warners," said former WIP chief Gill, who now runs production shingle the Film Department. "It's a sad day. Nobody expected that both companies would survive, but it's a shame that both are gone."

The other reality is that other than a few hits such as Picturehouse's "Pan's Labyrinth" and WIP's "March of the Penguins," most releases from these divisions -- about 30 from WIP and about 20 from Picturehouse -- were little-seen bombs.

WIP's "Snow Angels," David Gordon Green's drama starring Kate Beckinsale, grossed barely $370,000 (189,620 pounds) at the domestic boxoffice earlier this year. Picturehouse's Simon Pegg comedy "Run Fatboy Run" couldn't reach the $6 million mark.

Berney did not offer any details of his plans but, sounding very much like an obituary, said, "We've had a very exciting and successful run at Picturehouse, and I am so proud of the team and the filmmakers we've worked with."

Reuters/Hollywood Reporter

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