Changing Landscape of Production

For studio producers striving to maintain their positions, high energy and substantial output are now essential — otherwise, they risk losing their roles.

This is the clear message from studios as they continue to cut production deals and reshape the nature of the agreements they are willing to establish.

As a result, many producers are shifting from studio to studio, seeking out wealthy financiers or exploring opportunities in various tech companies.

In Variety's latest annual report, two notable trends emerge: companies like Miramax and New Line, along with smaller entities such as USA Films and production companies like Intermedia and Initial Entertainment, are quietly evolving and strengthening their producer relationships. At the same time, major studios, previously known for their extravagant contracts, are opting for more streamlined agreements with the few producers they retain.

Additionally, a new class of influential producers is emerging, possessing foreign investment and strong connections to talent, adding complexity to the industry landscape.

Studio representatives argue that their producer network remains robust, asserting that they are only terminating agreements that do not align aesthetically or have proven unproductive.

However, even for those producers whose contracts are still active, conditions have changed for the worse. In contrast to previous years when top producers enjoyed discretionary funds of $1 million to $2 million and overhead costs of $3 million to $4 million, current studio agreements rarely offer discretionary funds and impose stricter limits on overhead.

For instance, Warner Bros.-based producer Jerry Weintraub once had a discretionary fund exceeding $1 million annually, an overhead of $3.5 million, and a team of 10-11 staff members. Between 1996 and 1999, he produced films like "The Avengers," "Soldier," and "Vegas Vacation." Despite this notable output, it wasn't sufficient to secure favorable terms. While he does have "Ocean's 11," featuring stars like Julia Roberts, George Clooney, and Brad Pitt, on the horizon and Warner Bros. has renewed his contract, the new terms are significantly different. Reports indicate that his overhead has been cut to under $2 million and his team reduced to five members.At Miramax and New Line, access to discretionary funds is nearly non-existent, with only a handful receiving support for overhead costs. Insiders reveal that Miramax's leadership carefully assesses each deal's requirements, leading to a variety of agreements ranging from substantial first-look contracts to informal verbal arrangements with directors and producers.

Emphasis on Productivity

Peter Schneider, who recently assumed leadership at Walt Disney Studios, emphasizes the importance of partnerships. “We seek individuals eager to collaborate, those who can contribute positively to our business,” he states.

Schneider continues, “Our goal is to cultivate filmmakers passionate about creating content for us. Savings realized in overhead directly enhance our film production capabilities, which is where true value lies.”

The data supports this shift, with Variety reporting a decrease in studio deals by 28 over the past three years, indicating significant changes across the board.

However, it’s essential to note that this analysis specifically pertains to producing agreements and excludes first-look arrangements with actors and directors not involved in production.

Studio Analysis

Disney

Under Joe Roth's leadership, Disney was known for significantly reducing its number of deals. This year, however, the studio maintains a similar volume of agreements as last year.

The figures can be misleading; while some major deals have disappeared, new, smaller agreements have emerged. Mandeville Pictures, formerly located in the Disney animation building, has transitioned to Hyde Park Productions, now based in West Los Angeles. This new entity has secured a first-look deal with MGM, a second-look agreement with Disney, and a new producing partner, Ashok Amritraj, along with various equity partners for independent projects.

Notably, Barry Mendel, producer of “The Sixth Sense,” has transitioned to Universal but continues his collaboration with Disney on M. Night Shyamalan’s project, “Unbreakable.”

Additionally, the partnership between producers Charles Shyer and Nancy Meyers has ended, with Shyer directing “The Affair of the Necklace” for Alcon Entertainment and Meyers working on “What Women Want” at Paramount.Nicolas Cage's Saturn Films contract has come to an end, but discussions are underway for a new venture. Paul Schiff Productions has been disbanded, with Paul Schiff now taking the role of president at Rick Hess's Propaganda. Hunt Lowry is departing Disney to lead Gaylord Films, a sector of Gaylord Entertainment, which is well-funded. Julia Roberts' Shoelace Productions has transitioned to join Eric Roth at Revolution Studios.

The Mouse House has mostly secured smaller agreements with notable figures such as James Mangold, Eric Roth, Charles Hirschhorn, Mike Marcus, Wes Anderson, Owen Wilson, Mike Mitchell, and Rob Schneider.

DreamWorks

Insider information indicates that DreamWorks is specifically seeking to finalize contracts with producers who have projects ready for production. This explains the non-renewal of Mimi Leder's Yak Yak Pictures deal, as she has now partnered with John Wells Productions under Warner Bros. The studio also sees the dissolution of other agreements.

Following the acclaim of "American Beauty," DreamWorks has decided to retain key members of the film's creative team, including producers Bruce Cohen and Dan Jinks, along with director Sam Mendes.

Additionally, Woody Allen joins DreamWorks, marking his first studio deal after previous films were distributed by Sony Pictures Classics, Fine Line, and Orion. His new agreement spans three years and includes three films, bringing $100 million in equity from German video and licensing powerhouse VCL.

Fox

Due to a lackluster year, Fox has not entered into many new agreements, although the studio is minimally expanding existing contracts, such as the one with John Davis' Davis Entertainment. The recent announcement of CEO Bill Mechanic's abrupt departure on June 22 suggests that Fox will continue to exercise caution.

Among the significant departures from Fox is Chris Columbus' 1492 Pictures, which is expected to transition to Warner Bros., coinciding with Columbus' work on "Harry Potter." Other notable exits include Sigourney Weaver, Denzel Washington, Mike Newell, and Art Linson. Arnold and Anne Kopelson, who recently secured a financing deal with Munich’s Intertainment, are also likely to exit their costly agreement later this year.

A source from Fox emphasizes that productivity remains the studio's top priority.

While Fox values its equity partnership with Arnon Milchan's New Regency Productions, it has been hesitant to establish similar deals, opting instead to maintain full international rights to its films.

MGM

Industry Production Partnerships Update

MGM is making notable strides in expanding its production partnerships, having acquired Terence Chang and John Woo's Lion Rock Productions, alongside Seth Jaret's Jaret Entertainment and Hyde Park Entertainment.

Meanwhile, MGM's United Artists division has seen a significant change as it parts ways with Christine Vachon’s Killer Films, known for producing acclaimed works like "Boys Don’t Cry." Killer Films has secured new funding through the support of John Wells and Paul Allen’s Clear Blue Sky Productions.

United Artists is also broadening its network by establishing collaborations with prominent entities such as Francis Ford Coppola's American Zoetrope, Greenstreet Productions in Gotham, and Michael Stipe's Self Timer.

In the case of Miramax, its collaboration with London’s Hal Films has come to an end. Nevertheless, Miramax remains a hub for informal agreements, frequently partnering with a range of talent across the industry. One of its noteworthy ongoing collaborations is with Richard Gladstein’s FilmColony, which has produced hits like "The Cider House Rules" and "She’s All That."

Paramount, similar to Fox, has chosen not to form any new producer agreements this year. The studio has concluded existing contracts with notable producers such as Cort/Madden, Mace Neufeld, and Gale Anne Hurd. Neufeld has transitioned to Sony, while Hurd's Valhalla Productions has secured backing from German conglomerate Kinowelt.

On a positive note, Paramount continues to thrive with its partnerships with Tom Cruise and Paula Wagner’s C/W Productions, Jodie Foster’s Egg Pictures, and equity partner Mandalay Entertainment.

Universal has decided to terminate its collaborations with Good Machine, Mike Lobell and Jim Sheridan’s Hell’s Kitchen, and Penny Marshall’s Parkway Productions. However, the studio has successfully attracted new producers like Barry Mendel and Casey Silver while maintaining a strong relationship with Jersey Films. Despite this, the future of producer commitments at Universal is uncertain, especially with Vivendi's potential acquisition of the studio on the horizon.Following a period of financial underperformance, Sony is refocusing its strategy, emphasizing acquisitions and profitability, with the appointment of Peter Schlessel as the new production president.

Recently, Sony finalized a domestic distribution agreement with Joe Roth’s Revolution Studios, aiming to ease the pressures of film production at Columbia Pictures.

John Calley, chairman of Sony Pictures Entertainment, mentioned to Variety that the studio is not pursuing new partnerships and has seen a significant reduction in production agreements, totaling around four. However, he noted that Roth's involvement is unique, as the former Disney chairman is known for attracting talent and securing funding.

In contrast to other partnerships at Sony, Roth’s projects will not be subject to the typical greenlight process, allowing his production company to operate independently.

Over the last year, Sony has terminated contracts with John Woo and Terence Chang’s Lion Rock Productions, which has since moved to MGM. Additionally, the studio parted ways with Lisa Henson and Janet Yang’s Manifest Films. In place of these exits, Sony has welcomed longtime producer Mace Neufeld and signed a deal with director Penny Marshall.

Warner Bros.

Warner Bros. is continuing its process of downsizing production deals, with many contracts nearing their expiration. For those that will be renewed, it is anticipated that they will come with significantly lower overhead costs.

Current discussions are underway between the studio and the production team of Paula Weinstein and Barry Levinson at Baltimore/Spring Creek Productions, just ahead of the release of their $140 million film, “The Perfect Storm.”

If Weinstein and Levinson remain with the studio, it is expected that they will need to secure their own financing, a trend Warner Bros. insiders believe will become more prevalent in the upcoming year.

Among the notable departures from Warner Bros. this year are Bobby Newmeyer and Jeff Silver’s Outlaw Productions, known for films like “Three to Tango” and “Ready to Rumble,” as well as director Joel Schumacher, who has not produced films for Warner Bros. outside of his executive producer role on Outlaw’s “Gossip.”

Madonna’s Madguy Films has also exited the studio, although reports suggest that a new deal is on the horizon.

Contributors List

This report includes contributions from several individuals:

• Claude Brodesser
• Paul Duke
• Dana Harris
• Dade Hayes
• Dave McNary

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