hoc opus

The Los Angeles Times had a nice piece on Paramount's (really, Tom Freston's) desire for a stronger, more profitable (really, greater revenues) independent division. While Paramount Classics has been distrib'ing foreign language fare, Freston points to the success of the Fox Searchlight model for inspiration.

When I spoke to Freston late last week, he made it clear he views the specialty film world as one of the leading growth areas in the movie business. "Once you get past the tent-pole movies like "Spider-Man' or 'Shrek,' the indie film companies are the most financially viable part of the business today," he explained. "A specialty company is a place where you can make a profit on pictures at a relatively low risk, market movies more cheaply and build talent relationships that provide access to great material and bring new creative energy to the parent studio."

The key here is that a good distribution portfolio needs to accomodate a range of budgets and genres. More importantly, Freston recognizes that in smaller, niche films there is room for nice returns against much reduced investment. A $5 million acquisition of a film like Napoleon Dynamite with box office upwards of $40 million will bring significant returns to Searchlight. And it allows a studio to spread investment over a slate, as opposed to the impact of blockbuster event movies.

Coincidentally, consider this news in conjunction with the active risk-avoidance by New Line and Universal in their recently announced German tax fund deals (here and here).

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