Fox Atomic goes up in mushroom cloud after two-year money-losing run

Peter Rice may have been a genius when it came to making Fox Searchlight the most successful specialty film distributor in Hollywood with such breakout hits as "Slumdog Millionaire," "Juno" and "Little Miss Sunshine."

But when it came to hitting it big with a division dedicated to comedies and thrillers aimed at teens, he bombed.

After a two-year, money-losing run of too many box-office misses, including the recent R-rated comedy "Miss March" and last year's comedy "The Rocker," starring Rainn Wilson, 20th Century Fox is shuttering its Fox Atomic "genre" label.

Six production executives will lose their jobs and another half-dozen who worked for Fox Atomic Digital will transition over to Fox Filmed Entertainment to work on digital projects.

Fox Atomic President Debbie Liebling is expected to return to the main movie studio, 20th Century Fox, headed by Tom Rothman and Jim Gianopulos, where she worked previously.

The big Fox studio will release the films that Atomic has in the hopper including "I Love You, Beth Cooper," directed by Chris Columbus, due out July 10, and "Jennifer's Body," a comedy horror film written by "Juno" screenwriter Diablo Cody, scheduled for release Sept. 18. "The Post Grad Survival Guide," a comedy slated for Aug. 14, will be released through Fox Searchlight.

Fox Atomic was launched in January 2007 as a way to give Searchlight's then-chief Rice expanded duties. Rice had hoped the unit could cash in on a lucrative market for low-cost, so-called genre films driven by young moviegoers, just as Dimension Films and Lions Gate have had been doing.

But most of Atomic's films incinerated at the box office. In January 2008, the label's marketing operation was folded into main Fox and nearly two dozen employees were laid off.

Last month, Rice, who oversaw Fox Atomic, was promoted to chairman of Fox Broadcasting.

-- Claudia Eller

Photos: 20th Century Fox

Former AOL chief to join News Corp.

Former America Online Chief Executive Jonathan Miller is expected to join News Corp. in the newly-created position overseeing digital strategy, according to a person familiar with the situation.

Miller is a well known figure in digital media, whose name was mentioned in conjunction with the top job at Yahoo. It would be the start of a major reorganization of the News Corp. digital division. It's unclear how this would affect Peter Levinsohn, who currently oversees Fox Interactive Media, which includes MySpace.

Levinsohn is well regarded by New Corp. Chairman Rupert Murdoch and other senior executives at the company, and sources say there could potentially be another role for him inside the company.

Miller stepped down as head of AOL in 2006, and founded the investment firm Velocity Capital. Last year, he was reportedly involved in trying to secure financing to make a bid for Yahoo at $20 to $22 a share, or $28 billion to $30 billion.

Miller has established himself as a hot hand on the Internet. He made his mark in e-commerce at Barry Diller's media conglomerate, then as chairman and chief executive of AOL, from which he was ousted in November 2006. He has detractors, particularly inside Time Warner, but gets plaudits from analysts and colleagues who say he is one of the industry's foremost strategic thinkers.

Herb Scannell, CEO of Internet television start-up Next New Networks and former vice-chairman of MTV Networks, calls Miller "one of the smartest guys I have come across in the media world."

-- Dawn Chmielewski and Claudia Eller

Photo of Miller by AP

Former NBC exec to join Chernin?

Katherine Pope, the former head of Universal Media Studios, is talking with Peter Chernin about joining the outgoing News Corp. executive when he launches his new production company.

Pope, who as head of NBC's television studio helped shephard such shows as "Heroes" and "30 Rock," was one of three top programming executives who were outsted last year following a rocky fall season for the broadcast network.

Industry sources say Pope has been in discussions with Chernin, who announced that he would leave News Corp. when his contract ends in June, concluding more than a dozen years as the entertainment giant's chief operating officer. 

Chernin's contract guarantees him a six-year motion picture and television production deal, under which Fox is obligated to green-light at least two movies a year -- at his discretion.

Chernin did not respond to an e-mail request for information. Pope could not be reached for comment.

-- Dawn C. Chmielewski

'Wolverine' promo is 'too big for one night,' says Fox

So, here's a new twist on movie promotions.

20th Century Fox has produced a three-part trailer to promote its big-budget summer release "X-Men Orgins: Wolverine" that will run as separate 60-second spots beginning Sunday on the studio's TV shows "Family Guy," "House" and "American Idol."

Immediately after Tuesday's broadcast of the final "Wolverine" spot on "Idol," all three trailers — which together form a narrative — will appear on Yahoo.

The fourth "X-Men" movie, which debuts in theaters May 1, is one of this summer's most highly anticipated releases. The spinoff of the three earlier films, which have generated a total of $1.2 billion in worldwide ticket sales, traces the origins and transformation of the the mutant played by the humanly handsome Hugh Jackman into Wolverine. The studio is billing it as the first chapter in the X-Man saga that unites Wolverine with other legends in the X-Men character "universe."

Fox says the fourth installment of the Marvel Comics movie cost about $100 million. That would be considerably less than the cost of the 2006 sequel "X-Men: The Last Stand," which reportedly carried a price tag of more than $200 million. Why cheaper? For one, Jackman is the only major star in this "prequel." And Halle Berry, who appeared in the first three films, doesn't have a role. Nor was "Wolverine" directed by Brett Ratner, who made the last film, but rather Gavin Hood, who won the 2006 best foreign film Oscar for the low-budget crime drama "Tsotsi" and has never handled a big franchise picture.

— Claudia Eller

Photos from "Wolverine" courtesy of Fox

Murdoch Fox strategic review spurs Chernin speculation

News Corp. Chief Executive Rupert Murdoch (above right) is in Los Angeles this week and next week to meet with top Fox executives on the West Coast.

Murdoch's presence, and his scrutiny of the company's entertainment businesses, has prompted increased speculation that Peter Chernin (above left), president and chief operating officer of News Corp., actually might be leaving the company after 20 years.  Chernin's contract expires in June.  Chernin has been particularly tight-lipped about his plans, fueling anxiety among Fox executives who want to keep Chernin, who is admired by both Wall Street and Hollywood power players.

Chernin declined to comment.

Murdoch flew into Los Angeles from Australia this week after celebrating the 100th birthday of his mother, Dame Elisabeth Murdoch, along with about 600 friends. The 77-year-old Murdoch is fond of saying that his mum's longevity bodes well for his own prospects of remaining at the helm of News Corp. for many more years.

Succession issues have bedeviled the company because Murdoch wants one of his children (he has six) to eventually run the global media empire that includes the 20th Century Fox film studio, Fox Broadcasting network, cable television outlets that include Fox News Channel, social network MySpace and a string of newspapers that includes his recently acquired jewel, The Wall Street Journal. 

Some on Wall Street worry that Murdoch's kids are not ready to manage the sprawling businesses that generated $33 billion in revenue last fiscal year. What's more, it would be a particularly awkward time for a major executive transition because the recession has hammered media companies that depend on advertising and consumer spending for such non-essential purchases as DVDs.

Last week, News Corp. reported a $6.4-billion loss for the quarter ended Dec. 31. Its stock is down 65% from a 52-week high of $20.49. 

During a conference call with analysts to discuss the results, Chernin seemed to play a less prominent role than he has in the past. Murdoch dominated the session, fielding questions about the entertainment properties that have long been Chernin's specialty.

Then there was the sticky issue of Chernin's contract.

Back during November's earnings call, when Murdoch and Chernin were asked to characterize the negotiations, Chernin called them "constructive." Murdoch quickly jumped in:  "I would characterize them as constructive and friendly."

But last week, the same question prompted a more measured response. "Peter and I are continuing our conversations and they're private and that is all there is to it," Murdoch said.  "Nothing more for me to say and we won't take any further questions on that. It is a confidential matter."

Chernin remained silent.

Murdoch's tour through Los Angeles is part of a strategic review of the company's businesses that takes place every three years, say people familiar with the situation who did not want to be identified in discussing the sensitive subject. Murdoch will hold two more weeks of meetings with top Fox executives this month in New York.

If Chernin were to leave News Corp., he would be available to step into the top job at any number of troubled media companies, of which there appears to be no shortage.

People close to Chernin said it would be hasty to draw a conclusion about Chernin's tenure and Murdoch's visit (the CEO comes here more often than people think, they said). Chernin, 57, has been known to take his employment negotiations down to the wire.  His last contract renewal, in July 2004, was announced three days before the new agreement went into effect.

— Dawn C. Chmielewski and Meg James   

Photo: Daniel Acker/Bloomberg News

Hollywood sings the Blu(e)s

Hollywood is singing the holiday blues.

Several major studios and consumer electronics companies are bankrolling a $25-million marketing campaign this holiday season to promote Blu-ray movie discs.

The commercials will begin airing this month on television shows and cable channels that attract heavily male audiences (the classic technology early adopter), such as Fox's NFL games and ESPN, Comedy Central and the Discovery Channel.  The ad features some of the summer's biggest hits -- including "The Dark Knight," "Hancock" and "Wall-E" -- together with the promise that "all the movies you want will be on Blu-ray high definition ... The best way to watch movies at home, ever."

The launch of the "Tru Blu" promotional campaign underscores the enormity of the stakes for the studios and hardware manufacturers.  The initial format war over which technology would replace the DVD, Sony's Blu-ray or Toshiba's rival HD DVD, confused consumers and kept them from making the   high-def leap.

Meanwhile, DVD sales, long Hollywood's most dependable cash cow, are down 9% this year, according to Nielsen VideoScan. Studios are looking to promote Blu-ray to pick up the revenue slack.

Admittedly, spurring sales of a premium item as the economy spirals headlong into a recession is no small feat. Especially when a new Consumer Reports poll found that 76% of consumers plan to cut back on holiday spending on gifts, travel and entertaining. 

"With the recession, if people splurge, they’re going to splurge on watching movies at home, bypassing other entertainment options," said Ronald Sanders, president of Warner Home Video Inc.  "Yes, there are some challenges, given the recession. By and large, the industry is holding up very, very well."

Slowing economy, or something, hits studios

The slowing economy appears to be hitting Hollywood where it hurts: at the box office and in DVD sales.

Or maybe it's just that the movies weren't good enough to get people into the theaters.

Either way, several of the major Hollywood studios in recent days have been reporting lower revenues and income.

Time Warner Inc. today said revenue for its Warner Bros. movie division fell 9%, despite the blockbuster Batman sequel "The Dark Knight." Although the movie has grossed $528 million since its July release, even that performance unfavorably compares with a year ago, when "Harry Potter and the Order of the Phoenix," "Rush Hour 3," and "Hairspray"  were in theaters and "300" was out on DVD.

Nonetheless, filmed entertainment was able to squeeze out a 3% increase in operating income, partly owing, however, to cost cuts associated with consolidating its New Line Cinema unit into the larger Warner Bros. studio.

News Corp., meanwhile, reported a 30% drop to $251 million in fiscal first-quarter operating income for its filmed entertainment group, which includes 20th Century Fox. The movies "X-Files: I Want to Believe" and  "The Rocker" drew in fewer theatergoers than the previous year's box-office hits "The Simpsons Movie" and "Live Free or Die Hard."

"The film division admittedly got off to a slow start," said News Corp. Chairman Rupert Murdoch in a call Wednesday with press and analysts. He touted strong holiday offerings, which include "Australia," starring Nicole Kidman and Hugh Jackman, "The Day the Earth Stood Still" staring Keanu Reeves, and "Marley and Me" with Jennifer Aniston and Owen Wilson.

Media conglomerate Viacom Inc. started off the earnings season's economic malaise with its release Monday announcing that Paramount Pictures contributed to the film unit's $19-million loss for the quarter ended Sept. 30. Chief Executive Philippe Dauman said the studio planned to cut back the number of movies it releases each year to no more than 20 to save on marketing costs.

-- Dawn C. Chmielewski

Heath Ledger, as the Joker, with Christian Bale, as Batman, in "The Dark Knight."  Stephen Vaughan / Warner Bros. Pictures

Reports of DVD death greatly exaggerated

Online sites YouTube and Hulu stream billions of videos every month and attract millions of viewers, but when it comes to buying movies and television shows, consumers are still decidedly old school.

A new report from market researcher NPD Group shows that $8 out of every $10 spent on movies goes to buying and renting DVDs.

The findings, presented today at the DisplaySearch HDTV 2008 Conference in Hollywood, indicate that 41 cents of every dollar the consumer budgets for movies and TV shows goes to buying a DVD, and 11 cents goes to purchasing a season's worth of TV shows on DVD.

An additional 29 cents out of every dollar is spent on DVD rentals, which suggests that Blockbuster isn't about to go out of business anytime soon, despite the growing popularity of Internet video.

By contrast, digital rentals and purchases, through services such as Apple Inc.'s iTunes or Amazon.com's new online streaming video service, account for just 0.5% of consumer spending on renting or buying movies and TV shows. The results were based on a survey of more than 11,000 consumers and balanced to reflect the Internet-connected U.S. population age 13 and older.

"I think there's a big difference between looking at things on YouTube or getting the content for free online versus paying to watch a movie or a television show," said Russ Crupnick, NPD senior entertainment analyst. "My guess is it's going to take some time for people to latch on to that behavior."

That's not to minimize the strong growth of video-on-demand services or digital downloads, said Danny Kaye, executive vice president of 20th Century Fox Home Entertainment. Apple, for example, said in June that its customers were renting and purchasing more than 50,000 movies every day through iTunes.

Nonetheless, plasic discs continues to rule the day, in part because habit still trumps hot technology. For a majority of Wal-Mart Nation, it's still preferable to pick up a DVD at a local retailer or supermarket than to spend a couple of hours downloading it off the Internet.

Although DVD sales are likely to remain flat this year, Kaye believes spending on new, high-definition Blu-ray discs will restore the studios' packaged media business to growth within two years.

-- Dawn C. Chmielewski

Photo: Gary Gardiner/Bloomberg News