Paramount's Vantage now disadvantaged

No one said life was fair, but in the movie business, life often seems especially like a rigged poker game, especially when it comes to who gets the ax and who gets the cushy promotion. Nowhere is this more evident than at Paramount Vantage, which just laid off the majority of its 100-or-so staffers, a tacit admission that its much-ballyhooed specialty division--like most of Hollywood's specialty divisions--had been a big money loser. On the other hand, Vantage founder John Lesher, the one-time Endeavor agent whom Brad Grey hired in late 2005 to reinvent the studio's flagging Paramount Classics art-house wing, got out when the getting was good, Lesher being named president of the Paramount Film Group in January, largely as a reward for putting Grey in the Oscar game and allowing him to rub elbows with such cinematic luminaries as Paul Thomas Anderson, the Coen brothers and Martin Scorsese. 

Of course you wouldn't know any of this from reading Variety's Thursday coverage of the layoffs, which bought the Paramount party line hook, line and sinker, failing to mention that Vantage had lost untold millions of dollars, not just by greenlighting art-house films with wildly inflated budgets but also by overspending on marketing the films. Variety also failed to mention the obvious--that Nick Meyer, the smart industry vet who inherited Lesher's Vantage presidency, has gone from prince to pauper, reduced to making a handful of low-budget acquisitions a year. Variety also failed to connect the dots about the news last week that Vantage dumped production and acquisition exec Amy Israel, replacing her with ex-New Line exec Guy Stodel. The man who made New Line millions resurrecting the "Texas Chainsaw Massacre" franchise, Stodel is a good hire, but he won't be making any more "Margot at the Wedding"-type critic favorites. He's there to turn Vantage into a Screen Gems-style genre division. 

In fact, that's the old/new idea of the month in the movie biz: Transform your woebegone specialty division into a lean, mean macho machine, churning out low-budget comedies, thrillers and horror films. Warners just turned the same trick, axing its money-losing Warner Independent Pictures and Picturehouse divisions, replacing them with a new, streamlined New Line Cinema, whose mandate is to return to its low-budget horror and youth comedy roots.    

Of course this leaves us with a tantalizing question: Why would Brad Grey take John Lesher, who failed to make any money in his two-plus-year stint at Vantage, and make him Paramount's production chief, a job that by definition (as this summer's flood of superhero movies attests) is solely about making money?

An undeniably smart guy with an unfortunate tendency to engage in indiscriminate Hollywood hugging while yelling at his underlings (and reporters) in private, Lesher did a great job of sussing out his mission at Vantage. His predecessors, Paramount Classics founders Ruth Vitale and David Dinerstein, had stuck to the business model invented by tightfisted Paramount boss Jonathan Dolgen, spending as little money as possible, happy to hit singles instead of home runs. Classics movies were rarely big hits, but they rarely lost money. But in today's perception-is-reality movie business, blind adherence to fiscal responsibility is a losing game.

Seeing that all Vitale and Dinerstein got by hitting a lot of singles was a pink slip, and sensing that his new boss wanted to prove that he was more than a glorified talent hand-holder, Lesher decided to swing for the fences, not bunt the man to second. He hired a platoon of gifted filmmakers (some of whom were his former clients at Endeavor, by the way) and gave them plenty of dough, figuring they would quickly put Vantage on the map. The strategy worked. Vantage released a lot of good movies, notably Paul Thomas Anderson's "There Will Be Blood," Sean Penn's "Into the Wild" and Davis Guggenheim's "An Inconvenient Truth," a film that even had a visible impact on world affairs.

Unfortunately, the only Vantage releases that made any real money were "Inconvenient Truth" and "Babel," the latter a film that Grey had bought before Lesher arrived at the company. The vast majority of other pictures, notably the Angelina Jolie-starring "A Mighty Heart," Marc Forster's "The Kite Runner," Noah Baumbach's "Margot at the Wedding" and Mike White's "Year of the Dog," were losers. Like too many other specialty divisions in recent years, Vantage got so desperate chasing box-office results and Oscar nominations that it wildly overspent on marketing its films.

It was one thing to go hog wild on "Babel" since, after all, it was the boss' first big acquisition and an important flag-planting symbol for Vantage. But the real killer was losing money on the movies that should've made money. The big failure was  "There Will Be Blood," a Miramax co-production that became a poster child for specialty division excess. It cost more than $45 million to make, and nearly that much to market as Vantage struggled to find an audience--and Oscar validation--for the bleak period drama. Lesher also stumbled badly with his handling of "No Country for Old Men."

It was the Oscar winner he let get away. Produced by Scott Rudin, the Coen brothers' movie was originally slated as a Vantage release. But Rudin ended up taking it to Miramax for its domestic release, partly because Vantage had too many movies to release last fall, partly because Lesher alienated the Coens by grouching about the ending of the film. When Lesher proposed putting the film out in August, hardly an auspicious Oscar release date, Rudin went through the roof and moved the film to Miramax, which ended up getting the bragging rights for its Oscar victory.

Film historians will give Lesher credit for a Pyrrhic victory (I called him to talk about all this, but didn't hear back). He put Vantage on the map by making some really good movies. But he spent so much to make so little that he killed the golden goose; Vantage will end up as another genre-dominated studio division, its ambitions severely curtailed. Just a few short years ago, everyone was piling into the pool, trying to establish specialty divisions. Now that there's blood in the water, everyone is running in the other direction.

Of course, the glut that killed the specialty business will soon be the glut that will undermine the genre business. At least specialty films went after a specific, under-served audience; genre films, made by smaller divisions, are simply fighting for the same shelf space and audience that the studios already own with their bigger tentpoles.

But Lesher has flown the coop. He's safely ensconced at big Paramount, focusing on making lots of moola from tent-polers like "G.I. Joe," "Star Trek" and "Iron Man 2." His timing was as impeccable as his suits, parachuting out of the burning plane right before it hit the ground. You can't say the same for the 60-odd Vantage staffers who got laid off this week. But hey, not everyone in Hollywood gets to enjoy a happy ending.

Photo of John Lesher by Al Seib / Los Angeles Times; photo of Brad Pitt and Cate Blanchett in "Babel" from Paramount Vantage

Comments

[John]

"There Will Be Blood," by every account I read, cost $25 million to make. It grossed $76 million worldwide and has made an additional $36 million from DVD rentals and $22 million from DVD sales.

So, while it may not have been a big moneymaker, it certainly wasn't a "big failure."

[Melissa]

The film budget for "There Will Be Blood" may have been reported on some industry websites as $25 million but once it went into production it was over budget and that was reported, as well as widely known in the industry. In 2007, the MPAA reported that the average specialty pic cost $74.9 million to produce and promote, a huge increase from the year before. That's an average, so obviously some of those films cost a lot more than that to bring the average up that high. What doesn't get reported is that there is usually a minimum, and often much longer, of 2 years between when you start paying production costs and when you start to recoup those costs, so you also have financing costs (and you can only estimate how long it will be before you can start to recoup) in there as well, not to mention the costs of running a specialty division to find and foster these productions. So while it may look like it breaks even on paper, or makes a little money, what isn't being discussed is that it's not enough to break even or even do a little bit better because it means that if you have even a few of these middling successes, not to mention the failures, the money that should be in the pipeline to fund the development, production and acquisition of new quality pics is not there and so it weakens your ability to produce new films until there is nothing left.
The bottom line though is that you have to make good movies (and that takes guts and passion - in short supply these days in Hollywood) and then you have to get the attention of the right audience, and get butts in seats. There is a market for specialty pics and that audience is clamoring for quality films but they will not be reached by the traditional marketing methods and they will not settle for mediocre films. They are under served and largely ignored. The failure of most of the studio specialty divisions is a failure to recognize this and a failure of imagination, creativity and fiscal responsibility. And ultimately, as is pointed out, a failure of leadership.

[marychan]

$25 is just a [official] figure from Paramount; it looks like the real number is much more than that.

btw, from what I heard, Paramount Vantage spent too much money on the marketing campaign (and Oscar campaign) of "Babel", so this movie is also a money loser for Paramount.
Even Anne Thompson said that "Babel" didn't makr any money for Paramount.
http://www.variety.com/article/VR1117986990.html?categoryid=2508&cs=1

[someone who cares]

blood sucking snakes all of them I hope they all rot in hell.
The minions are the ones that held them together, now they get to go on the dole while Brad Grey and John Lesher have a very merry xmas. Happy Hannukah. How dare you treat people like this.