FedEx chief Fred Smith still believes in the movie business--Is he nuts?
While several of Hollywood's financially strained independent production companies have either gone under or drastically scaled back operations over the past year, Fred Smith -- the founder and chief executive of FedEx Corp. -- says he's still committed to his side business: investing in movies.
For more than a decade, the Hollywood outsider who lives in Memphis, Tenn., has quietly bankrolled Alcon Entertainment, the boutique production outfit behind such films as "My Dog Skip" and "The Sisterhood of the Traveling Pants" series. His company may not be known for any blockbuster success and has had some box-office losers like the romantic comedy "Chasing Liberty" and its debut movie, "Lost & Found." But Smith claims that, thanks to solid performers such as the romantic drama "P.S. I Love You," starring Hilary Swank and Gerald Butler, and continued financial discipline, Alcon has been a profitable venture.
He attributes the company's stamina in what he readily acknowledges is "a very tough business" to the cost-conscious "no-limos" philosophy guiding Alcon's two chief executives, Andrew Kosove and Broderick Johnson. Despite being a Yalie, Smith hired the two Princeton alums after meeting them in 1994 and being impressed with their 220-page business plan for launching a movie company.
Smith said the duo's success lies in the fact that the pair has stuck to their original strategy for lowering risks inherent to the unpredictable movie business: Keep film budgets tight and overhead low; focus on specific genres like family films; and have a strong studio partner to help market and distribute the pictures (Alcon has a multi-year distribution deal with Warner Bros. and typically sells off the international rights in its films to help finance them).
"Those three things have proven that we're the exception to the rule," Smith said when he dropped by The Times to talk about the toll that the bad economy is taking on his main business --delivering packages.
Smith ducked a question about how much of his own money he's invested in the movie business. "It's mostly been done with borrowed money," he says, noting Alcon's good fortune last year in securing a $500-million bank loan before those kind of "slate-financing" deals dried up. Smith says he used his own FedEx stock to secure the loan.
The entrepreneur, who leaves the day-to-day running of Alcon to his two movie chiefs, says he reads the occasional script and rarely visits the set of his company's movies.
His personal Alcon favorite? Smith says its Jay Russell's family movie, "My Dog Skip," based on Willie Morris' World War II memoir about a boy and his dog growing up in a small Southern town. Made for $7 million, the 2000 release grossed $35 million at the worldwide box office and did well on video. Smith said he defies anyone to watch the movie "without a tear in their eye."
Smith insists he doesn't regret his own failings as a would-be movie star. He jokes that any ambitions he may have harbored were "left on the cutting-room floor" when his three-minute cameo in Fox's 2000 "Cast Away," starring Tom Hanks as a FedEx executive in a modern-day version of Robinson Crusoe, was "so bad, so atrocious, it was cut to 18 seconds."