You might call it Hollywood’s version of a 900-pound gorilla. Or maybe just the mother of all market shares.
While Washington regulators focus on the TV side of the proposed Time Warner-Turner union, the Hollywood film community is gaping in awe at the cinematic behemoth the deal creates. The merger will usher in a conglomerate of film production and distribution companies more powerful and dominant than any in history. More than 80 pics per year could conceivably flow from the combined output of Warner Bros., New Line Cinema, Fine Line Features, Castle Rock Entertainment and Turner Pictures.
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Judged against last year’s 185 MPA A releases, the Turner-Time Warner numbers would account for 43% of studio films on screens across the country. Hypothetical 1995 market shares of this monster (from Jan. 1 to Sept. 24) yield a dominant 26% share with just over $1 billion in grosses. Its closest rival would become Buena Vista-Miramax, whose combined films grossed a distant $842.2 million for a 21.7% share.
“It’s the kind of company that you can’t live without if you’re a theater,” says a senior distribution exec at a rival studio. “It certainly won’t leave much market share out there.”
According to some insiders, the Turner-Time Warner box office domination could affect everything from star salaries and production costs to the types of movies that are made.
If Levin and Turner decide to scale back price tags on highlypaid thesps – or maybe refuse to greenlight any pics over $50 million – would that influence the rest of the industry?
“Probably,” says a crosstown studio honcho. “With that much dominance in the market, they could influence behavior. They will be a force to contend with.”
It remains to be seen, of course, how the new company will merge its disparate film entities.
“Obviously, we’re at a point where a lot of these things have not been discussed,” admits Warner cochairman Robert Daly. “As far as theatrical is concerned, New Line is a separate entity that does quite a few pictures. I don’t see any change in the way New Line does business. As far as Castle Rock is concerned, it has a deal with Columbia until the end of 1997. Obviously, Castle Rock is not going to renew their Columbia deal.”
Little else is clear. Among the possibilities:
* New Line Cinema wants to maintain its own production arm and distribution network. Warner Bros, may consider the upstart a complementary addition. Or maybe not. A sale of the company as is, or even a partial liquidation to allow for a minority interest elsewhere, are possibilities, says one source. Both rumors have been coursing through Hollywood’s phone lines and across dining tables.
* When Castle Rock’s distribution deal with Sony lapses, it’s anybody’s guess who will handle it. Castle Rock’s 10 to 12 pics per year could go to New Line, a prospect Castle Rockers have long avoided. Warner Bros, could pick up the product or the boutique could set up its own web, as it has long wanted to do.
* Turner Pictures, the nascent firm bearing the founder’s name, is equally up for grabs on its distribution. Production prexy Amy Pascal plans to have eight pics per year by 1998. New Line had planned on distribbing the startup – and had already started with Dawn Steel’s “Angus.” But that could end quickly if Warner Bros, plants its flag.
TBS officially says that none of those issues have even been broached by upper brass. “While the actual structure is yet to be determined, we’re very excited about the combined possibilities and opportunities that this deal would provide,” says a TBS spokeswoman.
Warner’s capacity
Daly agrees that it’s too early to tell. But he maintains Warners would be fully capable of handling both Castle Rock and Turner product, even if it added 20 pictures per year to the already hefty output of 25 to 30 pics per annum. WB released 28 films in 1993,33 in 1994 and plans on 25 this year.
“Can Warners handle more product? Yes they can,” Daly says. “But at the moment, it’s not one company yet… Turner Pictures hasn’t even done a picture (under the Pascal regime). They haven’t done enough to know whether they would be distributed by us or not.”
Hands too full?
Off the Burbank lot, distrib execs at other studios aren’t so sure Warner can handle such a big increase.
“On the one hand they’d have more leverage because they’d have more films. They’d be able to increase the distributor’s share of the film rental. But with a lot of pictures to set, sometimes that brings film rental down.”
New Line-Fine Line is clearly the biggest slice of the Turner pie. The powerhouse former indie churned out 24 pics last year and is poised to release 22 in 1995. (New Line took over distribution for specialty subsid Fine Line Features early this year.) The total now could swell to as many as 30 pics per year. With hits like “The Mask,” “Dumb and Dumber” and the current “Seven,” New Line has earned major player stripes. Early industry estimates of its value place it north of the $1 billion line, a substantial increase from the $550 million Turner paid for it in 1993.
Rumors immediately surfaced after the Sept. 22 announcement of the deal that New Line would be spun off by TW to avoid duplications and overlap of movies with Warner Bros. Both studios are interested in high-profile, A-list pics, and a sale would provide fast cash for the merged companies.
But Daly says New Line’s success is such a boon to the company that it would be crazy to lose it as a second distribution network. “New Line does a terrific job with what they do. You don’t see New Line being combined with Warner Bros.,” he says.
Buyback rumor
Some industry insiders say New Line chairman Robert Shaye has a buyback clause in his contract that allows him to repurchase New Line within three years of any sale by parent Turner. Shaye has denied repeatedly that such a clause exists, and that has been reiterated by key Turner Broadcasting officials.
It’s unlikely, says one source, that Warner would sell off all of New Line anyway. Ted Turner bought the company largely for the same reason he picked up the 3,000-plus title MGM library nine years ago- to provide fodder for his massive cable TV network. Under the merger, that product becomes even more valuable for the TV webs and cablers that include WB Network, HBO, Turner Movie Classics, TBS, TNT and the Cartoon Network.
“We would want to make sure that we had certain rights and certain distribution prerogatives,” says the source. Those might include homevideo distribution, cable and pay TV rights for New Line’s 15 to 20 films per year and Fine Line’s more specialty oriented 10 to 12 annual pics. Ironically, New Line, Fine Line and Turner all signed a 10-year agreement this week with an HBO rival, pay-cabler Starz!, owned by John Malone, after long negotiations.
Castle Rock’s future is equally uncertain. For years, chairman Alan Horn and Castle Rock Pictures president Martin Shafer have said they wanted the company to establish its own distribution network. It would only handle 10 to 12 pics per year, but execs there felt that was feasible. The company had produced such hits as “City Slickers,” “When Harry Met Sally…” and “In the Line of Fire,” but was never able to fully take advantage of those pics’ boffo B.O. take.
CastleRock destiny
Nobody will admit it on the record, but insiders often indicated that Castle Rock seemed destined to be handled by New Line’s distribution web. The company was already handling Turner Pictures films and it made no sense to many execs to let Castle Rock struggle to form a domestic distrib system from scratch. Now, nearly the entire industry assumes Castle Rock will be scooped into Warner Bros, distribution. Daly and Castle Rock chairman Alan Horn are both skeptical – but for different reasons.
“We have taken the position consistently that we want to have the distribution structure independently,” says Horn. “We want to be good corporate citizens. We are mindful of the fact that we are owned by a large company… At the same time, our management agreement has not changed. There have been zero discussions about any of this. And we have been assured by Jerry Levin and Ted Turner that this will be a terrific arrangement for us all. I’m confident Castle Rock’s legitimate concerns will be addressed down the road.”
Daly, however, says it’s “silly” to think about the idea that there might be three distribution organizations within one company.
Castle Rock’s leverage for its argument may get a boost over the coming months. The company hasn’t had a hit in two years, but signs are all positive for “The American President, ” directed by CRE partner Rob Reiner and starring Michael Douglas and Annette Bening. CRE insiders are hopeful the November release will put them back on track with a $100 million-plus domestic gross.
Baby of the brood
The baby of the brood, Turner Pictures, poses more pointed questions for the happy couple.
Under president of production Pascal, Turner Pictures is about to unleash a 15-pic slate of projects in development. Some are high profile pieces like “Edwards and Hunt: The First American Road Trip,” which the studio is bartering to secure Hugh Grant and Chris Farley for the leads. Others include “The Jackie Robinson Story,” written, directed and produced by Spike Lee, starring Denzel Washington; another screen version of Ayn Rand’s “The Fountainhead,” directed by no less than Oliver Stone; and “Mercury 13” from “Little Women” producer Denise Di Novi.
The company recently greenlit its first pic in “Michael,” which it picked up in turnaround from Universal, for an April start date. John Travolta is attached to star and Nora Ephron is directing from an original screenplay by Pete Dexter, rewritten by Ephron and her sister Delia Ephron.
All that activity- and Ted Turner’s name above the archway – leads most insiders to think Turner Pictures is safe from the dismantlement that some naysayers originally predicted. Turner likes having his name on a studio, and he pumped gobs of money into the fledgling effort. Even as recent as the Sept. 30 weekend, Turner had Pascal and filmmaker Oliver Stone up to his Montana ranch to discuss plans for “The Fountainhead.”
Whither Turner Pix
Daly, again, is unclear how Turner Pictures will fit into the overall distribution scheme.
“Turner basically decided to get heavy into the production of motion pictures because Ted was looking for new product for his channels and everything else,” says Daly.
A rival studio exec says: “It’s going to be hard for them to let Turner have any kind of piece of dirt. The biggest challenge will be getting everyone to do what they’ve been doing and fit into Warners.”
One distrib exec says the entities are most likely to merge on the burgeoning foreign distribution side. WB clearly has the dominant web throughout the world. New Line, Castle Rock and Turner have each built up their foreign capabilities with output deals. “Anything could happen on the foreign side,” says one distrib exec. “It may make more sense for everyone to go through one distributor for foreign.”
Questions remain, but one thing is certain. When Turner and Time-Warner get hitched, they will in fact have grown into a “Congo”-sized gorilla. How much of the industry they devour remains to be seen.
