DreamWorks' Stacey Snider Reveals How Studio Slimmed Down to Stay Alive
"We have to adapt, or we will be out of business," Steven Spielberg's partner tells THR about the cost cuts and new financial partners that will get its first big test with "The Fifth Estate."
A version of this story first appeared in the Oct. 25 issue of The Hollywood Reporter magazine.
After watching an early cut of the upcoming Vince Vaughn comedy Delivery Man, DreamWorks' Steven Spielberg called his fellow partner Stacey Snider suggesting additional footage (known as coverage) be used in several places. Snider found herself in a situation she'd never been in before: The coverage he wanted didn't exist because the film had been shot on a tight 40-day schedule, compared with the usual 60 days for studio films. Spielberg -- not used to hearing the word no -- backed off.
Such is the new reality at DreamWorks, which has undergone a radical personality shift in order to stay afloat. The company launched in 1994 by Spielberg, Jeffrey Katzenberg and David Geffen as a fully diversified Hollywood studio now operates more like a lean-and-mean indie venture. Under pressure from financial backer Reliance, Spielberg, 66, and Snider, 52, are making fewer films -- down from six in 2011 to two this year -- slashing budgets and setting up a key international partnership.
"Monday, Wednesday and Friday, I yearn for more. Tuesday, Thursday and Saturday, I'm proud that we looked at our reality open-eyed and said, 'We have to adapt, or we will be out of business,' " Snider tells The Hollywood Reporter. "When I worry about something, I can calm myself down and say, 'You know what, we are making well-priced, quality movies. We're not thoroughly exposed anymore.' "
They've also learned to say no to key talent. In September, Paul Greengrass exited as director of The Trial of the Chicago 7 because he wanted to spend more than DreamWorks was willing, leaving the Aaron Sorkin-scripted drama in limbo. Spielberg put his directing project Robopocalypse on hold because of the $150 million-plus budget (he also wasn't happy with the script) -- a stark reminder that not even one of Hollywood's most lauded directors is immune to changing times. (Spielberg also fell off Warner Bros.' American Sniper, but that in part was due to a salary dispute.)
DreamWorks' new direction will be tested beginning Oct. 18 with Bill Condon's WikiLeaks movie, The Fifth Estate, followed by the $23 million-budgeted comedy Delivery Man on Nov. 22 and the $66 million Need for Speed on March 14, all of which will be released by distribution partner Disney in the U.S. and some foreign markets.
Fifth Estate cost just $26 million after tax rebates, and DreamWorks' new deal with David Garrett's foreign sales outfit Mister Smith Entertainment means that nearly half or more of the budget is covered by European money. Participant Media co-financed a large chunk, putting DreamWorks' share at 25 to 30 percent. Should the movie not work (tracking is very soft), the fallout won't be devastating.
As part of the transformation, the studio slashed overhead by reducing its workforce from 120 to 80. It also shed first-look deals with longtime producers Alex Kurtzman and Roberto Orci, and Walter Parkes and Laurie MacDonald. In spring of 2012, head of physical production Steve Molen was replaced by indie veteran Jane Evans. DreamWorks' TV division, separately financed from Reliance, has enjoyed recent success (CBS' Under the Dome) and is contributing to the bottom line.
For Snider and Spielberg, the day of reckoning came in 2011 as DreamWorks was losing tens of millions of dollars. Infused with $325 million from India's Reliance Entertainment and another $325 million in credit, DreamWorks released six films that year -- including big misses Cowboys & Alien (the $160 million-plus tentpole was co-financed by Universal) and Real Steel, although a DreamWorks source says that film ultimately broke even. Of the movies released in 2011, The Help was the only notable saving grace. In April 2012, a more cautious Reliance continued its support of DreamWorks and invested another $200 million after Snider and Spielberg devised their scaled-back business plan (DreamWorks says the $200 million had been agreed to when the initial partnership was struck in 2009, and that it came in the form of a second payment).
"It isn't fun to live at the edge of a cliff," says Snider. "So we went about creating a foundation for ourselves and putting up screens to block the wind." Even Lincoln, made for $65 million during the transition, cost less than many Spielberg films. The movie did far better than expected, grossing $275.3 million worldwide.
Previously, DreamWorks put up much of the money for its films. Snider, with aid from DreamWorks COO Jeff Small, dismantled this practice by striking the deal with the London-based Mister Smith, which provides cash from European distributors. In return, those distributors get to release DreamWorks titles.
Additionally, DreamWorks now seeks co-financing on most of its films. Participant, in addition to backing The Help, Lincoln and Fifth Estate, also is partnering on The Hundred-Foot Journey, a Lasse Hallstrom film that has just gone into production. An exception is Need for Speed, based on the popular video game.
Generally, the studio is keeping budgets under $30 million, though movies Spielberg directs will be costlier. Delivery Man kept its cost down after Vaughn, who can command $5 million for a studio comedy, took a reduced fee in exchange for backend. The old DreamWorks would have spent far more to make the film. "They are being very careful and thoughtful about the movies they want to make," says producer Frank Marshall, a longtime Spielberg confidant who has a producing deal with DreamWorks.
The result, says Snider, is that DreamWorks is on solid financial ground: "Believe me, don't think for a minute that I don't worry and sweat everything. But I don't worry in the same way because a lot of money is in the bank."