Indie biz struggles, but startups bloom

Veterans, newcomers see opportunity in specialty fare

Oscilloscope Laboratories founder Adam Yauch was hosting a DVD-release party last month at his offices high above SoHo when he was asked to summarize his startup's business strategy.

"What we do is find what we really like, buy it and then think, 'Is there a way to market this?' " says the man best known as MCA of the Beastie Boys. Then, with a small smile at once sheepish and proud, he adds, "I guess that's the opposite of what you're supposed to do."

Yauch's boldness is increasingly common among a segment of the otherwise-depressed indie-distributor world, where unlikely players with unorthodox attitudes suddenly are filling the landscape.

Execs from gay-oriented media company Here! are getting into the foreign-film business. National Geographic, best known for eat-your-vegetables nature documentaries, is snatching up Sundance dramas for theatrical release, as it did with Cherien Dabis' immigrant-themed crowd-pleaser "Amreeka." A few weeks ago, a pair of New York-based unknowns created a stir when they announced the formation of DFIS, a $100 million production and distribution entity.

Traditional players, meanwhile, are furiously trying to reinvent themselves and come up with new ideas. Case in point: Ira Deutchman and his Emerging Pictures aims to outfit art house theaters with digital projectors that will allow exhibitors to break the rigid and expensive 35mm model.

Together, they form what might be called the new indie coterie, a mixture of savvy veterans and eager newcomers who see opportunity in a specialty world where studios only have seen losses.

That players like these are even involved in the labor-intensive work of theatrical distribution -- as opposed to film financing and production, which has seen its share of interlopers through the years -- speaks not only to their seriousness but also to how much the business has been shaken up during the past year.

Do they know something everyone else doesn't?

Specialty releases always have been a sucker's bet. Even good movies usually flop, and the people behind well-intentioned deals often lose both their intentions and their shirts.

The naysaying only has intensified as key players -- first Paramount Vantage and Picturehouse and, more recently, the Weinstein Co., Senator, Yari Films and New Yorker Films -- have struggled or disappeared.

The market is too fickle, the margins too thin; only DVD can save you. And DVD is shrinking.

The stat that resonates most: Only six indie movies have cracked the $1 million mark in domestic boxoffice grosses through June, the lowest first-half number in a decade.

The indie world is keenly aware of the precariousness of its distribution options.

"Even with the best company, you have to worry when you're selling to them because they could be out of business two years later," says a producer whose DVD titles migrated from just such a bankrupt firm to a theatrical distributor, only to find months later that the distributor didn't even know it had the rights.

Still, this new class of risk-takers won't take no for an answer.

"The reason there's momentum is that as the studios have stepped out of the indie business; it doesn't mean the business isn't there," Deutchman says. "It just means it doesn't fit their business model."

He would know. Deutchman is creating a banner that will release movies digitally in unorthodox ways -- say, as a one-night special event on 500 screens instead of struggling to hold one or two theaters for several weekends.

That, he says, will better take advantage of marketing dollars and break the chokehold he sees hampering traditional indie-film releasing.

Sony Pictures Classics, IFC, Magnolia -- and now, new companies like Bob Berney's unnamed shingle -- are occupying a space between indie and specialty distribution. Their movies rarely are on 500 screens, but they can get there if necessary. If not, they have ancillary platforms to make up the difference.

In contrast, many of the new-indie entities are more niche. Startup IndieVest is raising money for P&A at the same time as production financing. Others don't even function as distributors per se.

Freestyle Releasing is a veteran of microdistribution, having existed in its current form for five years. The company doesn't distribute in the traditional way; instead of putting up P&A money, it often takes a distribution fee and books theaters.

But Freestyle can flex its muscles: Last year, it released the wine-making dramedy "Bottle Shock" and grossed more than $4 million, which practically qualifies as a tentpole in the indie world these days.

Oscilloscope, a full-service distributor, has ramped up relatively quickly, buying movies out of nearly every major festival.

It took the 2008 Festival de Cannes critics darling "Wendy and Lucy" to a respectable $1 million in domestic gross and made a stir when it bought a Michel Gondry movie, "The Thorn in the Heart," out of Cannes last month.

"It has surprised me a little how many movies we've bought," Yauch says. "I don't think we expected to find as many movies as we like."

Indeed, many indie execs offer a variation on this refrain: Production has, until recently, been cranking at full tilt, and with fewer traditional distributors, it's a buyers' market. Freestyle proved the point several weeks ago when it came aboard to release "My One and Only, a Renee Zellweger romantic comedy that just a few months ago had been seeking a studio deal.

The supply is so deep even promising titles can sit without a distributor. For instance, the midbudget Catherine Zeta-Jones romantic comedy "The Rebound," one of the Film Department's first productions, hasn't found a suitor willing to pay the right price, though it could go with a Freestyle-type service deal.

Another new template is Music Box, a firm with just a few employees, mostly in Chicago. Last year, it managed to take "Tell No One," a 2-year-old French thriller no one wanted, spend next to nothing on the acquisition and marketing and turn it into a $6 million-grossing word-of-mouth hit.

Lest anyone think the studio specialty divisions aren't paying attention, Miramax chief Daniel Battsek said at the time, "One's competitive spirit is slightly piqued when someone else does well with a movie, and you think, 'Why didn't we have that?' " Miramax has since bought remake rights.

In some cases, these firms are literally filling the void of the struggling companies: Freestyle has picked up the Weinstein Co.'s "Midnight Man" and will release it as "The Collector."

"In many cases we're the first resort," Freestyle president Mark Forde says. "In others, a company that has a financial situation, like Weinstein does, and needs to sell off movies and focus on their core slate -- that's OK with us. It's more for us to choose from."

Paul Colichman, who runs Here! Media and its label Regent Releasing (soon to be renamed Here! Releasing), says his company recognizes the problems in indie distribution but hopes its agglomeration of such gay-themed media as social-networking site Gay.com, print mag the Advocate and the Here! TV network can help solve those problems.

"One reason it's hard to reach the specialty niche is because it's hard to reach smart people," he says. "But through our assets, we have access to millions and millions of people who are tastemakers and who are seven times more likely to go to a specialty film than their straight counterparts."

The company recenty used its platforms to release Japan's foreign-language Oscar winner "Departures" and art house title "Tokyo Sonata."

Still, no matter the cleverness of the approach, the odds are daunting. Even in good times, the indie world is littered with the corpses of smart, driven entities not dissimilar to this new group, a point that isn't lost on those attempting to break the mold.

"We'll see how many of these companies are here for the long haul and really build something," Yauch says. "And we'll see how many just want to flip it and make a quick buck."
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