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Sony Pictures Classics at 15

A study of the Classics proves it is possible to buy art films you love -- and satisfy the accountants at the same time.

Who knew that releasing art films could become big business? As anyone in the independent film sector will attest, the more esoteric spectrum of cinema is fraught with risk, and the list of specialty distributors that have started with a bang and then flared out is long. The reasons for their downfall? Failure to make the transition from indie to major. Gobbled up in a corporate merger. Collapse following abandonment of business models that made them successful. Inability to adapt to changing markets.

And then there's Sony Pictures Classics. Led by its two co-presidents, Texans-turned-New Yorkers Michael Barker and Tom Bernard, SPC has been "profitable every year," according to Sony Pictures Entertainment chairman and CEO Michael Lynton, who adds, "They have managed to outlive everyone else in their area."

Every year since 1992, SPC has released a slate of quality films driven by reviews and sustained by word of mouth, earning a reputation as a champion of foreign fare in particular. And every year, the company has mounted at least one aggressive Oscar campaign -- if not two or three. The results speak for themselves: 52 Oscar nominations and 22 wins, including this year's prize for "Capote," for which Philip Seymour Hoffman was named best actor.

"They haven't just survived," October Films co-founder and former head of United Artists Bingham Ray says. "They long ago carved out a business that others didn't value then -- and don't value now. They've proven that this model works. They mind their knitting and are careful about the films they acquire. They have specific tastes for a specific audience. What they've done is nothing short of miraculous. Show me a more stable management."

Stability has been key. SPC has hewn to the paradigm Barker and Bernard established in 1981 at United Artists, when that studio tapped them to create one of the first specialty divisions. UA Classics acquired films from the U.S. and abroad for low fees, platformed them in a few art houses in Los Angeles and New York, and if they built media buzz, slowly expanded their distribution around the country. Soon, other Classics wannabes wanted in: Fox Classics, Paramount Classics, Triumph Films, Fine Line Features, Gramercy Pictures, Island Alive. Ultimately, though, the newcomers wouldn't last.

Three years after launching their venture, Barker and Bernard followed the team that had backed them over to Orion Pictures, where they set up Orion Classics. When their partner, Donna Gigliotti, left Orion in 1989, the duo tapped Marcie Bloom, who had worked tirelessly as the New York publicist for such films as Stephen Frears' 1986 breakout "My Beautiful Laundrette." Quickly, Bloom became their peripatetic festival-hopping partner, their eyes and ears in the global cinema community. She helped to promote, among others, filmmakers Patrice Leconte (1990's "Monsieur Hire") and Zhang Yimou (1992's "Raise the Red Lantern").

Sally Potter, director of 1993's "Orlando" and 1997's "Tango Lesson," credits Barker, Bernard and Bloom with having "an evolved dynamic. They shared cinematic knowledge and good taste. They had integrity in what can be a cutthroat business."

As it happens, Potter wasn't the only one in the industry who revered the SPC team. When parent Orion Pictures declared bankruptcy in late 1991, Barker and Bernard -- at the behest of former UA and Orion colleague Mike Medavoy, who was then running Sony's TriStar Pictures -- met with Sony Pictures Entertainment chair and CEO Peter Guber to discuss bringing their company to his studio. After the pitch, Guber queried his financial officer Jonathan Dolgen, "What do you think?" Dolgen replied, "If you are going into this business, go into business with these guys, or don't go into it at all."

Guber promised them almost complete autonomy -- no pictures would be forced on them -- and they could remain headquartered in New York. The contract drafted then is still in effect today and allows the trio to work both inside and outside the system. "During that period, a lot of foreign films weren't finding their way into the marketplace," Guber recalls. "Smaller independent films didn't have the same studio champions they would today. The idea was to capture this strong team who had traveled the world and had respect from financing companies and filmmakers and give them the resources and platform and edge of a studio. We had a lot of tools that would give them leverage and support."

On Jan. 1, 1992, the trio brought their operation, then staffed with 15 employees, to Sony, and Guber's successors have fortunately felt equally comfortable with SPC's unique business plan. "It's the best of both worlds," Lynton says. "They pick their own movies and market them theatrically according to their vision of each picture in a very autonomous fashion."

Bernard says that style of working suits them: "As the business evolved, the studios were trying to make anything that happened conform to the studio system. Once a company conforms to a studio-like pattern, the more studio-like is their product. We have never wanted to conform to a studio. It's not conducive to what we do for a living."

Besides, Barker adds, the movies in which SPC traffics are not familiar and formulaic but rather "that which is new, different and traveling elsewhere."

Sony's faith was rewarded when SPC won the best foreign film Oscar for three years running, from 1992-94 (see related story on page XX). "They've remembered who they were, what their challenge was -- and didn't want to go and make an $80 million picture," Guber says. "They were smart in constantly reminding themselves of their charter. That's given them their deserved longevity. One would have to take a stupid pill to remake that company."

Change, however, proved inevitable. In November 1996, Marcie Bloom -- then just 39 -- was hit with a splitting headache. Four days later, she fainted in her office and fell into a coma. Two weeks after emergency brain surgery, she awoke to learn that a genetically inherited aneurysm had left her paralyzed on her left side. Now retired and wheelchair-bound, Bloom still reads scripts and consults for the company, checking in daily with her protege, acquisitions executive Dylan Leiner. It was at her urging that SPC pushed forward with Merchant Ivory Prods.' long-dormant "The White Countess," which was released late last year. And as a gesture of his regard, auteur Pedro Almodovar dedicated his Oscar-winning 2002 film, "Talk to Her," to Bloom.

Today, SPC boasts 23 staffers and functions as a small unit within the larger studio, taking full advantage of the corporation's global resources while still shifting with the tides and acting quickly when necessary -- without having to seek anyone's permission or oversight. And unlike the majority of today's studio specialty subsidiaries, which are in the business of producing and acquiring lower-budget movies for commercial release and which function like ministudios, SPC still believes in the business of selling art films, even if they lose ancillary value because they are not in English. "Foreign language films have always been part of our slate because we find (them) to be a good piece of business," Barker says. "We like to think we do American films just as well."

Early on, the number of SPC pickups outnumbered productions and co-productions, but as the field has become more competitive, the partners have invested in more films at the script and preproduction stage. Today, fully two-thirds of SPC's films are prebuys.

When the partners do decide to bid on a film, they determine in advance how the movie will perform in every market, how they will sell it and what the critics will say. They then proceed accordingly. And if projections for the movie are small, so be it. "Michael and I are very involved in marketing, distribution, acquisition and financing -- every aspect of the business," Bernard says. "We're a one-stop shop. Our response to a film is instantaneous. It's second nature -- we've been doing it so long. We're sometimes right, sometimes wrong, but we usually come up with a pretty good plan."

"I don't think we have ever underspent on a picture we've released," Barker adds. "The pictures themselves determine how big they go. We try to reach the widest audience with what we do, but the idea of overspending is crazy."

So, when the movie says to go wide, SPC goes wide: Along with 2000's "Crouching Tiger, Hidden Dragon" -- which at its peak reached 2,039 screens and went on to collect four Oscars -- two domestic releases, 2004's "House of Flying Daggers" and 2005's "Kung Fu Hustle," opened wide, with 1,500 screens and 2,500 screens, respectively.

"They stay behind the films and manage to find a significant core audience for a large number of them, with the occasional $130 million blowout like 'Crouching Tiger, Hidden Dragon,'" Ray says. "But they spend a fraction of what a major studio would spend to get the same number. Their philosophy is not to pile a lot of money on everything. They run a tight ship; they don't have an army of people working for them. They keep things simple."

Over the years, a tasty dividend of all of that front-end labor has been the creation of a vast and valuable library, which helps promote robust DVD sales (consumers can purchase most of SPC's library via its Web site, www.sonypicturesclassics.com, and the company's films are consistently strong renters at Netflix).

"Tom and Michael have been innovative and creative when it comes to acquisition and progressive enough to understand the value of customer communications and the Internet through their standout Web site," Netflix chief content officer Ted Sarandos says.

They've also mastered the art of Hollywood networking: From the start, Barker and Bernard have recognized the long-term wisdom of investing in relationships. For them, there's never a bad time to network. Take the gloomy wet day during the Berlin International Film Festival when Barker, bummed about being outbid by Miramax on two pictures, decided to pay an impromptu visit to filmmaker Tom Tykwer's offices. The two talked for hours. Barker impressed Tykwer with his interest in the German director's next project, and in 1998, when a bidding war ignited over "Run Lola Run," it was SPC that landed the film. "Lola," released in the U.S. in 1999, became a breakout hit, earning roughly $7.3 million during its domestic theatrical run.

Similarly, when Michael Haneke's French-language thriller "Cache" was the hot ticket at last year's Festival de Cannes, Barker and Bernard's 20-year friendship with the former Unifrance chief Margaret Menegoz closed the deal.

Admittedly, money sometimes trumps connections. Pedro Almodovar's professional relationship with SPC began way back in 1988, when the company released his classic "Women on the Verge of a Nervous Breakdown," but then-Miramax chief Harvey Weinstein's lucrative offer for Almodovar's next project, 1990's "Tie Me Up! Tie Me Down," was more than SPC was willing to pay.

But Almodovar returned to the SPC fold with 1999's critically acclaimed "All About My Mother," and in 2003, the venerable Spanish filmmaker collected a best original screenplay Oscar for the SPC release "Talk to Her." Now, SPC is releasing a special eight-film program of Almodovar's work in advance of the fall debut of his latest feature, "Volver," slated for U.S. release in November.

And Almodovar is not alone. A host of other top-notch filmmakers, including Yimou, Richard Linklater, David Mamet, John Sayles, Todd Solondz and Wim Wenders, has made a point of working closely with Barker and Bernard because of their singular approach, which balances a passion for the finest cinema with the kind of thoughtful pragmatism necessary to survive in the cutthroat business of independent film.

Even so many years later, Barker says he remembers how he felt to lose "Tie Me Up!" to the Weinsteins. "When things like this happen, you think it's the end of the world." But ultimately, he remains philosophical. "Fact is, when you stick to what you do, there's always another film."