Picturehouse shifts its foundation

Niche distributor redraws ties to HBO, New Line

Picturehouse is getting a remodeling job.

Although details are still being discussed, the Bob Berney-led specialty film venture that was formed and now run in a 50-50 partnership by Time Warner divisions HBO and New Line Cinema is restructuring its ties to the cable network. Terms are expected to be finalized in the next three months.

Picturehouse is likely to move under New Line's sole oversight. The rethink follows a string of underperforming Picturehouse films and several other slated projects that never hit theaters.

An HBO source downplayed the restructuring but acknowledged that it is likely to lead to its backing away from theatrical distribution.

"Trying to involve us at HBO in the day-to-day-management of distribution company is not the best use of our talents," the source said.

HBO will continue to have some financial stake and be a partner in Picturehouse with a role in distribution. It will keep an ownership stake, but HBO's financial commitment could depend on the number of films it releases through Picturehouse.

According to all parties, the desire for change came from the new HBO regime, which took over following HBO chairman/CEO Chris Albrecht's departure in the spring. Albrecht was replaced by Bill Nelson in June.

Picturehouse president Berney reports to New Line co-chairman/co-CEO Michael Lynne and HBO Films president Colin Calendar. It's unclear if that reporting structure will change.

Under its current structure, the cable network's HBO Films division and New Line both funnel projects to Picturehouse, which also acquires its own projects. HBO and New Line have the option in most cases to be financial partners on any particular Picturehouse film, as they were on "Pan's Labyrinth." On all films, financing and P&A are provided either by HBO or New Line or split by the two companies.

No layoffs are expected within Picturehouse, New Line or HBO, and the distributor is likely to increase internal production to make up for the reduced pipeline.

HBO Films plans to continue making feature-length films for its cable channels, and if films with theatrical ambitions are made, Picturehouse would be one of many potential buyers. Several sources said the company found theatrical P&A costs and the inherent gamble in theatrical releases an unwelcome burden in contrast to its profitable TV side.

Among the HBO Films projects that garnered critical acclaim but tanked at the boxoffice last year were "Starter for 10" and "Rocket Science." Two other HBO projects originally announced as Picturehouse releases, Kenneth Branagh's "As You Like It" and the Chernobyl drama "PU-239," bypassed theaters and were aired on the network. Another film, the Jeff Bridges starrer "A Dog Year," is in postproduction and no longer slated as a Picturehouse release.

Speculation on the split arose when the HBO Films project "Sugar" was submitted to the Sundance Film Festival without Picturehouse distribution. An HBO source said it was the producers' decision to take the film to the open market and that other HBO features, including the OutKast musical "Idlewild," have sold to distributors other than Picturehouse. A Picturehouse source said "Sugar" will seek outside theatrical distribution at the fest but bypass theaters if no bids are high enough.

Picturehouse plans to go ahead with the release of at least one HBO project this summer, "Kit Kittredge: An American Girl" (based on the American Girl doll line), which Berney brought to HBO.

The new structure may bring Picturehouse closer to the model New Line once had with Fine Line Features, which was folded into Picturehouse when the distributor launched in 2005.