Studios relying more on outside funding to make award contenders

By Steven Zeitchik and Ben Fritz, Los Angeles Times

Jan. 14, 2013 12 AM PT

For this awards season, Hollywood came through with a bumper crop of movies that were critical and fan favorites. But in many cases, the big studios themselves can’t take much of the credit.

Among the films basking in Oscar nominations — and bragging rights for the studios that released them — are “Lincoln,” “Zero Dark Thirty” and “Beasts of the Southern Wild.”

In a growing trend, the distributors of those three movies didn’t pay to make them. Walt Disney Studios, Sony Pictures and Fox Searchlight essentially outsourced the productions, allowing others to invest the money and take the risk. Other award-contending films, including “The Master” and “The Impossible,” follow the same pattern.

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At a time when media conglomerates are in thrall to the mega-profits that can be made from superhero movies and sequels, studio executives have a hard time risking money on pictures aimed at a more sophisticated adult audience. So they’re increasingly relying on outsiders to do so.

“Studios are tentative about adventurous movies that don’t have a clear precedent,” said Roman Coppola, a writer on the Oscar-nominated “Moonrise Kingdom,” which was released by Universal Pictures-owned Focus Features but financed by Indian Paintbrush, an independent company founded by venture capitalist Steven Rales. “So you sometimes have to go outside the system to make the most interesting movies.”

For moviegoers who prefer sophistication over spandex, it’s mostly good news. Some of 2012’s most acclaimed films, like “Zero Dark” and “Beasts,” might not have gotten the green light from a Hollywood studio boss in a corner office.

For the studios, however, there can be a downside: When the outsourced films become box-office successes, the studios don’t keep as large a share of the profits. The Steven Spielberg-directed “Lincoln,” for instance, has grossed nearly $150 million in the U.S. and Canada. But Disney will collect less than $10 million of that because it was simply the distributor. DreamWorks, which financed “Lincoln” with three other partners, stands to make far more.

In ego-driven Hollywood, the outsourced film can also create tension between a financier and a studio over who can receive champagne toasts at parties and be included among the thank-yous from the awards show dais. In 2011, financier Ryan Kavanaugh petitioned the motion picture academy to credit him as a producer on the Oscar-nominated “The Fighter” along with the producers credited by distributor Paramount Pictures. He was declined.

Of course, Hollywood has been making movies with other people’s money since the days of Charlie Chaplin and Buster Keaton. The trend accelerated in the 2000s as Wall Street hedge funds began investing in the movie business.

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But even during that period, it wasn’t unusual for studios to gamble $40 million to $50 million of their own money on high-minded productions such as the 2008 Oscar winners “There Will Be Blood” and “No Country for Old Men.”

Even in recent years, some of the highest-profile Oscar movies were financed primarily by studios, including 2011 Oscar winners “The King’s Speech” and “The Social Network.” In this year’s Oscar derby, “Life of Pi,” “Flight” and “Les Miserables” are also studio products.

“There’s still a willingness to take risks in the adult quasi-art film,” said “Argo” director Ben Affleck.

But those films all come with a commercial sheen, featuring well-known source material or A-list stars. And on “Flight,” studio Paramount Pictures sold some of the foreign distribution rights to hedge its bet on the $31-million drama about alcoholism.

For the last decade, the trend in Hollywood has been toward visual effects-driven franchise films such as last year’s “The Avengers,” which play big internationally and can generate hundreds of millions of dollars from merchandise, theme park rides and spinoffs.

The blockbuster formula doesn’t always work, as was demonstrated last year by the box-office bombs of Disney’s “John Carter” and Universal’s “Battleship.”

By comparison, the success of the outsourced movies now vying for Oscars has given fresh ammunition to those who want mainstream Hollywood to make more adult-oriented movies.

“What I hope changes is that it allows studios to take risks on subject matter that on the surface doesn’t appear capable of being commercial while having something important to say,” Spielberg said in an interview.

Indeed, many of the moguls who occupy corner offices on studio lots are personally inclined toward the more highbrow movies nominated for Oscars. Outsourcing the production of more such films enables executives to be affiliated with quality films without shouldering too much of the risk.

“Thank goodness we have partners to help us make these kinds of movies,” said Sony co-Chairman Amy Pascal, who oversaw the release of military thriller “Zero Dark.” “Nobody wants to be in an industry where we’re not making movies that stand the test of time.”

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Times staff writer John Horn contributed to this report.