Movie Biz 101 for Anschutz

In late June, a few days after billionaire Philip Anschutz’s big-budget movie “Around the World in 80 Days” had crashed at the box office, his top two film lieutenants sent a buck-’em-up e-mail to their dispirited troops.

“While the overall performance of ’80 Days’ is unfortunate, it will have no impact at all on our ambitious development and production plans,” the executives assured Anschutz Film Group staffers. “We will learn from this experience and move on to better commercial success in the future.”

That sense of determination and destiny has made Anschutz a very rich man in such realms as real estate, pro sports and oil. But success in Hollywood is another story.

“Phil Anschutz is an extraordinary businessman and financier, but we’ve yet to see him demonstrate that he has a full understanding of the complexities and risks of the motion picture industry,” said Christopher Dixon, a managing partner at investment firm Gabelli Group Capital Partners.

Anschutz and those watching his march into the entertainment industry will get another chance to measure his acumen when two more of his expensive movies make their way to theaters next year. The first is “Sahara,” a $130-million-plus action adventure that is based on Clive Cussler’s 1992 novel and has just completed production. The other is a $150-million adaptation of C.S. Lewis’ children’s classic “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe.” It is being shot in New Zealand.

Anschutz, whose vast holdings include Staples Center and the Los Angeles Kings hockey team, knows that his learning curve may be as steep as the Rockies that tower over his Denver headquarters. Although Anschutz does not grant interviews, he recently alluded to the difficulties during a speech at a Florida college.

“The movie business is not a very good business in many ways,” he said. “No one with any sense would get into it. My friends think I’m a candidate for a lobotomy, and my competitors think I’m naive or stupid or both.”

But Anschutz, who is worth an estimated $5 billion, also said he was interested in more than money. “If we can make some movies that have a positive effect on people’s lives and on our culture, that’s enough for me.”

Anschutz, in fact, is on a mission to cleanse movies of sex, foul language and violence, risking hundreds of millions of dollars to deliver family fare with uplifting messages. But it’s the scale of his ambitions -- moving from smaller movies to risky big-budget affairs -- that has many in Hollywood questioning whether he’s headed for the same humiliation suffered by so many other wealthy entrepreneurs who’ve come to town with dreams of conquering the movie industry.

In April, amid several management changes, Anschutz brought in his attorney and movie business advisor David Weil to streamline and strengthen the Beverly Hills film operations as chief executive of the new Anschutz Film Group.

“We’re now in a position,” Weil said, “to sharpen our focus and achieve both of Phil’s goals: to prosper as a company and inspire our audience.”

Although the film operation is committed to investing heavily on some projects, Weil said, the budgets for most will average $30 million to $35 million. Among the more moderately budgeted films is director Taylor Hackford’s upcoming $40-million biographical drama “Ray,” starring Jamie Foxx as legendary musician Ray Charles.

Known as a contrarian investor, Anschutz began venturing into entertainment in 2000 and 2001 by snapping up financially troubled theater chains at fire-sale prices. He bought three bankrupt companies -- United Artists, Edwards Theaters and Regal Cinemas -- and created the largest chain in the country, Regal Entertainment Group, now operating at a profit.

Around the same time, Anschutz launched his first production company, Crusader Entertainment, since renamed Bristol Bay Productions. He also linked up with Walden Media, which was started by former Dimension Films executive Cary Granat.

The two companies, now united under Anschutz Film Group, have made a dozen films, of which half have been released, with mixed results. The most profitable was last year’s lower-cost family hit “Holes,” which was distributed by Walt Disney Co. and grossed $67 million.

Anschutz also started thinking stratospherically, deciding to finance a remake of United Artists’ “Around the World in 80 Days,” which won an Academy Award in 1956 for best picture. For Anschutz, the film embodied the sort of wholesome and fun entertainment he believed audiences were craving and needed.

He was so determined that he began production without having a partner signed up to distribute the film -- a highly unusual move, especially considering a cost that was escalating beyond $100 million. Paramount Pictures originally had planned on co-financing “80 Days” but backed out over the choice of some creative elements and the direction of the script.

Only after the film’s completion did Disney agree to distribute and market the film domestically. The studio had planned on spending as much as $50 million to promote the movie but cut that amount by $15 million after the film’s disappointing opening.

Even after DVD and foreign sales, Anschutz and Disney will lose money. The only real winner is co-star Jackie Chan, who was guaranteed $18.5 million whether the movie was made or not.

According to associates, Anschutz was deeply disappointed by the film’s poor showing. They said he was convinced that families would flock to the good-natured entertainment.

“It’s hard to look back when a film doesn’t work or does work and know why,” said Anschutz Film Group President Granat. “There’s no recipe.”

Now, Hollywood executives are looking ahead, somewhat skeptically, to Anschutz’s next test -- “Sahara.”

Once again, Paramount opted not to be a 50-50 partner on the movie. Instead, it will receive a fee for distributing it domestically and in five territories outside the U.S.

“Sahara’s” lead character, adventurer Dirk Pitt, is portrayed by Matthew McConaughey, who has not yet proved he can carry an expensive action-adventure movie. Likewise, the film’s director, Breck Eisner, has never made a feature film, let alone one costing upward of $130 million. Eisner, 34, the son of Disney CEO Michael Eisner, has so far made his mark directing commercials and television shows.

Granat defended the casting of McConaughey, pointing to the once-unproved Brendan Fraser, who hit it big with “The Mummy” franchise. “This is simply going to elevate Matthew tremendously,” Granat predicted. He also defended the practice of giving young filmmakers such as Eisner their first big shots.

Paramount Pictures Chairwoman Sherry Lansing said she, too, had confidence in the movie’s cast and director. “We’re extraordinarily excited about bringing the Clive Cussler franchise to the big screen,” she said.

Industry watchers think Anschutz’s best bet for the future rests with “The Lion, the Witch and the Wardrobe,” which is being directed by Andrew Adamson of “Shrek” and “Shrek 2” fame. Anschutz purchased the entire series of popular books with an eye toward transforming them into a lasting film franchise with huge merchandising and licensing potential.

That’s why Disney, which plans a Christmas 2005 release of the film, agreed to split all costs and distribute it worldwide.

Media analyst Jeffrey Logsdon of Harris Nesbitt said such a sizable investment is “probably a smart move” given the film’s potential to spawn a lucrative film series for years to come along the lines of “Harry Potter.”

Still, Logsdon noted, such opportunities tend to be rare. Though Anschutz may be pursing a greater calling, Logsdon said, there’s no dodging the harsh realities of the marketplace, which apply even to billionaires.

“If you’re going to make larger budget movies,” Logsdon said, “they have to have commercial appeal whether you have a higher purpose or not.”

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Around the world in Hollywood

Phil Anschutz’s venture into the movies has had mixed results.

Recent releases

*--* Domestic Estimated gross cost Date Title Distributor (In millions) (In millions) opened Around the World Buena Vista $22.8 $115 6/16/04 in 80 Days* Holes Buena Vista 67.33 $30 4/18/03 Ghosts of the Buena Vista 16.37 Under $15 4/11/03 Abyss* Children on Artisan ** Under $10 10/18/02 Their Birthdays Joshua Artisan 1.37 Under $10 4/19/02 Pulse: A Stomp Giant Screen 6.96 Under $3 2002 Odyssey* Films

*--*

Upcoming releases

*--* Date Title Distributor opening Danny Deckchair Lions Gate 8/11/04 I Am David Lions Gate 10/8/04 Ray Universal Pictures 10/29/04 Aliens of the Deep Disney 1/14/05 Because of Winn-Dixie 20th Century Fox 2/18/05 Sahara Paramount 3/25/05 The Chronicles of Narnia: The Disney Christmas 2005 Lion, the Witch and the Wardrobe

*--*

*Still tracking

**Under $50,000, limited release before going to video

Source: Exhibitor Relations, Times research