'American Sniper' gives Warner Bros. a needed boost

The success of 'American Sniper' helps Warner Bros. rebound from an uncharacteristically rough summer

Warner Bros. Pictures President Greg Silverman and his colleagues huddled in a darkened screening room on the Burbank lot.

Director Clint Eastwood had just finished shooting "American Sniper" in Morocco and Southern California last summer and wanted to show them an unfinished version of the movie, the war drama based on a book by Navy SEAL Chris Kyle.

The musical score wasn't done. The film was still missing some 400 visual effects shots. Nearly two hours later, the lights came on and the room fell silent.

"As soon as we saw the first cut, we knew we had something really special," Silverman said.

Helped by six Oscar nominations, including one for best picture, savvy marketing and even some controversy, "American Sniper" has become an unexpected hit for Warner Bros. The film has generated more than $307 million in ticket sales domestically and $87 million internationally, considered an extraordinary feat for an R-rated war film.

The performance has helped the studio rebound after an uncharacteristically rough summer. After dominating the box office for much of the last decade, Warner Bros. found itself in the rare position of being in third place last year behind rivals 20th Century Fox and Walt Disney.

There were certainly hits for Warner Bros. in 2014, including "Godzilla," "The Lego Movie" and the final installment of the "Hobbit" trilogy. But there were also notable misses, including another Eastwood film, "Jersey Boys," the Adam Sandler comedy "Blended" and Johnny Depp's "Transcendence."

The studio's market share also took a hit when it delayed the July release of "Jupiter Ascending" — the costly science-fiction epic from Lana and Andy Wachowski. The $179-million movie recently fell flat in its domestic premiere.

But "American Sniper" is poised to become one of the highest-grossing domestic releases in Warner Bros. history.

"This is a great story for them," said Doug Creutz, a media analyst with Cowen & Co. "The jury is still out on the rest of the year, but it takes a lot of the pressure off the rest of the slate."

The strong box office performance for "American Sniper" comes as Warner Bros. has been looking to boost profits and cut costs. In November, the studio began shedding as many as 1,000 jobs.

The company recently reported that it had an adjusted operating profit of $1.25 billion in 2014, down from the previous year's record of $1.33 billion, reflecting higher TV production expenses and restructuring costs.

"American Sniper" was among the first movies greenlighted by Warner Bros. Chief Executive Kevin Tsujihara after he succeeded former studio chief Barry Meyer in March 2013.

Tsujihara and his new management team are betting heavily on franchise movies to help drive business. In October, he unveiled a slate of superhero movies from its DC Entertainment unit. As Disney's Marvel Studios has shown, popular superhero characters can become lucrative franchises.

The first tests of Tsujihara's new strategy won't be until next year, with the release of the superhero movies "Batman v. Superman: Dawn of Justice" and "Suicide Squad."

But as "American Sniper" illustrates, the studio isn't placing all its bets on comic book heroes. Warner Bros. also is releasing films across multiple genres, capitalizing on long-standing relationships with such filmmakers as George Miller and Ben Affleck.

This year's slate, for example, includes "Mad Max: Fury Road," the fourth in the Miller road warrior films; "Entourage," the big screen adaptation of the HBO series; and "Get Hard," the R-rated comedy starring Will Ferrell and Kevin Hart.

"Coming up are really good movies that are in very different genres, and that's the hallmark of what we're going to be doing here at the studio," Silverman said.

Still running in theaters, "American Sniper" is among the highest-grossing domestic releases in Warner Bros. history behind "The Dark Knight," "Lord of the Rings" and "Harry Potter" films.

But unlike those big-budget franchise films, "American Sniper" was produced for only $58 million, making the film highly profitable.

To keep costs down, the movie was shot mainly in Southern California, with the benefit of a state film tax credit. "American Sniper" was approved for $6.8 million to offset $34 million in production costs that qualified for incentives, according to records from the California Film Commission.

After filming 12 days in Morocco, the crew took over the Blue Cloud Ranch in Santa Clarita to re-create an urban Iraq environment. Much of Kyle's Ramadi tour was filmed at the ranch, whose sets are so realistic that they've been used for military training.

"We spent $1 million rebuilding the whole thing to our specifications," said Robert Lorenz, a producer on the film. "You've got access [in Southern California] to everything in terms of people, equipment and locations."

A key battle sequence, for example, was filmed in the desert town of El Centro, about 100 miles east of San Diego, where designers converted an old milk processing plant into an abandoned date factory where Kyle and his team face an onslaught of insurgents. Paramount Ranch in the Santa Monica Mountains depicted a sniper course, while the beach at Leo Carrillo State Park in Malibu stood in for the SEAL's training center in Coronado. Kyle's Texas home was filmed in Northridge.

After seeing the rough cut of the film in August, Silverman and his colleagues asked Eastwood to wrap up the film so they could accelerate the release date, which had originally been scheduled for this year. The movie opened in four theaters on Christmas Day, including ArcLight's Cinerama Dome in Hollywood, before its wide release in January, allowing it to qualify for an Oscar nomination.

It was a risky decision, given the weak box-office results of other Iraq war movies such as "Hurt Locker" and "Jarhead."

The six Oscar nominations have helped spur ticket sales. So did a well-crafted marketing plan.

Warner held multiple pre-releases screenings for veterans groups and on military bases across the country to build word of mouth. Events included a USO-sponsored screening at Ft. Hamilton in Brooklyn for 485 service members, veterans and their families, including a question-and-answer session with star Bradley Cooper and the sniper's widow, Taya Kyle.

The film's heroic depiction of Chris Kyle and the struggles of military families resonated in small towns and big cities across the country. The current trial of Kyle's accused killer, fellow Iraq war veteran Eddie Ray Routh, has also generated more interest in the film. The movie has also ignited political debate about the Iraq war and the toll on the people who fought in it.

"In red states and blue states the response has been fantastic," said Dan Fellman, head of domestic distribution for Warner Bros Pictures. "It's really a cultural phenomenon."

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