Film Company Hopes to Thrive on Commercials and Cost Cutting : Ventura Entertainment: An industry newcomer hopes to produce TV and movie projects, plus commercials, in Utah to keep costs down.

“There are some things even Santa Claus can’t do,” says one character at the beginning of “It Nearly Wasn’t Christmas,” a television movie starring Charles Durning that was co-produced last year by North Hollywood-based Ventura Entertainment Group Ltd.

One of the things Santa Claus can’t do is guarantee success in the tough business of television and film production. Ventura Entertainment, a small newcomer, is hoping to thrive by producing television shows and movies at its low-cost studio in Utah. It has also recently acquired a TV commercial-making business much bigger than Ventura’s conventional entertainment business.

The game plan for Ventura Entertainment Chief Executive Irwin Meyer and Chairman Harvey Bibicoff for making television shows and movies depends heavily on their newly acquired studio in Utah, where few workers are union members, which makes hiring actors and crews cheaper. The studio was once owned by the Osmond family, and changed hands before Ventura took it over last June in a deal worth about $6 million. Last fall, director Michael Cimino rented space there to film part of “The Desperate Hours” with Mickey Rourke, a remake of the 1955 Humphrey Bogart film about escaped convicts.

Labor for “The Desperate Hours” cost 10% to 15% less in Utah than in it would have here, according to Martha Schumacher, president of Dino De Laurentiis Communications, the movie’s producer.

Then last month Ventura Entertainment branched out and bought Harmony Pictures, an established $16-million-a-year advertising production company which has made TV commercials for McDonald’s, Burger King, Doritos, Budweiser and American Express.

Ventura paid $3.1 million in cash and stock to buy the commercial-making business. The acquisition will also give the company a chance to work with some independent directors who might agree to sign on for the company’s TV or movie projects. The roster of well-known commercial directors includes Claudia Weill, who directed episodes of “thirtysomething,” and Chris Menges, who won an Oscar for cinematography in “The Killing Fields.”

“They don’t have to do anything else” besides ads, Bibicoff said. “But what we offer them is a chance to do dramatic work.”

Bibicoff said Harmony isn’t an insurance policy Ventura can rely on if times get tough in television production, maintaining that the two companies, both in the business of film and video production, simply fit well together. “But it certainly gives you a running start,” Bibicoff said.

Bibicoff may say the advertising production business isn’t an insurance policy, but a look at the numbers shows that Harmony’s business dwarfs the rest of Ventura’s operation.

Ventura lost $455,316 on sales of $3.1 million in the 12 months that ended October 31--its first full year of operation. Meanwhile, Harmony had a profit of $4,137 on sales of about $14.9 million for the first 10 months of last year--but that profit figure doesn’t include $837,667 the company’s former owners paid themselves in salaries.

Besides Ventura’s Christmas TV movie, the other major entertainment project it has completed so far was a co-production with ABC Distribution of “Crosstown,” what Bibicoff calls “a soap opera at a police station.” Sixty-five episodes of the five-day-a-week show have been licensed to TV stations in Australia, New Zealand and Colombia for about $1.8 million. The partners also said they are developing pilots or negotiating deals to make about half a dozen other television shows, including a revival of “The Lone Ranger,” to be shot in and near the Utah studio, and list another half-dozen movie projects as well.

But even though their television programming hasn’t yet hit the big time on the major television networks, Bibicoff and Meyer have shown some skill in raising money for their ventures.

Two weeks ago, Bibicoff and Meyer took another strategic step by signing a deal with Marubeni Corp., a Japanese trading company, for a $2.3-million joint venture to produce 10 one-hour musical TV programs called “Rock ‘n’ Roll Years,” and four TV specials entitled “Cousin Brucie’s ‘60s Jukebox.”

Ventura Entertainment already raised $3 million in an initial public offering last year, plus about $5.6 million in an offering for its majority-owned subsidiary, Ventura Motion Picture Group. And Ventura is looking to raise about $4.8 million from another stock offering it hopes to complete the first week in May. The offering will include options to buy additional stock that could raise an additional $12 million.

Bibicoff and Meyer said they founded the company in 1988 with a single main idea: There’s a market for less-expensive movies and programs and a way to make them.

Most television shows cost so much to make that they don’t turn a profit in their first run on television. Profits come only when shows last long enough--two or three years--to make it as reruns. Only much later, after running for as long as five years, can shows command a high enough price from a network to turn a profit in their first run.

Bibicoff said lower-cost joint ventures in production will be particularly attractive to cable networks, which are trying to lure viewers from the major networks by running more original programming instead of reruns and previously released movies. But Ventura is not the only company in line to produce lower-cost shows for cable. “I think they’re going to compete with anyone who’s willing to produce for cable,” said Pat Fili, senior vice president of Lifetime Television Network, which got good ratings when it aired “It Nearly Wasn’t Christmas” last December.

Even when Ventura finds a partner to share its costs and manages to sell its programs, profits can still be elusive, at least temporarily. For example, Ventura laid out about $1.5 million--not including intangible expenses such as using the Utah studio--to make “It Nearly Wasn’t Christmas” last year. It turned around and licensed the film to foreign and domestic distributors for an initial $1.25 million. So the company now has to take in an additional $250,000 in revenues from the film to turn a profit on the project, something Meyer predicts will happen this year.

Besides lower-cost programs and television shows, Ventura also hopes it will grow by forming partnerships with foreign producers to make programs and movies to air abroad, much like its deal with Marubeni.

Ventura is not alone in that strategy. Since a number of Western European countries began discussing dismantling trade barriers within Europe, some entertainment industry leaders such as Jack Valenti, the chairman of the Motion Picture Assn., have touted the potential entertainment market there.

But Europeans aren’t uniformly enthusiastic about U.S. producers seizing a large chunk of television business in Europe. Last fall, the 12 member countries of the European Economic Community approved a law limiting television imports into Europe to no more than 50% of all broadcasts.

Bibicoff and Meyer have known each other since the two were partners in a New York venture capital firm, First Consolidated Corp., which specialized in helping entertainment companies raise money. The two ran the company from 1967 to 1974, when Meyer decided to parlay his entertainment contacts into a career.

In 1975, Meyer was shown the script to a musical that he decided to produce at a summer stock theater in Connecticut. The show was “Annie,” which soon made it to Broadway with Meyer as a co-producer.

Bibicoff stayed in finance, eventually becoming chairman of Discovery Associates, Inc., which acquired Leo’s Stereo, Inc. for about $35 million in 1986. The acquisition turned sour, though, when customers began returning some car stereos Leo’s had sold them before the acquisition. Bibicoff left the company in October, 1987, when the previous owners bought the Leo’s company back.