Home Video Firms Are Making the Move to Theaters

Trimark Pictures executives call it a “calculated risk.”

Backed by a new $75-million credit line, Trimark, best known as the home video distributor of such fare as “Leprechaun 4,” is launching a new strategy focusing on theatrical production and distribution. It plans to take nine films into theaters in 1997, beginning with “Meet Wally Sparks,” the Rodney Dangerfield comedy that opened Jan. 31 on more than 1,500 screens.

The move into theaters comes at a time when even major studios are cutting back on production, decrying the crowded market and rising costs.

But Trimark feels it has no choice but to produce its own films for theaters. And it’s not alone.

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Faced with the deteriorating market for so-called B and direct-to-video fare, several home video specialists, including Trimark, Live Entertainment, Republic Entertainment and Hallmark Home Entertainment, are stepping up their theatrical production efforts.

“The domestic home video market is by far the toughest it’s ever been,” said Trimark Pictures Executive Vice President Tim Swain. Trimark’s parent company, Trimark Holdings, posted an $8-million loss in its latest fiscal year, citing problems in the direct-to-video market.

A theatrical release, even one that generates little box-office revenue, increases a film’s value in all areas, including the international, cable, pay-per-view and home video markets. But the pool of theatrical movies available to independent home video companies has dried up in recent years. Major studios have either bought or locked up exclusive distribution deals with most of the successful independent film producers.

In the case of Live Entertainment, a major supplier of A titles went bankrupt: Carolco Films, which had sold Live the home video rights to “Terminator 2,” “Basic Instinct” and the “Rambo” series. In the wake of Carolco’s bankruptcy, Live’s lone major home video hit was “Stargate,” which was produced by Canal Plus and distributed theatrically by MGM/UA.

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Live debuted its in-house production unit last year with the theatrical releases of “The Substitute,” “The Arrival” and Steve Buscemi’s critically acclaimed “Trees Lounge.” Live plans eight releases for 1997, ranging from “Dead Men Can’t Dance,” an action/thriller starring home video regular Michael Biehn, to “Critical Care,” a comedy directed by Academy Award winner Sidney Lumet and starring Kyra Sedgwick, Anne Bancroft and Albert Brooks.

Taking the move into theaters a step further, Live began handling its own distribution with the Feb. 7 limited release of “Hotel de Love,” an Australian romantic comedy.

By taking distribution in-house, Live will be able to keep the 20% to 25% of the box office that normally goes to the distributor.

“We’re not reinventing the wheel,” said Live Executive Vice President Elliot Slutzky. “All we’re trying to do is control our own destiny.”

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But control carries a hefty price tag. Live spent $15 million to produce “The Substitute,” an action film starring Tom Berenger, and $27 million on “The Arrival,” a sci-fi yarn starring Charlie Sheen--plus another $15 million each to market the films.

“The Substitute” produced a respectable $14.8 million in domestic box office, but “The Arrival” managed only $14.1 million (although Live executives say it will turn a profit when foreign box-office and home video revenues are included).

“It’s an incredibly dangerous game people are getting into,” said Steve Beeks, executive vice president of Hallmark Home Entertainment.

Hallmark began producing its own feature films in September, planning one or two theatrical releases a year, budgeted at less than $5 million apiece. It’s currently in post-production for “Murder in Mind,” a $4.5-million suspense thriller starring Nigel Hawthorne.

Hallmark countered the dearth of quality films by locking up distribution deals with October Films and Samuel Goldwyn Co. in 1995.

At the same time, prices for independent fare have skyrocketed. Little-known festival entrants, such as last year’s “The Spitfire Grill,” are the objects of intense bidding between labels backed by major studios willing to spend $10 million or more for a shot at the next “Pulp Fiction.”

“The reality is, if you make movies you go to the big guys first to see who will write you the biggest check,” said Swain. “By the time [films] get to the mid-level companies, it’s tough to find something really good.”

Producers find themselves in something of a seller’s market.

Several studios were interested in “Meet Wally Sparks,” which was produced with independent financing, according to producer Leslie Greif. Trimark offered an “unusual deal,” laden with incentives, which allowed the producers to “remain a partner in the film,” Greif said.

Trimark is reportedly spending more than $12 million to distribute and market “Meet Wally Sparks.” Beyond putting people in theater seats, the goal is to show Hollywood’s talent community that Trimark can launch and back a major theatrical release.

“The creative community is going to believe what they see, not what they hear,” Swain said.

Based on results, Trimark may not have accomplished its goals. On 1,500 screens, “Meet Wally Sparks” opened to a dismal $2.1 million its first weekend.

Live’s ability to attract talent in the future may depend, in large part, on its ability to market several so-called prestige projects on its slate, including “Critical Care,” due in theaters in October, and “The Winner,” a Las Vegas crime movie starring Rebecca de Mornay, Vincent d’Onofrio and Michael Madsen.

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With the market flooded with big-budget fare from major studios, Live and other independents will have difficulty securing favorable release dates and finding a generous number of screens for smaller films, industry experts say.

The independents “have got to dance among the lions and elephants, and if they’re positioned in the wrong place they will get stomped,” said Dennis McAlpine, media and entertainment analyst for Josephthal Lyon & Ross.

Live has already been in the wrong place at the wrong time. “The Arrival” had the unfortunate experience of opening soon after “Twister” and “Mission: Impossible” and a few days before another sci-fi epic, the much-hyped “Independence Day.”

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Live’s new strategy is to leave the big budgets and holiday blockbusters to the major studios. “Don’t look for too many Christmas or summer movies from Live,” Slutzky said.

Trimark plans to focus on titles with low budgets and high home video appeal, including “Sprung,” a romantic comedy directed by and starring Rusty Cundieff (“Tales From the Hood”); “Chairman of the Board,” the film debut of comedian Carrot Top; and “Kama Sutra,” a “sensual epic” directed by Mira Nair (“Salaam Bombay” and “Mississippi Masala”).

“You need to know what you are and what game you can play,” Swain said. “As soon as you start kidding yourself and pretending you’re something you’re not, you’re just going to get in trouble.”